Many of Toys R Us' U.S. locations are leased back to a separate entity created by the company known as Toys R Us Property Co., or Propco. REITs including Simon (13 small-format locations at its outlets), Kimco (24 stores), Brixmor (12 stores), Weingarten (four stores) and DDR (20 stores) own a handful of shops, while the remainder is owned directly by the toy retailer, securities filings show.
Urban Edge Properties, a spinoff from Vornado, which played a role in acquiring Toys R Us in 2015, has a larger percentage of exposure to the retailer with nine locations in its portfolio of only 90 centers.
Some REITs have already told CNBC they plan to redevelop existing Toys R Us locations to fit a handful of smaller companies once the liquidation process is complete.
Not many landlords foresaw the liquidation, announced Thursday. They were expecting some possible closures in a restructuring after Toys R Us emerged from its Chapter 11 bankruptcy filing last September, but not to this magnitude.
Analysts have drawn parallels to when big-box retailer Sports Authority initially hoped to reorganize its business but ultimately was forced in 2016 to shutter its roughly 460 stores after a failed attempt to find a bidder. Some of those locations are still looking for replacements, people familiar with the real estate market told CNBC.
"There was ample demand for the [Sports Authority] space, but the turnaround time from losing a large box tenant and the new tenant(s) occupying space is 1.5 – 2.0 years," RBC Capital Markets analyst Wes Golladay said.
In the case of Toys R Us, he added, "ideally, the landlords will look to re-tenant with retailers such as off-price retailers, which would require less reconfiguration." Companies like TJ Maxx and Homegoods owner TJX and Ross Stores are still actively adding more locations.
A spokesman from Kimco told CNBC: "During the liquidation process, some leases may be acquired by other tenants, which would limit downtime and lost rent, while the bigger opportunity ... is the ability to recapture some of these older boxes, which may spark potential future redevelopments and help unlock the embedded value of the real estate in our core U.S. markets."
A similar situation has been playing out as Sears Holdings closes stores (both Sears within malls and Kmart at shopping centers). Many landlords have welcomed the opportunity to recapture those spaces for other uses, landing tenants that can pay more per square foot.
Toys R Us is still shopping a deal that would save as many as 200 of its U.S. stores from going dark. It hasn't disclosed which locations could be saved. The company also hasn't yet provided a timeline on other liquidation sales.
Here is a map of all of Toys R Us' U.S. locations.