By Angela Chen
Sears moved Wednesday to sell some of its top properties and
then lease them back, a step that will let shareholders like CEO
Edward Lampert buy valuable company assets to raise much needed
cash.
The struggling retailer said it plans to raise more than $2.5
billion by selling 254 properties, most of them occupied by Sears
or Kmart stores. The step is crucial to reassuring suppliers that
have been rattled by the company's long string of losses and are
seeking tougher payment terms to keep shipping their goods.
It also starts the process of unlocking the value of Sears's
real estate for shareholders. Analysts have considered that
property to be a central source of value for Sears Holdings Corp.
ever since the company was formed in 2005, when Mr. Lampert merged
Sears with Kmart.
Shares are up 3.9% to $43 in light premarket trading.
Specifically, Sears filed Wednesday for an offering by Seritage
Growth Properties, a Maryland-based trust set up by the company.
Seritage will buy the property from Sears and then lease it back.
It will fund the purchase in part with money raised by selling
stakes to Sears shareholders via a rights offering.
Mr. Lampert, who with his hedge fund owns nearly half of Sears's
stock, said he would buy his allotted stake.
Separately, Sears agreed to partner with mall owner General
Growth Properties Inc. on a real estate joint venture. Sears has
contributed 12 properties located at General Growth malls in
exchange for half ownership of the joint venture and $165 million
in cash. Sears will continue to operate the 12 stores, which are
valued at $330 million.
Sears said it would eventually sell its stake in the
joint-venture to Seritage.
Sears Holdings has struggled badly in the 10 years after being
formed. Sales have plunged and losses have piled up amid
underinvestment in its stores and weak traffic. The company posted
a loss of $159 million over the holidays, as revenue plunged 24% to
$8.1 billion.
Write to Angela Chen at angela.chen@dowjones.com
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