Simon Property, Brookfield and brand licensing specialist Authentic Brands have teamed up on a stalking horse bid of $81 million for bankrupt Forever 21. The bid would serve as a baseline for an auction for Forever 21 and includes a breakup fee of $4.7 million and expense reimbursement of $1 million if Forever 21 accepts an alternate deal.
Forever 21 reportedly started talking with landlords, and Simon and Brookfield specifically, about buying a stake in the retailer before it filed for bankruptcy last year. In September 2019, days before the company filed, Bloomberg reported that the talks with landlords had collapsed. That sent Forever 21 into Chapter 11 without a plan and without certainty of how it would exit bankruptcy. At the time, Bloomberg reported that the negotiations touched on ownership and leadership at the retailer as well as locations to close.
In Simon’s recent quarterly earnings report, Chairman and CEO David Simon noted that the firm has been successful in the past investing in retailers, namely Aeropostale and Authentic Brands. Simon noted “We would not have done Aero(postale) and we would not be attempting to do Forever 21 for the sole purpose of maintaining our rent. And that’s the biggest misnomer out there when I read various publications and analyst notes and media notes. We make these investments for the sole purpose of when we think there is a return on investment.”