Off-price retailers Burlington Stores and Ross Dress for Less are among the bidders that are offering a total of $36.3 million for about half the available Saks Off 5th store leases.
Last month, 59 Saks Off 5th leases went on the block after the chain's parent, Saks Global, decided to shut down most of its locations. Now, 31 of those leased locations have bids. The New York-based luxury retail conglomerate is slashing its brick-and-mortar footprint — closing not only its off-price chain but also a number of Saks Fifth Avenue and Neiman Marcus stores — after filing for Chapter 11 bankruptcy protection in January.
New Jersey-based Burlington bid $22 million for 22 Saks Off 5th leases, according to court documents filed on Wednesday. Ross, with headquarters in Dublin, California, bid $4 million for four leases. Bookstore chain Books-A-Million, based in Birmingham, Alabama, bid $1.25 million for three of the leases. And Cavender's, a Western-wear retailer with headquarters in Tyler, Texas, bid $750,000 for two leases.
Separately, Saks Global's debtors have negotiated a deal to sell the lease for a 90,000-square-foot Saks Fifth Avenue store at 2 Bala Plaza in the Philadelphia suburb of Bala Cynwyd, Pennsylvania, for $8.4 million, according to a bankruptcy court filing. The buyer was identified as AD Tenant Holdings.
Off-price chains such as Burlington, Ross and T.J. Maxx in recent years have been snapping up leases for stores closed by retailers that have gone bankrupt, including Bed Bath & Beyond and Party City. The off-price chains are in an expansion mode after enjoying sales gains as financially pinched shoppers increasingly hunt for bargains. With U.S. retail space tight, off-price retailers need locations for their stores and the rash of recent store closings — like those of the Saks Off 5th space — are providing them.
Saks Global tapped A&G Realty Partners, based in Melville, New York, as its real estate adviser, and it is marketing the leases for the stores the company is shutting.
A&G circulated a flyer for the 59 Saks Off 5th leases to roughly 1,900 potential purchasers and ultimately received 41 bids for 31 of them, according to an affidavit by Mike Matlat, a senior managing director at A&G. The firm evaluated the offers and selected the four winning bidders.
Saks Global's debtors have asked U.S. Bankruptcy Court Judge Alfredo Perez in Houston to approve the lease sales.
Burlington has bid on Saks Off 5th leases in several states, including Arizona, California, Florida, Georgia, Illinois, Maryland, Massachusetts, Nevada, New Jersey, New York, North Carolina, South Carolina and Texas, according to court documents.
Ross bid for three leases in California and one in New Jersey. Books-A-Million bid on leases in Florida, South Carolina and North Carolina. Cavender's bid on two leases in Texas, in San Antonio and Cypress, according to bankruptcy filings.
As for the Saks Fifth Avenue outside of Philadelphia, Matlat said A&G didn't market that lease. In his affidavit, he said it was his understanding that Saks Global's debtors' management team had negotiated the sale of that store's lease directly with AD Tenant Holdings.
A&G reviewed the Bala Cynwyd lease and determined that the $8.4 million bid was at the high end of its valuation range, according to Matlat.
A&G and Saks Global didn't respond to emails from CoStar News on Thursday seeking comment.
Saks Global has announced two rounds of Saks Fifth Avenue and Neiman Marcus closures. The Bala Cynwyd Saks Fifth Avenue was closed as part of the first wave of closings that involved nine stores, in February. A week ago, Saks Global unveiled a second round of store closings of 15 additional locations.