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Kohl's and Forever 21 Take Over 46 Mervyns Leases for Only $6.25 Million

22 Sites Are Macerich-Owned; Five Are DDR-Owned
December 15, 2008
Department store retailer, Kohl's, together with moderately priced fashion apparel retailer, Forever 21, prevailed in a joint bid at bankruptcy auction on Dec. 11 to take over the leases of 46 Mervyns stores. The stores account for about one-third of the 149 stores Mervyns announced would account for a full liquidation of the chain in October.

Kohl's has assumed 31 stores, while Forever 21 has assumed 15 stores, for a total price of only $6.25 million. In comparison, Macerich (NYSE: MAC) paid $430 million for 43 Mervyns stores in a sale-leaseback transaction in February 2008.

Of the 46 stores Kohl's and Forever 21 are taking over, 22 are owned by Macerich and five are owned by Developers Diversified Realty (NYSE: DDR). "The strong interest in these locations from popular and well-positioned retailers Forever 21 and Kohl's underscores the inherent value of this retail real estate," said Tony Grossi, senior executive vice president and COO of Macerich. He added that the company has received "strong retailer interest" on the 19 stores not spoken for at bankruptcy auction.

Kohl's said the new locations give the retailer a presence in "under-penetrated" markets -- these new locations will account for 31 of the 50 new stores Kohl's plans to open in 2009. The retailer hinted it might take over more Mervyns stores, "We will continue to be opportunistic and prudent in our discussions with the owners of select Mervyns real estate as we continue to position Kohl's to grow market share," said Kevin Mansell, president and CEO for Kohl's.

DDR said it is in active negotiations to sell the real estate related to the four Mervyns stores Kohl's acquired the leasehold interest in, as well as another store in Las Vegas. DDR added that Gottschalk's is likely to take over a Mervyn's lease in Reno.

According to Macerich and DDR, Forever 21 is taking space at the following centers: Arrowhead Towne Center in Glendale, AZ; Lakewood Center Mall in Lakewood, CA; Los Cerritos Center in Cerritos, CA; Montebello Town Center in Montebello, CA; South Towne Center in Sandy, UT; and The Mall of Victor Valley in Victorville, CA; Northridge Mall in Salinas, CA; Antelope Valley Mall in Palmdale, CA; Cottonwood Mall in Albuquerque, NM; Mall Del Norte in Laredo, TX; Santa Fe Place in Santa Fe, NM; Tucson Mall in Tucson, AZ; Crossroads Plaza in Calexico, CA; and Valle Vista Mall in Harlingen, TX.

According to Macerich and DDR, Kohl's is taking space at the following centers: Northgate in San Rafael, CA, and Stonewood Center in Downey, CA; Bayshore Mall in Eureka, CA; Brickyard Plaza in Salt Lake City, UT; Huntington Oaks Shopping Center in Monrovia, CA; Southland Mall in Hayward, CA; Capitola Mall in Capitola, CA; Northridge Plaza in Northridge, CA; College Grove Shopping Center in San Diego, CA; Nellis Crossing in Las Vegas, NV; Pear Tree Center in Ukiah, CA; The Galleria at South Bay in Redondo Beach, CA; the Galleria at Sunset in Henderson, NV; Whittwood Town Center in Whittier, CA; and Zinfandel Square in Rancho Cordova, CA.

This story appears in CoStar's Retail News Roundup: Dec. 14 to Dec. 20, 2008, a weekly column covering retail store expansions, closings, bankruptcies, acquisitions/mergers/sales, new retail developments, personnel changes, sustainability, and more.

This week in the Retail Roundup, CoStar reports on expansions or new concepts at Kohl's, Forever 21, Aldi, Safeway, and Tops Markets; new retail developments in SC, GA and TN; acquisition, merger, loan or sale activity at General Growth and Macerich; closings, cutbacks or bankruptcies at KB Toys, EZ Lube, and BTWW Retail; personnel announcements at National Retail Properties and Sperry Van Ness; and more.

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