Mall owners Simon Property Group and Brookfield Property Partners are close to a deal to buy department store chain J.C. Penney out of bankruptcy and keep the chain running.

Penney’s lawyer, Josh Sussberg, announced the tentative pact, which will save roughly 70,000 jobs and avoid liquidation, during a brief hearing in bankruptcy court last week..

Sussberg said that the Penney deal would have an enterprise value of $1.75 billion, including $300 million in cash from the two landlords and $500 million in new debt.

He noted a letter of intent, which will include more details of the pact, would be filed with the bankruptcy court the next day. Penney will be left with $1 billion in cash after they complete the deal, he said.

“We are all committed to moving this quickly and saving J.C. Penney,” Sussberg said during the court hearing.

The 118-year-old Texas-based department store filed for Chapter 11 bankruptcy protection in mid-May, one of the biggest retailers to do so since the pandemic temporarily shut down nonessential stores around the country. As part of its bankruptcy reorganization, Penney announced the permanent closure of nearly a third of its 846 stores over the next two years. That would leave it with just over 600 locations.

More than 40 retailers have filed for Chapter 11 bankruptcy this year, including over two dozen retailers since the coronavirus outbreak. Among the hardest hit have been department stores, which were already struggling to respond to shoppers’ shift to online marketplaces.

The tentative agreement between two big landlords and Penney is the latest example of mall owners’ increasing willingness to buy out their pandemic-hit tenants. Mall owners are facing enormous challenges as stores close or are unable to pay rent. The exit or closing of retailers also triggers a clause that would allow other tenants to break their leases or get a rent reduction without facing penalties.

In fact, a retail venture owned by licensing company Authentic Brands Group and Simon agreed to purchase 200-year-old clothier Brooks Brothers for $325 million last month.

Neither Simon SPG nor Brookfield responded to requests for comment regarding the tentative deal with Penney.

The Mall at Barnes Crossing in Tupelo is a Brookfield property, one of some 170 malls the company owns nationwide.

J.C. Penney has nine stores in Mississippi, but two – Starkville and Laurel – are to close and have their contents liquidated. The remaining stores are located in Biloxi, Flowood, Greenwood, Hattiesburg, Ridgeland, Southaven and Tupelo.

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