Kohl’s has received a bid for its owned real estate that could reach $2 billion, according to a Reuters report that cited anonymous sources.
Kohl’s and the bidder, private equity firm Oak Street Real Estate Capital, have met in recent days to discuss a deal in which Kohl’s would sell real estate for $1.5 billion to $2 billion and lease back its stores, according to Reuters.
Kohl’s and Oak Street did not immediately respond to Retail Dive’s requests for comment.
The Reuters report stipulated that there is no certainty around a deal or continued negotiations.
The reported negotiations come after acquisition talks with Franchise Group, owner of Vitamin Shoppe and American Freight, among other retail banners, came to an end without a deal earlier this summer.
Kohl’s said then that it was “currently reviewing other opportunities to unlock shareholder value, including reevaluating monetization opportunities for portions of the Company’s real estate portfolio.”
Leaseback transactions have the dual effect of adding lease liabilities to a company’s balance sheet while removing assets that add value and boost credit ratings, helping to keep borrowing costs lower.
In a March filing, Kohl’s itself called sale leasebacks of property “an inefficient source of financing that would negatively impact margins by adding unnecessary rent expenses in perpetuity and risk Kohl’s investment-grade rating.”
