Seritage Growth Properties, the real estate spinoff of Sears
Holdings Corp., estimated Monday that it will receive about $1.6
billion from its rights offering and will begin trading today on
the New York Stock Exchange.
Seritage Growth, structured as a real-estate investment trust,
plans to use the proceeds of the offering to fund in part its $2.72
billion purchase of 235 properties and 31 joint-venture interests
from Sears. That purchase is expected to close Tuesday.
Seritage said it would lease back all but 11 properties to
Sears.
Sears announced it was exploring spinning off some of its top
Sears and Kmart properties into a REIT last year as it sought to
raise much-needed cash.
REITs were created by Congress decades ago as a way to let
ordinary Americans buy shares in skyscrapers or shopping malls just
as they could buy stock in a company or mutual fund. The basic
rules are simple: REITs have to have most of their assets and
income tied to real estate, and they pay no tax on income
distributed to their shareholders as long as they pay out at least
90% as dividends.
Meanwhile, Sears' business has continued to deteriorate. The
retailer has been slashing costs and selling off assets to bolster
its cash position in the face of declining sales and shopper
traffic. Earlier this year, some of its suppliers demanded tougher
payment terms over concerns about the retailer's access to
cash.
Sears has also formed joint ventures with mall owners including
Simon Property Group Inc. and Macerich Co.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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