About 300 of Big Lots' store leases are going on the block for sale as part of the home goods chain's bankruptcy proceeding, adding to the surge in brick-and-mortar retail closings this year.
A&G Real Estate Partners on Thursday said it will be offering up two rounds of leases, totaling 296 Big Lots stores across 37 states, in connection with the Columbus, Ohio-based retailer's Chapter 11 restructuring and sale process. And even more Big Lots locations could end up being shuttered, according to A&G, which is headquartered in Melville, New York.
Big Lots, which operates more than 1,300 stores across 48 states, filed for bankruptcy protection Monday and has struck a so-called stalking horse deal to sell its assets and operations to Nexus Capital Management, a New York private equity firm. The next day, Big Lots received court authorization to kick off the sale process for 144 store leases, A&G said. In the coming weeks, the retailer will seek the go-ahead to start the sale of 152 additional store leases.
The bid deadline for the auction of the initial leases, which include stores ranging in size from 18,000 to 58,400 square feet, is Monday, according to A&G.
Big Lots — with a strategy of acquiring closeout items such as furniture, beverages, groceries, small appliances, electronics and home decor to sell at bargain prices — is part of a swelling number of U.S. retailers that have filed for Chapter 11 this year. Some of them are liquidating and going out of business and others are reorganizing and just shuttering some stores.
At this point in the year, announced U.S. store closings have caught up with and are outpacing openings, according to Coresight Research. But some brokers have expressed optimism about empty retail space being leased, because the vacancy rate is only 4.1% for that commercial real estate sector, according to CoStar data, and store locations are scarce.
A&G is currently engaged in "nationwide lease-restructuring negotiations for Big Lots locations that have the greatest likelihood of serving customers going forward," according to A&G Co-President Andy Graiser.
As Big Lots "proceeds to facilitate the sale transaction with Nexus, it will continue to assess its real estate portfolio, closing additional stores as needed to achieve its goals," Graiser said in a statement.
The locations being auctioned "are in desirable, strategically positioned shopping centers and markets across the United States," A&G Co-President Emilio Amendola said in a statement. "At a time when retail occupancies are the tightest in recent memory, the availability of these leases presents an incredible opportunity."
In June, before filing for Chapter 11, Big Lots in a securities filing said it was having financial difficulties and planned to close 35 to 40 stores this year. It subsequently increased that number to 315.
Available leases
The initial leases for sale are in 28 states:
- Alabama (1 store)
- Arizona (13)
- California (55)
- Colorado (4)
- Connecticut (3)
- Florida (11)
- Georgia (2)
- Illinois (3)
- Indiana (2)
- Kansas (1)
- Louisiana (2)
- Maryland (3)
- Massachusetts (1)
- Michigan (4)
- Minnesota (1)
- Missouri (3)
- Montana (1)
- New York (3)
- North Carolina (1)
- Oregon (2)
- Pennsylvania (2)
- South Carolina (3)
- South Dakota (1)
- Utah (2)
- Vermont (1)
- Virginia (2)
- Washington (12)
- Wisconsin (5)
The additional leases are in 34 states:
- Alabama (4)
- Arizona (8)
- Arkansas (1)
- California (20)
- Colorado (4)
- Connecticut (6)
- Florida (15)
- Georgia (6)
- Illinois (6)
- Indiana (3)
- Kansas (1)
- Kentucky (3)
- Louisiana (2)
- Maine (1)
- Maryland (2)
- Massachusetts (4)
- Michigan (7)
- Missouri (3)
- Montana (1)
- Nevada (1)
- New Hampshire (1)
- New Jersey (1)
- New York (7)
- North Carolina (6)
- Ohio (8)
- Oregon (6)
- Pennsylvania (4)
- Tennessee (3)
- Utah (2)
- Vermont (1)
- Virginia (6)
- Washington (6)
- Wisconsin (2)
- Wyoming (1)
Financing approved
Big Lots on Wednesday announced that the bankruptcy court had granted it interim approval to immediately access $550 million of its $707.5 million in post-Chapter 11 petition financing.
That financing, coupled with cash generated from the company's ongoing operations, is expected to provide sufficient liquidity to support it while it works to consummate its sale to Nexus, Big Lots said.
"With the court relief we have received today and the support of our lenders, we look forward to moving through this process and emerging as a stronger, more efficient company, well-positioned to serve our customers," Big Lots President and CEO Bruce Thorn said in a statement.
The next court hearing is scheduled for Oct. 9.
Nexus's purchase price for Big Lots is $620 million, and according to court documents includes $2.5 million in cash plus the repayment of certain credit agreements and the assumption of other liabilities.