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But Cerberus, the giant buyout firm owned by secretive billionaire Steven Feinberg, revealed yesterday that it sold its stake in Mervyn's in a previously undisclosed transaction late last year to Sun Capital, a Florida-based investment firm.

Cerberus, which had partnered with Sun Capital to buy Mervyn's in 2004 from chic discounter Target for $1.2 billion, now only owns a 15 percent interest in the real-estate company that is Mervyn's landlord, a Cerberus spokesman said.

That real-estate firm has reaped big gains by selling and leasing some Mervyn's properties to other retailers, and more than doubled its money amid the real-estate boom in the Southwest over the past several years, sources said.

However, the sharp drop in home values across the Southwest over the past year has hit Mervyn's shoppers hard. With sales plunging, Mervyn's in recent weeks has withheld payments to suppliers, and Sun Capital has declined to give the retailer an equity infusion, sources said.

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Elaine Misonzhnik

Senior associate editor Elaine Misonzhnik has been writing for National Real Estate Investor since June 2006 and has covered commercial real estate for more than 12 years. She first became...
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