Due to an intense government regulatory review, Career Education, a for-profit postsecondary higher education provider, chose to move away from their campus locations and focus on their successful online education schools. As a result, they proactively closed a significant number of campuses, including the renowned Le Cordon Bleu. They turned to A&G for assistance in transitioning their complex real estate portfolio.
ITT Educational Services, Inc., a for-profit technical school with 38 campuses nationwide and over 35,000 students, filed Chapter 7 Bankruptcy in September of 2016. Shortly thereafter, A&G was hired by the Lender, Cerberus Capital Management, to value the properties and was subsequently hired by the Trustee to dispose of 31 of the owned properties.
In 2009, Office Depot, an office supply retailer, retained DJM Realty, the predecessor to A&G Real Estate Partners, to close over 100 unprofitable stores. In 2013, Office Depot merged with OfficeMax, acquiring 823 stores, 600 of which were closed due to lease expirations and sales transfers that made closing sister stores with term necessary. Closed stores with term remaining went to A&G, with the challenge of mitigating the remaining leasehold liability on over 300 closed Office Depot/OfficeMax locations. We faced two primary challenges: leases had very little term remaining, and rents were higher than the current market.
When Mattress Firm filed for Chapter 11, A&G was engaged to reduce occupancy costs for 2,700 stores with 2,200 landlords in 41 days as part of a prepackaged Chapter 11. We had to swiftly develop a user-friendly system for a 20-person deal team to execute, process, and track hundreds of documents flowing through our system on a weekly basis. Such a project was unprecedented and required a highly efficient and unique approach.
When Toys”R”Us, a toy, clothing, and baby product retailer, originally engaged A&G, it was to negotiate rent reductions with the landlord community as it planned to emerge from Chapter 11. A&G negotiated over $100MM before the debtor announced it would be liquidating. After that, A&G was tasked with disposing of the majority of the company’s real estate during the liquidating Chapter 11 bankruptcy case. This included about 700 of the retail locations in the United States, plus four of the eight distribution centers. Of note: 274 retail boxes were company-owned sites, the rest were leased.
A&G was retained by Bon-Ton, a department store chain founded in 1898, to sell 22 fee-owned department store boxes, a distribution center, and an e-commerce facility primarily located in the Midwest. While marketing the assets beginning May of 2018, we were challenged with a retail environment with thousands of store closures, and numerous other department store and big-box retailers announced bankruptcies and closures. Furthermore, users were sparse, and Bon-Ton demographics were significantly inferior to other department store closings.
Southeastern Grocers is comprised of three supermarket chains including Winn-Dixie, BI-LO, and Harvey’s. Their portfolio of 750 stores included a number of closed stores with ongoing lease and rent obligations as well as locations with upcoming lease expirations. In 2016, A&G Real Estate Partners was hired to mitigate Southeastern Grocers’ future occupancy cost exposure with respect to closed stores, and to restructure leases on operating stores with upcoming lease expirations to better align occupancy costs to sales.
When Sbarro, a pizzeria chain that specializes in New York-style pizza and other Italian cuisine, filed for Chapter 11, they needed to close 230 sites, franchise 59 sites, and restructure more than 100 leases. A&G was engaged to conceive an approach and then manage the process in a tight 90-day time period.