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Starwood Capital Group LLC hired Eastdil Secured LLC to broker the sale of U.S. malls valued at about $1.2 billion, Bloomberg News reported yesterday. Starwood is selling malls it had acquired from Westfield Corp. including assets in Chicago, San Francisco and Cleveland. Bleak earnings forecasts from department stores, Internet shopping and bankruptcy filings by firms including Sports Authority Inc. and teen-clothing chain Aeropostale Inc. have damped demand for malls among investors. Poorer quality malls face a “very tough environment,” Blackstone Group LP’s global head of real estate Jon Gray said on June 6. It’s also getting more difficult to find buyers for lower-tier malls, according to Green Street Advisors LLC. The pool of investors is shallow and funding is elusive, the real estate research firm wrote in a note to clients this month. Several hundred malls could shut down over the next decade, with properties reliant on Macy’s, JC Penney and Sears at the most risk, Green Street estimates.

The bankruptcy auction for assets of Pacific Sunwear of California Inc. in Anaheim has been canceled, with San Francisco-based private equity firm Golden Gate Capital now set to acquire all of the retailer’s assets, the Orange County Business Journal reported yesterday. The auction had been scheduled for June 22, but no bids were submitted by June 15 deadline, according to the documents filed with the U.S. Bankruptcy Court in Wilmington, Del. The 593-store chain filed for bankruptcy in April and was looking for “a higher and better offer than that contained in the currently-filed plan of reorganization” with Golden Gate Capital, which will write off $58 million in debt in exchange for a 100 percent stake in the company. The private equity firm is holding an additional $30 million in PacSun’s debt and has offered another $20 million upon its emergence from chapter 11 to “support its long-term growth objectives.” Wells Fargo Bank is providing $100 million in “debtor-in-possession” financing, which comes on top of $41 million PacSun already owes it. The retailer, meanwhile, is looking to reduce its costs on store leases, which currently total about $140 million a year.

U.K. sporting goods retailer Sports Direct International PLC is in talks with Modell’s Sporting Goods about a potential deal to acquire as many as 200 Sports Authority stores out of the retailer’s bankruptcy, the Wall Street Journal reported today. Sports Authority revealed in court papers filed on Friday that it is in advanced discussions regarding a potential sale of 100 to 200 of its stores. Bids for Sports Authority store leases are due on Thursday, and stores with leases that go unsold are in danger of going dark. With going-out-of-business sales in full swing at nearly 450 Sports Authority stores, the possible deal could be the last hope of saving anything of the ailing business. Sports Authority filed for chapter 11 bankruptcy in March and is expected to wrap up its liquidation by the end of July.

Under Armour Inc. cut its sales outlook for the year, citing the bankruptcy of Sports Authority, the Wall Street Journal reported today. Given the recent approval of Sports Authority’s liquidation, as opposed to a restructuring or sale of the continuing business, Under Armour said that it would realize only about a quarter of the revenue it had planned to receive from Sports Authority. In addition, the company said it would take a $23 million impairment charge in its current quarter. Under Armour Chief Executive Kevin Plank noted that the company still has strong brand momentum and pointed out that Sports Authority’s bankruptcy is a one-time event. Read more. (Subscription required.) 

In related news, the owner of the NFL’s Denver Broncos is seeking to end its stadium-sponsorship agreement with Sports Authority Holdings Inc., the Wall Street Journal reported today. The team’s request to scrap the deal comes after the bankrupt retailer skipped two payments this year and made an unauthorized attempt to sell the stadium naming rights in bankruptcy court. The Broncos claim Sports Authority owes them roughly $2.1 million for 2016. Read more. (Subscription required.) 

According to U.S. mall landlords, the rumors of the death of bricks-and-mortar retail are greatly exaggerated, Bloomberg News reported yesterday. Bleak earnings forecasts from department-store companies including Macy’s Inc. and Nordstrom Inc., along with bankruptcy filings by firms including Sports Authority Inc. and teen-clothing chain Aeropostale Inc., have rattled investors in retail landlords. A Bloomberg index of regional mall landlords, which includes the shares of Taubman and Simon Property Group Inc., has dropped almost 8 percent in two weeks through Tuesday, double the decline in the broader Bloomberg Real Estate Investment Trust Index. Retailers are being hurt by the continued use of Internet shopping, changes in consumer tastes and declining visits to big-city shopping districts by tourists deterred by the strong dollar. Retail rents on Madison Avenue in Manhattan have fallen to $1,644 a square foot on average, down 3 percent from last year, according to a report this month by the Real Estate Board of New York. Sales have suffered this year at malls that rely on shoppers from Europe and Latin America, said Taubman, whose properties include high-end destinations such as the Mall at Short Hills in New Jersey and Beverly Center in Los Angeles. Spending by travelers from China hasn’t dropped off much, he said. Despite the turmoil, demand for space has held up, Kimco Realty Corp. Chief Executive Officer Conor Flynn said. The market will get more clarity on retailers’ demand for space when Sports Authority auctions off its stores, Flynn said. Once the largest U.S. sporting-goods retailer, the company filed for bankruptcy in March after saddling itself with $643 million of debt.

Sports Authority Holdings Inc.’s going-out-of-business sales will begin this week after a bankruptcy judge signed off on a deal with a trio of liquidators, the Wall Street Journal reported today. At a hearing yesterday, Bankruptcy Judge Mary Walrath authorized the liquidator group — made up of Hilco Merchant Resources LLC, Gordon Brothers Retail Partners LLC and Tiger Capital Group LLC — to quickly launch the sales. In exchange for the right to run the sales, the liquidators, who prevailed over another liquidator group in an auction held last week, will pay a guaranteed 101 percent of the value of the inventory, of which 88 percent will be paid in cash, Jeremy Graves, attorney for Sports Authority said in court yesterday. Tiger Capital and Gordon Brothers were previously engaged to run the going-out-of-business sales at 142 of the 450 stores early on in Sports Authority’s bankruptcy proceeding. The latest round of sales will begin Thursday, according to a news release from the liquidator group, and will cover the chain’s remaining stores, around which it originally had high hopes of reorganizing.