Please ensure Javascript is enabled for purposes of website accessibility

J.C. Penney Reopens Over 150 Stores, Looks to Make Real Estate Trust

By Rhian Hunt - May 20, 2020 at 11:45AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company still faces a minefield of tasks to escape liquidation.

While apparel retailer J.C. Penney (JCPN.Q) may have bought itself a little time with its Chapter 11 bankruptcy filing, a countdown is still looming on its planned exit from Chapter 11 in November. As it works to avoid liquidation, the company is reopening more than 150 of its outlets this week, along with moving forward with its plans to put some of its properties into a real-estate investment trust, or REIT.

A strict timetable governs J.C. Penney's efforts to dodge liquidation. It must file a business plan detailing its restructuring and bankruptcy exit in June, then use the plan to successfully obtain $225 million in debtor-in-financing loans by July 14. If it fails to obtain the financing, liquidation proceedings will begin around August 15.

Bags and accessories in J.C. Penney.

Image source: J.C. Penney.

Improving its financial position is an obvious step toward convincing lenders of its Renewal Plan's viability, giving urgency to its reopening schedule. It is opening dozens of stores today in four states, including Florida, Ohio, Indiana, and Texas. Other states where reopening has already occurred or will happen this week include Rhode Island, Georgia, Kansas, Arkansas, and Colorado. The total will reach 153 locations by Friday. The outlets are providing both contactless in-store payment and contactless curbside pickup of online orders.

Additionally, J.C. Penney is moving to create an REIT that will incorporate some or all of its 387 company-owned locations. The real-estate trust will then lease the real estate to the other half of the company, the so-called "new J.C. Penney." As much as a 35% stake in the REIT might be sold to an outside investor, and some analysts remain dubious that creating the REIT will significantly help Penney's position.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

J. C. Penney Company, Inc. Stock Quote
J. C. Penney Company, Inc.

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/05/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.