This article is from the Australian Property Journal archive
US department store chain Mervyns will close eight stores leased from Macquarie DDR Trust as part of its bankruptcy business realignment process.
The eight closing Mervyns stores are located in California (3), Arizona (1), Nevada (3) and Texas (1) and cover 614,334 sq ft representing 3.7% of the trust’s gross lettable area or approximately 2.0% of Macquarie DDR’s share of gross rental income.
Of the eight stores, six are located in shopping centres and two in malls, anchored by such national chains as Wal-Mart, Target, Sears and Toys R’ Us.
At present, Mervyns has not rejected any of the eight leases through its bankruptcy case, or requested rent relief for any location within the trust’s portfolio.
Mervyns remains fully up-to-date with rental payments for all leases with the trust.
Mervyns currently has 37 leases covering 2.8 million sq ft and representing approximately 10.6% of the trust’s annual base rental income.
The trust said the eight stores proposed for closure are located within predominantly infill locations with high population densities which would potentially be attractive to new tenants.
Macquarie DDR said it has not sought to draw any amounts under its $US25 million ($US12.5 million MDT’s 50% share) letter of credit which was setup in 2005 for the $US407.2 million purchase of the Mervyns assets.
The trust will determine in due course the appropriate action to take.
Overall, Mervyns will close a total of 26 of its 176 stores across the US. The store closures and resulting liquidation sales of stock are subject to the approval of the court overseeing Mervyns’ bankruptcy.
If approved, Mervyns have indicated that the closures will be completed by November 2008.
MDT shares fell 2 cents lower to close at 33 cents.
Australian Property Journal
