Kohl’s receives a bid that could help monetise its real estate

By:
on Sep 4, 2022
  • Oak Street wants to buy up to $2.0 billion worth of Kohl's real estate.
  • The private equity company plans on leasing it back to the retailer.
  • Shares of Kohl's Corporation ended more than 5.0% up on Friday.

Kohl’s Corporation (NYSE: KSS) ended more than 5.0% up on Friday after Oak Street Real Estate Capital LLC said it was interested in buying up to $2.0 billion worth of its property and lease it back to the retailer.

Oak Street already has such deals with other retailers

The private equity company has a history of making such deals with a number of other retailers, including Big Lots and the Reddit’s favourite Bed Bath & Beyond.

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Negotiations with Kohl’s that currently operates 1,100 stores in total are now ongoing. How many of these will be covered in the agreement is yet to be known.

Both the parties have refrained from making an official comment on the stock market news so far and there’s no guarantee that an agreement will indeed be signed. Kohl’s shares are down more than 50% versus the year-to-date high.

Kohl’s had been wanting to monetise its real estate

Earlier this year, Franchise Group had shown interest in buying Kohl’s Corp for about $8.0 billion – a deal that Oak Street wanted to help finance.

In July, however, those “talks” were terminated on deteriorating retail landscape and a slowdown in the broader economy. At the time, Kohl’s had said it will explore ways to monetise its real estate.

On Friday, Oak Street offered $1.5 billion to $2.0 billion for it to realise that goal. Last month, Kohl’s warned its sales will be hit up to 6.0% this year after net income crashed 63% year-on-year in Q2.  

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