Sears (NASDAQ:SHLD) is considering monetizing some of its real estate through the creation of a real estate investment trust (REIT). The company filed an 8-K regulatory filing with the Securities and Exchange Commission today, which said the brand would sell between 200 and 300 stores to the REIT and then lease them back, hopefully creating some cash.
The company would distribute these rights to the shareholders to allow them to purchase shares of the REIT, reported Women's Wear Daily. In its entirety, Sears would then own about 400 to 500 stores and lease 1,300 to 1,400 stores, including those in the REIT.
The goal is to free up more cash through the sale-leaseback transaction, reported Reuters. The company has been busy trying to build-up its cash flow in time for the holiday selling season. Some tactics include selling stores and selling off assets, and the sale of a Cupertino, California store for $102.5 million last month—all in an effort to turn around nine straight quarters of losses. Last month the company was forced to close more than 100 stores and lay off at least 5,457 employees, and it already closed 75 Kmart and 21 Sears department stores in the first half of the year.
Other recent strategic moves include raising $625 million through an unsecured loan and the prospect of eventually raising about $380 million by selling of a stake in Sears Canada. Last month, Edward Lampert, the company's CEO, loaned Sears $400 million from his own hedge fund, ESL Investments.
As of Nov. 1, the company had a total cash flow of about $330 million and $234 million available under the current credit facility, according to the company blog, written by Rob Schriesheim, executive VP and CFO of Sears. The amount also includes the $168 million from the $380 million rights offering for our Sears Canada shares.
-See this Reuters article
-See this Women's Wear Daily article (subscription)
-See this Sears 8-K filing
-See this Sears blog
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