Remnants of Sears to be wiped out as Seritage shareholders bless asset sale

Company has yet to receive an offer for entire portfolio

Seritage Growth Properties' Andrea Olshan (LinkedIn, Getty)
Seritage Growth Properties' Andrea Olshan (LinkedIn, Getty)

Sears spinoff Seritage Growth Properties is gearing up for a major liquidation sale.

Seritage’s plan to sell off all of its properties was approved by a majority of shareholders this week, securities filing shows.

This summer, the company’s board recommended a plan to liquidate its properties and return proceeds to shareholders. Shareholders had been expected to go along, given that former Sears CEO Eddie Lampert controlled close to 30 percent of Seritage’s Class A shares.

The money will also pay the company’s outstanding liabilities, including a $1.4 billion loan from Warren Buffett’s Berkshire Hathaway that is set to mature in June.

The company has already sold 45 properties and joint venture interests, generating $410.9 million. In addition, Seritage said it expects to make $400.3 million for pending sales and $670 million in “pipeline sales” for which purchase prices are being negotiated.

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Seritage hired Barclays to find a buyer for the entire company. Barclays reached out to 20 potential purchasers but has yet to receive a single offer, according to Seritage’s proxy statement.

Seritage was spun out from the failing Sears chain in 2015. Its holdings included Sears and Kmart stores as well as other real estate assets. The company initially planned to explore other uses for sites but announced earlier this year it would look at new strategies, including liquidation, and that Lampert, the chairman, would step down.

Seritage also changed from a real estate investment trust to a C corporation. This year Seritage said it no longer had any Sears or Kmart stores in its portfolio.

The company’s biggest concern is its debt to Berkshire Hathaway. Seritage’s outstanding balance with Berkshire Hathaway was $1.27 billion as of Oct. 13.

The company has the option of extending the loan’s maturity date for two years but only if it reduces its outstanding principal to $800 million by July 31, 2023. Seritage expects to meet that deadline with its current rate of property sales.