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M2G Ventures, Pennybacker Capital Nab Tuesday Morning Assets

A smattering of buildings occupied by retailer Tuesday Morning and totaling more than 1.3M SF have traded hands to a developer known for its mixed-use adaptive reuse plays. 

M2G Ventures co-founders Jessica Miller Essl and Susan Miller Gruppi

M2G Ventures, in partnership with real estate private equity firm Pennybacker Capital LLC, acquired retailer Tuesday Morning’s 1.2M SF industrial distribution facility, a former corporate-owned store and the chain's 105K SF headquarters in Farmers Branch.

The industrial and retail assets are at 14303, 14621, 14601, 14639 Inwood Road and 4404 South Beltwood Parkway in Farmers Branch. Tuesday Morning's 105K SF headquarters is at 6250 LBJ Freeway in Dallas.

The deals were done as sale-leasebacks with Tuesday Morning, which filed for Chapter 11 bankruptcy reorganization in May, citing financial strain in the midst of the coronavirus pandemic. 

At the time, the retailer had already reopened 80% of its stores and brought back more than 7,000 associates. The reorganization was filed to help the store shed costly real estate assets and other liabilities as it attempted to rebalance its books and emerge from bankruptcy. 

M2G and Pennybacker reportedly outbid Rialto Capital for Tuesday Morning's headquarters and warehouses. Rialto had intended to pay $60M, according to the Dallas Morning News

When the final sale was executed in December, the winning bidders in bankruptcy court — M2G and Pennybacker — apparently beat out Rialto Capital with a $70M-plus bid, according to DMN.  

The buyers have not said what they will do with the sites, which are mostly still occupied by Tuesday Morning. 

"The site possesses a lot of optionality due to the sheer size of the portfolio. M2G and Pennybacker are exploring all options for the site," M2G's leadership told Bisnow in a statement.  

M2G's co-founders, twins Jessica Miller Essl and Susan Miller Gruppi, are known for their retail, office and industrial product conversions and value-add updates in Dallas-Fort Worth. Many of their completed projects include a focus on art. The duo is redeveloping the former Can Academy campus in East Dallas into a mixed-use project with office, retail and public art space. M2G updated former industrial space in Fort Worth into The Foundry, which now has office, hotel and retail space, including a beer distillery. The firm is also the retail and restaurant partner of the Stockyards/Mule Alley in Fort Worth.

The two firms consider the purchase part of an ongoing value-add approach to growing capacity inside urban infill industrial markets, M2G said in the statement to Bisnow

The industrial assets come with great potential at a time when retail e-commerce distribution and the last-mile transport of goods are coming into sharper focus every year.