A trust overseeing the sale of a JCPenney portfolio could attempt to move the properties into a REIT following a failed deal.

Copper Property CTL Pass Through Trust, which was created in 2020 to sell off nearly 220 properties as part of the retailer's bankruptcy proceedings, wrote in its 2025 annual report that a pending lawsuit could hinder the sale of the portfolio.

This could lead the trust to create a REIT or an alternative investment vehicle for the properties, the trust said. Such an action could further delay the sale of the retailer's assets.

The annual report was released Friday.

In July 2025, the Boston-based private equity firm Onyx Partners was set to purchase 119 JCPenney stores for nearly $1B. The properties are triple-net master-leased to Penney Intermediate Holdings and its affiliates.

The transaction was halted in January after Onyx failed to close on time. The trust argued it had satisfied all of the conditions of the sale but that the buyer failed to close the deal.

Onyx then filed a breach-of-contract suit against the trust, arguing it had complied with the terms of the deal.

On Feb. 10, Copper filed a motion to have Onyx's lawsuit thrown out.

The two sides have also disputed a $5M buyer deposit. Copper had planned to hand out $2M worth of the deposit as part of its monthly cash payment to shareholders, with the other $3M to remain in escrow.

Copper had originally been tasked with selling 160 stores and several distribution centers with the goal of reimbursing the retailer's creditors. In 2024, after selling several properties piecemeal, the trust retained Newmark to market a large portfolio of stores for sale.

The portfolio averages 130K SF per store. Locations include stores in Florida, Texas, California, Illinois, New Jersey and New York.

JCPenney filed for bankruptcy in 2020 with roughly 650 locations across the country. The trust was originally supposed to dissolve early this year, but the date has been pushed to April 30.