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Sears Teams With Macerich in Another Real Estate Joint Venture

Sears has been busy selling parts of itself this month. The struggling retailer announced Thursday that it will form a real estate joint venture with mall operator Macerich Co. making this its third such deal in April alone.

As part of the deal and Sears’ continued efforts to “enhance its financial flexibility” and draw on value from its physical properties (Sears reportedly owns or occupies 2 percent of U.S. retail space), the retailer will contribute nine stores located in Macerich malls to the joint venture and re-lease the space to continue operating the existing stores. Macerich paid Sears $150 million for its 50 percent interest.

“Since the filing of the registration statement for Seritage Growth Properties a few weeks ago, we have entered into JV agreements with the leading mall operators in the U.S., demonstrating the value of Sears Holdings’ real estate portfolio,” said Sears Holdings chairman and CEO Edward S. Lampert.

Sears Holdings formed real estate investment trust Seritage Growth Properties this month, which will buy properties from Sears and sell them back to the retailer. Through this endeavor, Sears plans to raise more than $2.5 billion by selling more than 254 Sears and Kmart stores.

“We are pleased to be in a position to unlock substantial value for Sears Holdings shareholders and further facilitate the company’s transformation,” Lampert added. “Through these transactions, we have additional capital to invest in our membership and integrated retail platforms. We will continue to operate these nine stores and there will be minimal impact on their day-to-day operations or the overall shopping experience for our members.”

Macerich chairman and CEO Arthur Coppola said the new joint venture with Sears is in line with the company’s strategy to reinvest capital in its “highly profitable locations.” According to Coppola, the nine stores are located in properties with average in-line sales of $680 per square foot.

Earlier this month Sears announced a similar partnership with retail real estate company Simon Property Group. As part of the venture, Sears contributed 10 stores in Simon malls, valued at $228 million, including space already leased to outside parties in exchange for $114 million in cash and retaining 50 percent ownership.

Just before that, Sears said it was doing the same deal with General Growth Properties (GGP), another retail real estate company, to do a sale-leaseback with 12 of its stores located in GGP malls.

Simon Property Group made a $16.8 billion bid to buyout rival mall operator Macerich earlier in April, but the offer was rejected.