Linens 'n Things

NEW YORK CITY-Though Linens’ N Things’ bankruptcy filing will result in the closing of 120 stores, the largest U.S. REITS face only minimal exposure, says a research report by Bank of America Securities.

Kimco Realty has five stores to be closed, followed by Developers Diversified Realty and Regency Centers with four. CBL & Associates Properties, General Growth Properties and Simon Property Group have three units each. Canadian stores are not affected by the filing.

“The REITs will not be receiving lease termination fees for the LNT closings given the bankruptcy, and big box stores are more difficult to re-lease,” said the report, written by Christy McElroy. “That said, we are not concerned about the earnings impact, as the number of stores relative to the size of each of the companies should not impact results substantially.”

But don’t expect to see another large user taking the shuttered spaces, which average 33,000 sf. Few chains with units that size are expanding right now.

“These were the least productive stores for a reason,” said Jim Sullivan, a managing director of Green Street Advisors, the Newport Beach, CA-based real estate research firm and consultancy. “I wouldn’t be surprised to see them chopped up. The stores are in malls, strip centers, power centers, and all have very different dynamics.”

A group of smaller tenants will be much more likely, once the landlords involved get control of the space. That may be the chief advantage.

“They have some good landlords who know what they’re doing,” said Cory G. Zelnik, president and CEO of New York City-based real estate consultancy Zelnik & Company LLC. “The larger ones will find this opportunistic.”