Shoppers walk in front of the Kohl’s Store in Mount Kisco, New York.
Scott Mullin | CNBC
Oak Street Real Estate Capital LLC, a private equity firm, Coles Corporation It will let U.S. retailers lease back stores, according to people familiar with the matter.
Oak Street interest gives Cole another chance to close deal after negotiating to sell company Franchise Group Inc., Vitamin Shoppe owners lost about $8 billion in July as the department store operator’s business outlook deteriorated. Oak Street sought funding for the franchise group’s bid.
Related investment news
Oak Street is currently making an offer of $1.5 billion to $2 billion to buy the property from Coles, and the two companies have met over the past few days to discuss possible deals, sources said. There is no certainty that negotiations will continue and an agreement will be reached, the sources added.
It’s not clear how many of Kohl’s 1,100 stores will be involved in the deal with Oak Street.
A representative for Oak Street declined to comment, but a spokeswoman for Cole could not be reached for comment.
Coles said in July that it was looking at ways to monetize its properties after deal talks with franchise groups fell apart. Sale-leaseback transforms retailers from landlords to store tenants, allowing them to cash out their accumulated real estate equity. They also have a lease obligation on them.
Kohl’s reported last month that its most recent quarterly results fell on lower sales, forcing management to cut its outlook for the year. Kohl’s reported that net profit fell 63% in the quarter ended July 30, blaming high inflation for a pullback in shoppers. Make it flat or slightly elevated.
The company’s stock has fallen nearly 43% since January.