Please ensure Javascript is enabled for purposes of website accessibility

Simon Property Group Part of Company Bidding for Assets in Lucky Brand Bankruptcy

By Eric Volkman - Jul 6, 2020 at 8:18PM

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 REIT might end up as a co-owner of its tenant.

In a buy-your-business partner move, Simon Property Group (SPG 3.12%) might soon be one owner of bankrupt clothing retailer Lucky Brand Dungarees.

The real estate investment trust (REIT), which specializes in shopping malls, jointly with privately held Authentic Brands Group owns SPARC Group. This entity controls a set of clothing brands that includes Nautica and Aeropostale. SPARC has made a stalking horse bid for "substantially all" of Lucky Brand's assets following its bankruptcy declaration on July 3.

Two people modeling Lucky Brand clothes.

Image source: Lucky Brand Dungarees.

A stalking horse bid is one in which a potential buyer makes an initial offer for bankruptcy assets. This usually sets a low-end price; if there are subsequent bidders, they typically place higher offers. By positioning itself as a stalking horse, the bidder typically is rewarded with incentives such as expense reimbursements for the service of setting that pricing floor.

SPARC's offer is $140 million in cash, accompanied by a credit bid of $51.5 million and other consideration. Separately, a freshly created subsidiary of Authentic Brands has made a bid of $90 million for Lucky Brand's intellectual property.

So far, it seems no other entities have yet made bid. Simon has not released a statement on its participation in the Lucky Brand bid. Earlier this year it made a stalking horse bid for the bankrupt Forever 21 in a similar situation.

Simon and Lucky Brand have a history together. The REIT is a landlord for many of the retailer's stores; these are still a common sight in shopping malls throughout the United States. Lucky Brands is currently owned by Leonard Green & Partners, a private equity firm. Leonard Green also holds a minority stake in Authentic Brands Group.

Simon's stock inched up by less than 0.2% on Monday, lagging behind the gains of the major equity indexes on the day.


Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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

Simon Property Group, Inc. Stock Quote
Simon Property Group, Inc.
$111.38 (3.12%) $3.37

*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 08/11/2022.

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.