These retailers will take over Bed Bath & Beyond's 'top-notch' store leases

Bed Bath & Beyond locations crossed America volition soon beryllium replaced by Burlington Stores outposts and a scope of different businesses, aft the failed location goods retailer auctioned disconnected its leases arsenic portion of its bankruptcy proceedings, tribunal records show. 

The doomed big-box store selected bidders for 109 of its leases aft a Monday auction. Off-price elephantine Burlington agreed to instrumentality implicit 44 of the locations for $12 million, the largest stock of the leases, records filed precocious Tuesday show. 

Burlington secured six much leases for $1.53 cardinal extracurricular of the auction process, bringing the full fig of locations to 50 for $13.53 million, records show. 

Many of the locations are considered "top notch," said Bill Read, the enforcement vice president of commercialized existent property steadfast Retail Specialists. They supply retailers successful maturation mode an accidental to snag leases successful premier locations amid a dearth of prime commercialized existent estate.

"In aggregate the Bed Bath & Beyond locations were immoderate of the champion that I've seen go available. They're usually successful ample assemblage centers with Target arsenic an anchor and aggregate different desirable anchor tenants successful the buying center," Read told CNBC. 

"These are mostly successful well-established, mature markets that person a proven way grounds of generating precocious sales," helium continued.

A fig of different retailers snatched up the leases. Here's a database of the apical winners: 

The different winners see grocers, premium furnishings stores and discounters. Macy's paid $1.2 cardinal for a lease successful ritzy Winter Park, Florida for a imaginable Bloomingdales determination and Barnes & Noble secured a lease successful Concord, North Carolina for $129,015. 

Landlords isolated from those companies won 37 of the leases, the adjacent largest information aft Burlington. Those landlords tin present find their ain tenants and perchance get a higher rent terms than they'd beryllium capable to wrong the auction process.

The leases are for some Bed Bath & Beyond and Buy Buy Baby locations. Leases for the Buy Buy Baby outposts could beryllium clawed backmost depending connected what happens astatine an auction for the chain's assets, Bed Bath said successful a tribunal filing. 

The leases sold are for stores that scope successful size from 14,000-square feet each the mode to 92,000-square feet. 

Bed Bath raked successful $24.41 cardinal successful each from the lease auction. A information of those proceeds volition apt spell to unpaid rents astatine the locations and the remainder volition spell to Bed Bath to wage the retailer's galore creditors. 

When Bed Bath & Beyond filed for bankruptcy successful precocious April, the retailer had 468 leases to its name, and 153 of them were brought to auction earlier this week, records show. Successful bids went done for lone 109 of the them.

The retailer had said successful tribunal filings that different question of lease auctions could instrumentality place. It is unclear if that process is underway, oregon what volition hap to the further leases that weren't auctioned disconnected this week. 

The influx of disposable stores comes arsenic vacancy rates for buying centers fell to 5.6% successful the archetypal 4th of this year, the lowest level since commercialized existent property steadfast Cushman & Wakefield began tracking successful 2007.

The lack of disposable retail space tin hinder companies that are looking to expand. But retail bankruptcies tin supply a unsocial accidental to snatch up abstraction they couldn't different access.

When Burlington reported net for the 3 months that ended April 29, the institution noted it planned to unfastened 70 to 80 nett caller stores successful fiscal 2023. It aimed to unfastened adjacent much successful the coming years. 

During a telephone with analysts, CEO Michael O'Sullivan said the institution had its oculus connected "retail bankruptcies."

"We deliberation these bankruptcies are apt to person a important interaction connected the availability of charismatic caller store locations… we're assured that these bankruptcies volition fortify our caller store pipeline," said O'Sullivan. 

"We anticipation successful 2024 and 2025, immoderate of the availability that we're seeing from retail bankruptcies volition springiness america the accidental to unfastened more," helium added.

Burlington's determination to bargain up Bed Bath's leases wasn't its archetypal foray into bankruptcy-run lease auctions, the main enforcement said connected the call. 

"We person a precise beardown existent property squad that has a batch of acquisition dealing with retail bankruptcies. Many of our astir palmy and productive stores contiguous were erstwhile upon a clip Circuit City, Toys"R"Us, Sports Authority, Linen's N' Things," said O'Sullivan, rattling disconnected a bid of different failed retailers that came earlier Bed Bath. 

"Some of our champion stores were created from carved up Kmart oregon Sears locations," helium added.

Read, the enforcement vice president with Retail Specialists, said it's "no surprise" that Burlington was the apical bidder for Bed Bath's leases. 

"Burlington is successful assertive maturation mode, these are fantastic locations and they're getting a batch of worth for their dollar," Read said. "Companies similar Ross and TJX already person capable stores successful their fleet that they didn't person to beryllium arsenic assertive successful an auction to get caller stores but it's perfectly tenable for Burlington to beryllium assertive to scope their store number desires."

He added: "They're getting tenable rents, they're getting large locations, they're getting large co-tenancy and they'd astir apt beryllium successful a bidding warfare with different retailers astatine higher rents for these locations if it was extracurricular of an auction."