Tuesday Morning puts 250 leases up for auction
Tuesday Morning's store closing plans are coming into focus.
The off-price home goods and décor chain, which last month entered Chapter 11 bankruptcy protection for the second time in three years, will soon be shedding more than half of its store base. A&G Real Estate Partners announced that it has been retained to put 250 of the Tuesday Morning's leases up for auction. No date has yet been set for the bidding.
“Tuesday Morning is committed to optimize its store footprint and focus on its core markets," said A&G senior managing director Todd Eyler. "The company's new management team believes this targeted approach to closing unprofitable and underperforming stores, along with a variety of other measures being undertaken to improve operations, will allow it to emerge from Chapter 11 with a profitable store fleet that serves its most engaged and loyal customers.”
Eyler noted that more stores could be added to the list if acceptable new terms are not reached with their landlords.
Much interest in the properties is expected to be shown by well-capitalized, expanding chains vying for valuable locations during a time when little new retail space is under construction. JLL reported last month that retail tenants absorbed more than 75 million sq. ft. of space last year, the highest level posted in five years. The current vacancy rate in the general retail sector is below 3%
The Tuesday Morning locations being auctioned off range in size from 6,000 to 28,000 sq. ft. and include freestanding stores as well as ones found in strip center sites. Many of the locations offer five years or more of remaining lease term, along with renewal options.
"The early interest in the Tuesday Morning leases reflects the fact that it's rare to see so many good quality locations become available in major markets, including such desirable DMAs as Dallas, Houston, Phoenix and Tampa," said A&G senior managing director Mike Matlat.
Tuesday Morning, which operates 487 stores in 40 states, stated in its bankruptcy filing that it planned to close low-traffic locations in order to focus its resources on stores in higher-traffic regions, The chain recently received $12.5 million in debtor-in-possession (DIP) financing from 1903 Partners together with its affiliates, Gordon Brothers. The new financing from Gordon Brothers brings Tuesday Morning’s total DIP commitments to $27 million.
“After careful deliberation, we have determined that partnering with Gordon Brothers offers Tuesday Morning the best opportunity to save jobs, serve customers and maximize value for the estate,” said Andrew Berger, CEO and director, Tuesday Morning. “Notably, this DIP clears the path for the company to continue transforming our operations through the bankruptcy process. In addition to providing liquidity, partnering with Gordon Brothers will allow us to leverage the team’s deep knowledge and experience in the retail sector.”