Dollar General, Five Below Emerge as Top Bidders for Party City Leases

‍Party City Lease Auction Results

Party City, which filed for Chapter 11 bankruptcy protection in December 2023, has been liquidating its assets, including its real estate portfolio. At a lease auction, Dollar Tree and Five Below secured the most Party City locations, acquiring 148 and 44 leases, respectively.

A&G Real Estate Partners, managing the lease auction on behalf of Party City, originally listed nearly 700 leases, yet only about 250 locations received bids. Other winning bidders included:

• 16 locations taken by landlords.
• 15 locations acquired by Cavender’s.
• 9 locations won by Rack Room Shoes.
• 5 locations picked up by Books-A-Million.
• 4 locations each awarded to Barnes & Noble, La-Z-Boy, and Zurchers Merchandise.
• 2 locations acquired by Burlington Stores.

Among the awarded leases, 40 were located in California, while just over 30 were in Texas.

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Financial Outcome and Next Steps

The lease auction generated $14.5 million in gross proceeds, with the potential for additional earnings as efforts to monetize the remaining leases continue. A court hearing for final approval is scheduled for February 26.

Beyond the lease sales, Party City’s intellectual property and wholesale assets were sold to New Amscam—an affiliate of Ad Populum—for $20 million. Ad Populum plans to revamp the Party City and Amscan brands, leveraging its strengths in sourcing and distribution to maintain a presence in the party supply market.

Lease Designation Rights and Retailer Flexibility

Rather than taking full lease ownership, Dollar Tree and Five Below acquired designation rights, a strategy that provides more flexibility in lease renegotiations. Under this approach, the acquiring retailer can:

• Renegotiate lease terms with landlords.
• Sell or transfer the lease to another business.
• Reject the lease entirely if favorable terms are not secured.

This method has been increasingly used in bankruptcy auctions, as seen in recent cases involving 99 Cents Only and Big Lots.

Source: CoStar