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Tim's Corner: 2 Winners From J.C. Penney's Bankruptcy

Sep. 23, 2020 8:38 AM ETAMZN, BPY, SPG1 Comment
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Specializing in biotech stocks, Small Caps, managing optimized portfolios

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Specializing in profiling high beta sectors, Bret Jensen founded and also manages The Biotech Forum, The Insiders Forum, and the Busted IPO Forum model portfolios. Finding “gems” in the biotech and small-cap stock sectors, these highly volatile spaces proven hugely successful have empowered Bret Jensen's own investing portfolio.

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Common sense ain't common.”― Will Rogers

Image result for balance picThis instablog post is sponsored by Tim Plaehn, expert on income investing and a friend & colleague of mine at Investors Alley as well as a contributor here on Seeking Alpha. Tim runs the Dividend Hunter newsletter which offers a solid & diverse selection of attractive high yield plays. The service now nearly 10,000 active subscribers and can be had HERE for the rock bottom price of $49 (It usually is $99) for the first year. Tim provides a solid selection of lower beta, high yield recommendations for these challenging times.

Common sense is in spite of, not the result of, education.”― Victor Hugo


By Tim Plaehn,

Is brick-and-mortar retail dead? I’m not so sure. My research points to a different paradigm for retail sales. I believe you will see more coordination and integration between traditional brick-and-mortar retail outlets and the large online sellers.

Instead of competing for market share, the smart retailers from both sides of the digital divide will combine forces, growing the whole retail pie. The acquisition out of bankruptcy of J.C. Penney by two premium shopping mall operators will be a catalyst.

According to a September 9 CNBC article, Simon Property Group (SPG) and Brookfield Property Partners (BPYhave offered a deal in bankruptcy court totaling $1.75 billion to acquire the business operations and owned real estate of J.C. Penney. The two companies will each contribute $500 million of equity, with the balance coming from new and assumed debt. About $5 billion of Penney debt and any common stock equity will be wiped out if the court accepts the offer.

Currently, J.C. Penny operates 650 stores with 70,000 employees. The company-owned Penney real estate is valued at $1.4 billion with the stores open, and $700 million with the stores shut down. If the Simon and Brookfield offer is accepted, the two pick up some valuable assets at a great price.

Even though the two mall operators will pick up assets at great prices, the real money will be made when the determine and start a plan to integrate the Penney assets into the new world of blended in-store and online shopping.

Last month, the Wall Street Journal revealed a big clue about the future of retailing. The article reported that Simon Property Group was in talks with Amazon.com (AMZN). The two companies discussed (and continue to work on, I suspect) the potential to turn some of Simon’s anchor department stores into Amazon distribution hubs. 

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Both the Brookfield and Simon management teams have outstanding long-term track records of building shareholder values. These recent moves show how the two companies are at the forefront of the changes in retail selling.

Simon Property Group (SPG) is a large-cap real estate investment trust [REIT] with over 200 malls, premium outlets, international shopping centers, and lifestyle centers.

With the retail shutdown in the early days of the pandemic, Simon reduced its dividend to pay $6.00 per share in 2010. So far, $3.40 in dividends has been paid.

The recent $1.30 per share dividend rate should increase significantly as we go into 2021.

Brookfield Property Partners (BPY) is a diversified global real estate company that owns, operates, and develops one of the largest portfolios of office, retail, multifamily, industrial, hospitality, triple net lease, self-storage, student housing, and manufactured housing assets.

The company has sustained its dividend through the pandemic and currently yields over 11%.

As a publicly-traded partnership, Brookfield sends out a Schedule K-1 at tax time.

Horse sense is the thing a horse has which keeps it from betting on people. ”― W.C. Fields

Tim Plaehn of The Dividend Hunter has developed one simple strategy that can take $25k from your 401K or IRA and turn it into tens of thousands of dollars in income every single year. You will only find the strategy FREE when you click here

Thank You & Happy Hunting,

Bret Jensen

Founder, The Biotech Forum, The Busted IPO Forum & The Insiders Forum

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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