Sears Holdings Corp. announced Wednesday that it expects to raise more than $2.5 billion through the sale of roughly 254 Sears and Kmart stores to Seritage Growth Properties, a Maryland-based real estate investment trust (REIT) the company is setting up.
Seritage will then lease back the space to the struggling retailer.
It’s the latest in a series of steps to shore up finances for the company, which reported its eleventh straight quarterly loss during the holidays, by unlocking the value of Sears’ real estate for shareholders. As of Jan. 31, Sears owned or leased 1,725 Sears and Kmart stores combined.
The company said its shareholders will receive subscription rights, on a pro-rata basis, to buy common shares of Seritage. Billionaire chairman and CEO Edward Lampert, who controls nearly half of Sears, as well as his hedge fund, ESL Investments Inc., intend to exercise their pro-rata portion of the subscription rights in full.
In addition, Sears has announced a joint venture with mall owner General Growth Properties, under which the company will sell and lease back 12 stores (valued at $330 million) in exchange for $165 million in cash and 50 percent ownership. Sears said it would eventually sell its stake in the joint-venture to Seritage.
“We continue to show that Sears Holdings is an asset-rich enterprise with multiple levers to generate financial flexibility, while creating shareholder value,” Lampert said in a statement. “Importantly, we will continue to operate these 12 stores and there will be minimal impact on the day-to-day operations of our stores or the overall shopping experience for our members.”