Gottschalks’ Promenade location to sell for $8.5 million; Forever 21 drops bid for Santa Maria store

But Forever 21 drops bid to move into Santa Maria Town Center after mall owners object

By Tim Sheehan | The Fresno Bee

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Forever 21, a women’s clothing retailer, will pay $8.5 million to buy the Gottschalks property at the San Luis Obispo Promenade and $142,672 more for the bankrupt company’s unexpired lease here, according to U.S. District Bankruptcy Court documents.

The retailer is dropping its bid to go into the Santa Maria Town Center Mall, however, after its owners raised objections with Forever 21 coming into their center.

A bankruptcy court judge in Delaware is expected to rule today on whether Macy’s and Forever 21 can take over 16 Gottschalks store locations in California, Washington and Alaska.

The two retailers were the winning bidders in a May 28 auction of some of Gottschalks’ real-estate assets — properties that the bankrupt Fresno company owns or unexpired leases it holds in various shopping centers.

If the sales are approved, Gottschalks stands to receive more than $19 million — money that will help the company repay its creditors.

Gottschalks, founded in 1904, filed for Chapter 11 bankruptcy reorganization in mid-January. At that time, it operated 58 department stores and three specialty stores in six Western states. Liquidation sales of the company’s merchandise, equipment and fixtures began in early April at all of its stores and are expected to be completed by mid-July.

Documents in the bankruptcy court indicate Forever 21 — which deals primarily in young women’s clothing — was the winning bidder on 14 Gottschalks locations, including the stores Gottschalks owns in San Luis Obispo, Yuba City and Hanford.

Forever 21 abandoned its bid for a Gottschalks store in Santa Maria after owners of the Town Center Mall lodged an objection with the court, saying their lease limits the Gottschalks space to a department store, not a specialty retailer that the owners said reached only a limited demographic. Several other objections filed by landlords are expected to be resolved before today’s hearing.

But there are more than 40 other Gottschalks store locations for which no bids were received at the real-estate auction. “The debtor continued the auction with respect to the remaining real property interests and reserves the right to sell them at a later date,” Gottschalks’ attorneys wrote in a court filing Monday.

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