In a sign of ongoing distress in the luxury retail sector, Saks Global has confirmed the sale of their land beneath the Neiman Marcus store in San Francisco's Union Square, acquired as part of their merger just last year. Amidst bankruptcy rumors, this move underscores the company's financial struggles, as it has missed a bond payment of over $100 million, as reported by Reuters. While the identity of the buyer or the purchase price was not released, a Saks Global spokesperson assured the SF Chronicle of their intention to maintain Neiman Marcus' operations at the location through a long-term lease.
Public records indicate a 99-year lease has been secured, acting as part of Saks Global's strategy to distinguish the land from the leasehold. The reason for this is reportedly to ensure not only immediate funds but also to potentially provide security for the buyer against a future bankruptcy filing by Saks Global. "Investors want future income stability, and financially-troubled tenants can choose to separately sell the land beneath a building, and lease it back. This safeguards the lease's income with the building's value, in addition to the corporate guarantee," commercial real estate broker Charles McCabe told the SF Chronicle.
The retail conglomerate's financial troubles stem from the high-stakes acquisition of Neiman Marcus in 2024 for $2.7 billion, which was intended to bolster its competitive edge against other retailers, such as Nordstrom and Bloomingdale's. This merger, funded by prominent investors including Amazon and Salesforce, brought luxury brands such as Saks Fifth Avenue and Neiman Marcus under one umbrella, aiming to establish a stronger market presence. Despite these efforts, Saks Global has steadily shuttered stores, including a Saks Fifth Avenue location in Union Square. According to Reuters, attempts have also been made to sell a minority stake in Bergdorf Goodman and the land of a Neiman Marcus building in Beverly Hills.
