132 Christiana Mall, Newark, DE, 19702, US

JCPenney - Newark, DE

Asset description

JLL is pleased to offer for sale the JCPenney box located in Newark, DE (referred to as the "Property" or the "Asset"). With a NNN lease in place, the Tenant, JCPenney, enjoys 16 years remaining on the lease term, featuring 2% annual rent increases, 5 renewal options, and a corporate guaranty. The Asset is strategically positioned within the Christiana Mall, which is jointly owned by Morgan Stanley and Brookfield Properties. The mall consists of 146 stores with a total retail space of 1.25 million SF, anchored by Costco, Apple, Target, Best Buy, REI, Dick’s Sporting Goods, Macy’s, and Nordstrom.

Benefiting from Brookfield Properties’ mall operating expertise as the second largest retail shopping center property management company in the U.S., Christiana Mall, has successfully attracted 10.3 million annual shoppers. This level of traffic that ranks in the 89th percentile among the most frequented super-regional malls in the U.S. As a result, the mall is 100% occupied, generates $1329/SF in annual sales, and boasts an “A+” grade from Green Street. Additionally, 600,00 SF of additional retail was added to the mall as part of an expansion project that began in 2017. The strong sales and tenant demand is due to the regional draw of Delaware having no sales tax.

The Asset’s A+ grade is attributed to its coveted location in the heart of a densely populated suburb with 196,000 people and direct access to 293,000 VPD via I-95 and Hwy 7. ChristianaCare Hospital, the State of Delaware's second largest employer with over 11,000 employees and one of Wilmington's primary economic drivers, is located less than a mile away and a 5-minute drive from the mall. Additionally, the Wilmington Airport is conveniently located 2-miles away, while the University of Delaware, which boasts 24,000 students and nearly 5,000 employees, is a mere 5-miles away.

The lease is guaranteed by several restructured JCPenney corporate entities (implicitly backed via a Brookfield & Simon joint venture), which are required to maintain a $925M tangible net worth value and 12 months of liquidity. JCPenney is also in a very favorable liquidity position today, with current cash on-hand of $205M and total available liquidity of approximately $1.6B. Further, JCPenney has less than $500M of outstanding long-term debt and no outstanding borrowings on its line of credit.

This offering presents a passive income opportunity seeking growing long-term cash flow and zero landlord responsibilities on an oversized 11.83-acre parcel at Delaware’s #1 shopping center.

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Attributes

Building area net

159,878 sf

Occupancy

100%

Year built

1980

Land area gross

12 sf

WAULT

16 years

Media

Investment highlights

EXCEPTIONAL CORRIDOR IN A PREMIER MARKET

•The Asset is situated within the Christiana Mall, Delaware’s busiest shopping center with more than 10.3 million annual visits, per Placer.ai.

•Prominent retailers and restaurant brands surround the Asset including Costco, Apple, Target, Best Buy, REI, Dick’s Sporting Goods, Macy’s, Nordstrom, Lululemon, Cheesecake Factory and more.

•The center is positioned along I-95 and Hwy 7 with direct exposure to 293,000 vehicles per day.

•In 2017 the mall completed a significant renovation & expansion project which added more than 600,000 SF of space.

•The Property is across the freeway from the ChristianaCare Christiana Hospital, the largest hospital in Delaware with over 1,000 beds and 1.3 million SF.

•The mall is 1.5-miles away from the Wilmington airport, which set a 2023 passenger record at 1.3M+ passengers, a 21% YoY increase.

•The University of Delaware is 5-miles away with over 24,000 students and nearly 5,000 employees.

•The surrounding city of Newark is centrally located on the I-95 corridor that connects Philadelphia, Wilmington and Baltimore.

•The Asset’s surrounding 1-mile average household income exceed $114,000, and the population has grown nearly 7% since 2010.

OUTSTANDING LOCAL RETAIL FUNDAMENTALS

•The Christiana Mall is graded “A+” by Green Street and achieves exceptional annual sales of $1,329/SF.

•Christiana is one of the most sought-after retail pockets in the Wilmington metro with 3% YoY rent growth at $24.95 PSF.

•JCPenney is in the 85th percentile based on annual visits (450,000+), the #1 most visited JCPenney in Delaware

LONG-TERM SITE COMMITMENT WITH FAVORABLE LEASE ECONOMICS

•The Tenant operates on a 20-year lease with over 15-years of guaranteed remaining term, a testament to JCPenney’s long-term commitment to this location.

•The Tenant’s rent cost of $6.24/SF is substantially below market rents of $24.95/SF and offers a significant mark-to-market opportunity for ownership in the future.

•The lease features annual rent growth and a NNN structure, leaving Landlord with zero financial obligations.

•The lease is guaranteed by several restructured JCPenney corporate entities (implicitly backed via a Brookfield & Simon joint venture) which are required to maintain a $925M tangible net worth value and 12 months of liquidity.

•In the trailing twelve months, the collective guarantor entities have reported cumulative four-wall EBITDA of $60.2M across 127 total locations.

•Significant EBITDA growth is expected in 2024 – 2025 following $52M of capital expenditures projects to help drive long-term growth.

•Very healthy balance sheet with significant cash on-hand of approximately $205M, total available liquidity of approximately $1.6B, and less than $500M of outstanding long-term debt, and no outstanding borrowings on its line of credit.