ORGANIZATION |
9 Months Ended |
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Sep. 30, 2025 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| ORGANIZATION | ORGANIZATION Overview
Copper Property CTL Pass Through Trust, a New York common law trust (the “Trust,” “we,” “our” or “us”) was formed on December 21, 2020, in connection with the reorganization of Old Copper Company, Inc. (f/k/a J. C. Penney Company, Inc.) (“Old Copper”), effective as of January 30, 2021 (the “Effective Date”) pursuant to the terms of the Amended Joint Chapter 11 Plan of Reorganization of Old Copper and certain of its subsidiaries (collectively, the “Debtors”) (the “Plan of Reorganization”).
On the Effective Date, through separate wholly-owned property holding companies (the "PropCos"), the Trust acquired 160 retail properties (the “Retail Properties”) and six distribution centers (the “Warehouses” and, together with the Retail Properties, the “Properties”) all of which were leased under two Master Leases (as discussed in Note 3) to one or more subsidiaries of Copper Retail JV LLC (“OpCo Purchaser”) (collectively with its subsidiaries, “Penney Intermediate Holdings LLC”), an entity formed by and under the joint control of Simon Property Group, L.P. and Brookfield Asset Management Inc. Specifically, the PropCos include (i) CTL Propco I LLC, a Delaware limited liability company, CTL Propco I L.P., a Delaware limited partnership and CTL Propco PR I LLC and CTL Propco PR II LLC, Puerto Rico limited liability companies, which collectively own the fee simple or ground leasehold title (as applicable) to the Retail Properties and (ii) CTL Propco II LLC, a Delaware limited liability company and CTL Propco II L.P., a Delaware limited partnership, which collectively owned the fee simple title to the Warehouses. During 2021, the Trust sold all six Warehouses and in 2022, CTL Propco II LLC and CTL Propco II L.P. were dissolved.
The Trust’s operations consist solely of (i) owning the Properties and interests as lessee of land under non-cancellable ground leases, (ii) leasing the Properties under the terms of the Retail Master Lease to Penney Intermediate Holdings LLC as the sole tenant and (iii) subject to market conditions and the conditions set forth in the Trust Agreement (as defined below), selling the Properties to third-party purchasers through the PropCos.
As of September 30, 2025, the real estate portfolio consists of 117 Retail Properties, of which 20 are encumbered by ground leases, in the United States (the "U.S.") across 35 states and Puerto Rico, and comprise 15.5 million square feet of leasable space.
Trust Agreement
The Amended and Restated Trust Agreement (as amended, the “Trust Agreement”) created a series of equity trust certificates designated as “Copper Property CTL Pass Through Certificates” (the “Trust Certificates”), 75,000,000 of which were issued on the Effective Date. Each Trust Certificate represents a fractional undivided beneficial interest in the Trust and represents the interests of the holders of the Trust Certificates (“Certificateholders”) in the Trust.
Subject to the following sentence, the Trust shall terminate no later than January 30, 2026. If upon this date, the Trust owns any Retail Properties, the Manager (defined below) may take action, with the consent of the majority of the Certificateholders, to (a) extend the Trust for a fixed period to facilitate the complete liquidation of the properties; or (b) to convert one or more PropCos to a real estate investment trust (or "REIT") and take action to list the securities of such PropCos on an internationally-recognized stock exchange. The Trust had a Targeted Disposal Period ending on July 31, 2025 for the sale of all of its properties. On July 18, 2025, the Trust obtained written consent by holders of a majority of the Trust's total interests, approving an amendment, effective August 18, 2025,
to the Trust's Trust Agreement to extend the Targeted Disposal Period contained in the Trust Agreement to January 30, 2026 and to change a provision relating to the information policy of the Trust.
GLAS Trust Company, LLC serves as the Trust's independent third-party trustee (the "Trustee") pursuant to the terms of the Trust Agreement, performs trust administration duties, including treasury management and certificate administration, and earns trustee fees. The Trust pays the Trustee an annual service fee of $100, which is amortized monthly. For both the three and nine months ended September 30, 2025 and 2024, the Trust incurred trustee fees of $25 and $75, respectively.
Management Agreement
The Trust has retained Hilco JCP LLC, an affiliate of Hilco Real Estate LLC, as its independent third-party manager to perform asset management duties with respect to the Properties (together with any of its affiliates, replacement or successor, the “Manager”) pursuant to an agreement with an initial term of 24 months, with automatic six month renewals until the termination of the Trust. The Trust pays the Manager a base management fee (the “Base Fee”) and a fee for each property sold (the “Asset Management Fee”). The Base Fee is an amount equal to the greater of 5.75% of the lease payments of the Properties per month and $333 per month. The Asset Management Fee consists of a success fee for each Retail Property sold which varies based on the sales proceeds and date sold.
The Trust incurred Base Fees of $4,264 and $4,381 for the nine months ended September 30, 2025 and 2024, respectively, and $1,405 and $1,446 for the three months ended September 30, 2025 and 2024, respectively, which are included in “Operating expenses” on the accompanying consolidated statements of operations, of which $464 and $482 as of September 30, 2025 and 2024, respectively, were included in “Accounts payable and accrued expenses” on the accompanying consolidated balance sheets.
For the three months ended September 30, 2025 and 2024, the Trust incurred Asset Management Fees of $52 and $61, respectively, and for the nine months ended September 30, 2025 and 2024, the Trust incurred Asset Management Fees of $82 and $216, respectively, which are included in “(Loss) gain on sales of investment properties, net” on the accompanying consolidated statements of operations.
Purchase and Sale Agreement
On July 23, 2025, the Trust, through its subsidiaries, entered into an amendment to its purchase and sale agreement (as amended, the "Agreement") with an unrelated third party ("Buyer") which made the Agreement binding for the sale of all remaining Retail Properties for a price of $947 million. By July 25, 2025, the Buyer had completed its due diligence and paid a non-refundable deposit. A redacted copy of the Agreement and all amendments are attached as Exhibits 10.1 to 10.3 hereto, and the terms are incorporated by reference herein.
On September 4, 2025, the Trust completed the sale of two properties in accordance with right of first refusals (ROFR) in favor of adjoining property owners. The total purchase price for the two properties was equal to the $12.4 million total amount allocated under the Agreement for those properties. Accordingly, an adjustment to the purchase price under the Agreement in the amount of $12.4 million was made to bring the total purchase price under the Agreement to $935 million. On September 8, 2025, the Trust entered into a second amendment to the Agreement to extend the scheduled closing date from September 8, 2025 to October 8, 2025. Subsequent to September 30, 2025, on November 7, 2025, pursuant to the terms of the Agreement, the scheduled closing date was extended to December 8, 2025 to allow sufficient time to complete all steps required for closing. The Trust strongly believes that all conditions for closing as required by the terms of the Agreement will be satisfied, and that closing will occur in accordance with the terms of the Agreement.
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