Private equity firm Oak Street Capital has reportedly made an offer to acquire between $1.5 billion and $2 billion worth of property from Kohl’s, people familiar with the matter told Reuters. Under the terms of the agreement, the retailer would then lease back its stores.
Kohl’s operates 1,100 locations and it is unknown how many would be sold to Oak Street as part of the deal. Additionally, there is no certainty that the negotiations will continue or that a deal will be reached, according to the sources.
Oak Street was previously involved with Kohl’s when the retailer sought to sell itself to Franchise Group for approximately $8 billion in July 2022. The firm was on board to help Franchise Group finance the deal, but negotiations ultimately fell through.
Oak Street also has completed real estate buybacks with other retailers, including Bed Bath & Beyond and Big Lots. The firm also planned to engage in a similar deal with Kohl’s earlier in 2022, but that was contingent on Acacia Research and Starboard Value’s failed $9 billion bid for the retailer succeeding.
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Kohl’s had previously avoided sale-leasebacks but expressed interest in monetizing its real estate following the failed Franchise Group acquisition. Shares of the company jumped 9% on the news, though stock prices remain down nearly 43% compared to January 2022.
A major cash infusion could help the troubled retailer reverse its fortunes. Kohl’s reported a 63% drop in net income for the quarter that ended July 30, 2022, and also projected a potential 5% to 6% sales decline during the remainder of the year due to continued inflationary pressures.
