By Alexander Gladstone and Andrew Scurria 

Two of J.C. Penney Co.'s largest landlords have emerged as the leading contenders to acquire the department-store chain's retail business out of bankruptcy, according to people familiar with the matter.

Simon Property Group Inc., the biggest mall owner in the U.S. by number of malls, and Brookfield Property Partners LP, another big shopping center owner, have joined together and are in advanced talks to purchase Penney's retail operations, people familiar with the matter said. In recent days, the pair have eclipsed other interested bidders, according to the people.

Penney reviewed a competing offer from private-equity firm Sycamore Partners that carried a slightly higher price tag, some of the people said. But Simon and Brookfield offered certain concessions over lease agreements that Penney and its lenders viewed as delivering better value, the same people said.

Simon didn't respond to requests for comment. Representatives for Penney, Brookfield and Sycamore declined to comment.

The negotiations are fluid, the people said, and aren't certain to produce an agreement acceptable to Penney and its top lenders. Other bidders would have the opportunity to top the lead offer, which also requires approval from the judge presiding over Penney's chapter 11 case in the U.S. Bankruptcy Court in Corpus Christi, Texas.

(MORE TO COME)

Esther Fung contributed to this article.

Write to Alexander Gladstone at alexander.gladstone@wsj.com and Andrew Scurria at andrew.scurria@wsj.com

(END) Dow Jones Newswires

August 12, 2020 18:46 ET (22:46 GMT)

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