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J. C. Penney Company, Inc. Message Board

  • fastmoney_2012 fastmoney_2012 Aug 21, 2013 3:33 PM Flag

    J.C. Penney stores, real estate worth $4.06 billion

    It's been appraised but the value has probably gone up (a little )

    pumpers will say it's worth 11 billion and the bashers will say it's worth Zero

    Grow up people

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    • that's really fabulous
      know how much debt and underfunded pension they have against that?

    • As mall traffic continues to decline the value of the buildings declines also

    • So how exactly does the real estate help an equity owner?

      Either (1) the company owns the real estate so it doesn't have to pay rent, which increases profits. This company has large losses.

      Or (2) they sell the properties and distribute the money to shareholders.

      The way the JCP story will play out is that either they start making money and the stock goes up or they keep bleeding cash and do a restructuring and wipe out / dilute the equity. In no case will the management agree to do a Chapter 7 and liquidate the RE and distribute the proceeds to creditors and shareholders and close up shop. Have you ever seen management do this? No. They will restructure, wipe you out, and try again.

      Now you may say OK they'll just sell 50 stores a year. No. All RE has been pledged and any sales of RE would go to prepaying the term loan.

      So, as you can see, the RE is irrelevant for the shareholder. It is only relevant for the secured lender with security in the RE. All that is relevant to the shareholder is cash burn. If they stop burn, stock up. If they don't you will eventually be wiped out.

      • 2 Replies to beck446
      • They cannot reorganize the company. JCP does not have a debt problem. They have an operations problem basically very few customers. You file for bankruptcy to protect you from creditors and JCP does not have this problem. The next bond is due Oct 2015.

        RJ brought in merchandise that the customers do not want. I was told by several employees nobody was buying the modern furniture. When I go there nobody is even looking at the furniture.

        The gay agenda that RJ promoted lost customers that will not shop there again. The sale under RJ was down by around 30% in one year. Under Mike they are down by over 12%. They are not improving but getting worse. Last third quarter they were down by 26%. Look for another down third and maybe fourth quarter SSS.

        When filing for bankruptcy who will give them cash when their inventory and the real estate are secured by the lenders? They would burn thru the cash before they even sell their first piece of real estate. Bankruptcy will not solve any of the problems that I stated above. It will hurt internet sales, gift cards and order thru the store because the customers are afraid they will not receive their product.

      • Ahhhhhhh - finally someone that understands exactly - they WILL NOT file BK - I don't believe they can generate the amount of sales at the margins they need and will reorganize, as you said - - they cannot close just a few stores without reorganizing(which let's them break leases) - - -

        On a side note, I can't recall ever seeing your option (2) play out in real life - - generally by the time the real estate is auctioned off there is not even enough to pay lien holders 100%

    • Morgan Stanley said it was worth $5.9 billion

      • 1 Reply to dr_tjm42
      • Morgan Stanley said it was worth $5.9 billion
        ////////////////////////////////////////////////////////

        Stanley Morgan, a guy who lives down the street, told me they were worth twice that - Habitat for Humanity has an offer in as we speak to turn them into homeless shelters - - - - ------------------

        however in speaking with a couple of homeless people, they said even tho they were low, they still had certain standards.

    • pumpers will say it's worth 11 billion and the bashers will say it's worth Zero
      //////////////////////////////////////////////////

      What about the people using the ACTUAL figures - - they obviously aren't pumpers or bashers - - - - - - - Thank you very much !!!

    • Are you sure? I thought it was 4.0715 billion. Did you include the value of the reserved parking spaces?

 
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