By Chelsey Dulaney
Sears Holdings Corp. said Monday that it has formed a joint
venture with mall owner Simon Property Group Inc., the latest move
by the struggling retailer to cash in on the value of its real
estate.
Sears, which earlier this month announced a similar deal with
General Growth Properties Inc. , said it has contributed 10
properties valued at $228 million to the venture. Sears will lease
back the properties, which are located at Simon malls, from the
joint venture. Simon, meanwhile, has contributed $114 million in
cash to the venture.
Sears' shares gained 2% in premarket trading, while Simon's
shares were inactive.
The move comes as Sears looks to raise more than $2.5 billion by
spinning off 254 of its best properties into a separate real-estate
investment trust called Seritage Growth Properties. Sears plans to
lease back the stores from Seritage.
The move allows shareholders like Sears CEO Edward Lampert to
buy valuable company assets to raise much-needed cash, after a long
string of losses rattled the company's suppliers and investors.
As part of this effort, Sears agreed earlier this month to
partner with General Growth Properties, the nation's second-largest
mall owner behind Simon, on a joint venture. Sears contributed 12
properties located at General Growth malls in exchange for half
ownership of the joint venture and $165 million in cash. Sears is
continuing to operate the 12 stores.
In both cases, Sears expects to sell its stake in the ventures
to Seritage Growth.
Simon, for its part, is moving forward after its $16.8 billion
offer to buy smaller rival Macerich Co. was rejected in late March
, its largest and boldest takeover campaign yet. Simon was eager to
acquire Macerich, the nation's third-largest mall owner, because
the combined company would have had a bigger slice of the thriving
high-end retail real-estate market.
Macerich said the offer undervalued the company and its growth
prospects.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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