Filling the Federated Gap
Mar 1, 2006 12:00 PM, David Bodamer
Federated Department Stores surplus of 84 stores is rapidly diminishing with buyers coming from all corners. The company had previously announced the closings, which stemmed from redundancies resulting from its acquisition of May Department Stores and its decision to switch the majority of the two companies' numerous regional brands over to the Macy's banner.
Questions arose as to who would swallow the space as Federated vacates it. The answer seems to be that there's a little bit of interest from all types of buyers. At least 28 locations have been claimed in recent deals with upscale department store Nordstrom Inc., regional chain Boscov's Inc. and developer The Westfield Group. Overall, Federated expects to clear between $400 million and $500 million through the disposition of its excess stores.
Westfield scored the biggest chunk of the Federated portfolio to date, acquiring 15 stores in two separate transactions. (Of these, 11 are located in Westfield properties.) The first deal is actually a swap with Westfield taking 12 stores and in return, handing over 12 other stores it currently owns that had been leased to the May Company. Of those 12, only two are located in Westfield-owned properties. In a second transaction, Westfield will acquire three stores for $18.5 million.
Meanwhile, in Boston, upscale department store chain Nordstrom is stepping in and preparing to take over three Federated locations that had been occupied by Filene's. Nordstrom plans to open one store a year starting in 2007. All three are at malls owned by Simon Property Group.
In the other recent deal, regional chain Boscov's vaulted itself a notch by scoring 10 locations (see Case Study, page 22), helping bolster its presence in the mid-Atlantic.
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