Forever 21 on Sunday night announced it was filing for Chapter 11 bankruptcy, planning to close nearly 200 locations across the U.S. The apparel retailer has 815 stores globally.
The average Forever 21 store is close to 40,000 square feet but there are some locations that span more than 100,000, which is more like the size of a traditional department store. Larger locations can prove to be much more difficult to fill. Landlords are already dealing with the aftermath of a Sears bankruptcy filing last October, with store closures continuing to drip out, and empty Toys R Us locations, which have been vacant for more than a year.
"There are outcomes that could be very detrimental to the mall REITs," Vince Tibone, a lead retail analyst for Green Street Advisors' retail team, said in a recent interview. Because of the size of some of their stores, some Forever 21 closures in malls could trigger co-tenancy clauses, he added, which means surrounding retailers would then have the ability to either break their leases or try to negotiate rents, leading to more of a ripple effect.
Simon and Brookfield are listed in court papers as two of Forever 21's biggest unsecured creditors. Simon is owed $8.1 million, while Brookfield is owed $5.3 million, and Macerich $2.7 million.
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