Forever 21’s Real Estate Portfolio Available After Bankruptcy Filing

In a significant development, Forever 21 has placed its extensive real estate holdings on the market following its recent bankruptcy filing. This move comes as the retailer seeks to navigate its financial challenges and optimize its remaining assets.

Overview of the Real Estate Portfolio

The portfolio consists of roughly 360 retail leases in major U.S. markets, encompassing a total of 7.6 million square feet. Alongside these retail locations, the company is also listing its headquarters and distribution warehouse properties for sale.

Continuity of Operations

While the liquidation process unfolds, Forever 21’s online and physical stores in the United States will remain operational. The company plans to phase out its brick-and-mortar operations gradually as it seeks to sell its assets.

Challenges Leading to Bankruptcy

Brad Sell, the CFO of Forever 21, attributed the bankruptcy to an inability to establish a viable future amidst fierce competition, particularly from overseas fast-fashion entities that exploit the de minimis exemption to offer lower pricing. Rising operational costs and shifting consumer preferences have also adversely impacted the brand’s viability.

Details of Sale Listings

Earlier this week, RCS Real Estate Advisors initiated the sale of under 100 Forever 21 store leases, accounting for over 2 million square feet of retail space. Available deals range from smaller locations of 4,000 square feet to a significant 153,500-square-foot store located in Riverside, California. Notably, 18 of these leases, encompassing approximately 666,846 square feet, are situated in California, presenting substantial opportunities for potential tenants.

RCS is concurrently promoting the leasing opportunities for the Forever 21 headquarters located in Downtown Los Angeles, alongside a noteworthy distribution center lease in Southern California’s Inland Empire.

Lease Specifics

In June 2022, Forever 21 secured an office lease for nearly 164,000 square feet in the California Market Center, a deal costing roughly $606,198 per month, with a term extending until March 2034. Additionally, the distribution center spans nearly 657,000 square feet, with a monthly rent of $338,774, set under a ten-year agreement that concludes in December 2029.

Market Potential

Spence Mehl, a partner at RCS Real Estate Advisors, emphasized their commitment to maximizing the value of these leases, noting that the high demand for key retail locations offers considerable potential for brands aiming for expansion.

Ownership and History

Forever 21 was acquired by SPARC Group, a partnership between Brookfield, Simon Property Group, and Authentic Brands, following a previous bankruptcy in 2020. This acquisition reflects the continuing evolution of the brand amidst changing retail dynamics.

For inquiries, Gregory Cornfield can be contacted at gc********@****************er.com.