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Mall Owners Go on Defensive to Rescue Aéropostale

September 28, 2016

Mall Owners Go on Defensive to Rescue Aéropostale

Landlords’ unusual strategy aims to hold on to tenant’s stores and avoid a liquidation

Aéropostale filed for chapter 11 bankruptcy protection in May and later faced the threat of liquidation. Simon Property Group counts 160 Aéropostale stores and General Growth Properties has 77 in their respective tenant portfolios. Photo: Rick Wilking/Reuters

Updated Sept. 27, 2016 2:50 p.m. ET | By Esther Fung | WSJ

A move by a pair of mall owners to rescue distressed retailer Aéropostale Inc. shows how some landlords are getting more aggressive as they seek to stem a rising tide of vacancies and store closings.

Simon Property Group and General Growth Properties Inc. were part of a consortium that last week won an auction to purchase teen-apparel retailer Aéropostale, an unusual move in which shopping-center landlords stepped in to rescue a tenant to preserve the tenant’s business.

‘Liquidation and bankruptcies tend to be messy and landlords would rather avoid that at nearly all cost.’
—D.J. Busch

The push to take over the struggling retailer comes at a time when changing shopping habits and the growth of e-commerce are eating into traditional retailers’ revenue and in some cases forcing store closures. That, in turn, is weighing on mall operators, forcing some to reconfigure their properties and add other attractions to bring in shoppers.

Simon and General Growth saw value in keeping afloat Aéropostale, which had filed for chapter 11 bankruptcy protection in May and later faced the threat of liquidation. Aéropostale stores potentially generate more than $1 billion in global retail sales, of which more than $800 million is from the U.S., said General Growth Chief Executive Sandeep Mathrani in a news release. Simon counts 160 Aéropostale stores and General Growth has 77 in their respective tenant portfolios.

General Growth and Simon declined to comment about their turnaround strategy for Aéropostale.

Read the full story on WSJ by clicking the link below…

—Lillian Rizzo contributed to this article.

Write to Esther Fung at esther.fung@wsj.com

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