Dozens of New York Rite Aid Sites to be Auctioned

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Auctioneers are poised to help landlords looking to fill the space of a bankrupt pharmacy chain.

Dozens of leases for New York City Rite Aid locations are expected to be auctioned off in July, Crain’s reported. The items up for auction include 33 of the chain’s sites in the Big Apple, most of which are in Queens and Brooklyn, though a trio is also in Manhattan.

All of the city stores are expected to close by June 4, according to state layoff notices.

Next month, a bankruptcy court in Trenton, New Jersey, is expected to set a deadline for bidders. The auction would likely unfold in July, according to A&G Real Estate Partners, which is in charge of marketing the properties.

Landlords are likely hoping their leases are picked up via auction. For landlords, it means they have steady income from a tenant every month; for retailers, the auctioned leases could provide less competitive spaces going for below-market rates.

If a location isn’t auctioned, the lease will be canceled, meaning a landlord can relist the space at a likely higher market rate, though it may prove onerous to find new tenants.

At the start of the month, Rite Aid made virtually all of its real estate available after filing for Chapter 11 bankruptcy, a portfolio that includes 1,194 store leases and 50 company-owned properties across 15 states. There are 178 locations in New York; the 60-year-old pharmacy chain plans to close all locations after selling or rejecting its leases.

The national stores range from 5,000 to 70,000 square feet, most averaging somewhere between 10,000 and 15,000 square feet. While some believe the locations’ adaptable size and layouts could lead to quick absorption, the collapse of other national chains, such as Party City and Joann, may mean there are too many locations and not enough buyers or bidders.

Rite Aid reported in an earlier court filing that 275 locations already have purchase agreements that are either in place or soon to be in place.

Rite Aid, which operated 1,277 stores at filing, had already closed approximately 800 locations during its previous bankruptcy and an additional 29 stores since emerging last September.

— Holden Walter-Warner