The Real Deal Chicago

Seritage Growth Properties could lose up to $84M from Sears bankruptcy

The REIT spun off from Sears in 2015 would lose more than half its annual rent income if the retailer is liquidated
October 16, 2018 04:00PM

(Credit: iStock)

Seritage Growth Properties, the REIT spun off from Sears that leases dozens of properties to the retailer, stands to lose up $84 million this year if the Sears bankruptcy ends in liquidation. 

Seritage collects about $49 million in annual rent from 82 Sears stores it owns, according to Bloomberg. Costs associated with the pending closure of 142 Sears stores stand to take another $35 million bite out of the landlord’s cash flow this year, meaning Seritage could lose out on nearly half of its expected rent income this year.

The REIT collects another $55 million in annual rent from other tenants, and it plans to recover from Sears’ ongoing woes by signing up to $72 million in new leases on its properties.

Sears CEO Eddie Lampert launched Seritage in 2015, raising $2.7 billion for Sears by selling the REIT 235 stores. Seritage now owns 42 of the 142 Sears stores named in its latest round of closures, plus five Kmart stores set to be shuttered.

The possibility of more — or even all — Sears locations closing has mall owners worried too, as the loss of another major tenant would be the latest sizable storefront they’d have to scramble to fill. [Bloomberg] — Alex Nitkin