Hundreds of Toys ‘R’ Us stores will likely remain dark for a long time after they close for good on June 30.
As the massive liquidation of the storied retailer hits full swing, it’s becoming clear that real estate shoppers view its unattractive, boxy stores the same way toy customers did in recent years.
That’s hardly good news for the landlords of its 700-plus remaining locations in the US.
Of 140 stores that hit the auction block last week, just 50 received winning bids, and 30 of them were from the landlords themselves, some of whom scooped up their own properties for $5,000 to $10,000.
A Toys ‘R’ Us landlord in West Hartford, Conn., got its store back for as little as $4,978, according to court papers.
In total, Toys ‘R’ Us pulled in just over $37 million in the auction, comprised mostly of its least profitable stores.
The retailer has not set a schedule for when the rest of its stores will hit the block and some landlords are becoming impatient.
“We have been gearing up for the past several weeks,” said bankruptcy attorney David Pollack of Ballard Spahr, who represents 15 Toys ‘R’ Us landlords.
Real estate experts say the low number of bids wasn’t a total surprise given the glut of retail corpses.
“There is a lot of inventory out there now, and in today’s world and marketplace 50 bids on a 140 stores is a pretty good result,” even if there was no interest in more than 100 stores, Pollack told The Post.
Among the successful bidders were a handful of retailers including Big Lots, Raymour & Flanigan, PGA Tour Superstore, Burlington Coat Factory and Farmers Fresh Market Place. The rest were real estate developers.
Raymour & Flanigan snatched the Babies R Us store in Union Square in Manhattan for a mere $250,000, as well as three other New York metro stores including the Paramus, NJ, Toys ‘R’ Us store for $1.3 million, while Big Lots picked up two stores for $303,000.
The Union Square store had less than 10 years left on the lease, according to a source familiar with the property.
The biggest bid — $15.6 million for a San Francisco-area store that Toys ‘R’ Us owned — was won by a New Jersey real estate developer, Benderson, while the second largest bid for another property Toys ‘R’ Us owned in Chicago went for $7.5 million from shopping center developer Festival Development Corp.
“The question is whether we’ll see any sexy names like TJX, Best Buy, Whole Foods or Amazon bid on the rest of the stores,” said one real estate expert who did not want to be identified.
Target and the German grocer Aldi were among the qualified bidders for last week’s auction, but neither pulled the trigger.
Separately, Toy ‘R’ Us has had better luck trying to sell its operations abroad.
On Wednesday, it received multiple bids of more than $1 billion for an 85 percent stake in its Asian business, its lawyer Joshua Sussberg said, adding that the liquidation and real estate auctions were “going better than expected,” according to Reuters.
Source: New York Post
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