Sears Holdings Corp. Wednesday released more details about its plan to establish a REIT with its extensive real estate holdings, saying it will raise at least $2.5 billion from shareholders by offering rights to buy shares.
The REIT, dubbed Seritage Growth Properties, will buy some 254 Sears and Kmart stores, and the retailer will lease back as many as needed.
Sears also said it’s selling 12 stores to a 50/50 joint venture with General Growth Properties Inc., the country’s second largest mall operator, which will pay $165 million in much-needed cash. General Growth Properties will also buy Seritage shares for about $33 million in a private placement, the retailer said.
This is good and bad news for Sears. The REIT will garner the retailer badly needed cash. But, like many of the retailer's recent cost-saving moves, the REIT can be undertaken just once. In other words, Sears is running out of options.
Still, Sears has made substantial improvements in its performance, and the coming REIT could help literally buy it the time it needs for its survival.