Sears Holdings Corporation and General Growth Properties, Inc. announced that they have entered into a real estate joint venture (the “JV”) under which Sears Holdings has contributed to the JV 12 Sears Holdings properties located at GGP malls, involving both existing Sears Holdings stores and certain property leased to third parties occupying former Sears Holdings stores. As part of the transaction, GGP has contributed cash to the JV, and the JV has leased back the existing Sears Holdings stores. The transaction is designed to unlock real estate value and enhance financial flexibility for Sears Holdings while at the same time providing the JV the opportunity to create additional value through re-development and re-leasing of up to 50% of each property.
“Today’s announcement demonstrates our ability to unlock a small portion of Sears Holdings’ vast and valuable real estate portfolio, and represents an important step in the continued transformation of Sears Holdings,” said Edward S. Lampert, Chairman and CEO of Sears Holdings. “We continue to show that Sears Holdings is an asset-rich enterprise with multiple levers to generate financial flexibility, while creating shareholder value. The JV and its structure are consistent with our transition from a store-focused network to a more asset-light, member-centric retailer and it provides additional capital to invest in the future of our membership and integrated retail platforms. 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.”
Sandeep Mathrani, CEO of General Growth Properties, stated “Our new partnership with Sears Holdings is consistent with our investment strategy of acquiring interests in high-quality retail properties located in the U.S. This transaction provides an opportunity to potentially redevelop certain Sears Holdings locations within our portfolio and further strengthen each mall within its trade area. We look forward to working with Sears Holdings to maximize the value of these locations for our shareholders.”
