Sears Raising $2.5B In Lease-Back Deal

Lampert’s latest monetizing move
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Sears Holdings is forming a real estate investment trust (REIT) that will buy about 250 Sears and Kmart stores and lease them back to the retailer.

Hoffman Estates, Ill. – Sears Holdings is forming a real estate investment trust (REIT) that will buy about 250 Sears and Kmart stores and lease them back to the retailer.

The move, which Sears first signaled last year, is the latest effort by chairman/CEO Edward Lampert to raise cash by leveraging the company’s assets.

Sears said the arrangement with the new trust, Seritage Growth Properties, will generate about $2.5 billion. The deal will also allow it to reduce store size and increase traffic by sharing leased space with other destination retailers while it continues to focus on digital sales.

Separately, Sears is also forming a joint venture (JV) with shopping mall operator General Growth Properties. Under terms of that deal, Sears will sell the new entity 12 of its stores, which it will continue to operate, in exchange for $165 million in cash and a 50-percent interest in the JV – which it will in turn sell to Seritage.

“Today’s announcement demonstrates our ability to unlock a small portion of Sears Holdings’ vast and valuable real estate portfolio,” Lampert said.

He noted that the REIT arrangement provides additional capital to invest in “the future of our membership and integrated retail platforms,” and represents "an important step in the continued transformation of the company" as it transitions from “a store-focused network to a more asset-light, member-centric retailer.”

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