Sears sets up REIT for $3B

Sears (NYSE:SHLD) announced that it plans to raise more than $2.5 billion from shareholders through a real estate investment trust (REIT). The REIT, which will include some of its stores, is the latest in a series of steps to try and fix the retailer's financial situation.

Sears has posted losses for three years, reported Reuters, and CEO Eddie Lampert currently controls almost half of the company, with Fairholme Capital Management controlling the second-largest share at 24 percent. Both shareholders say they plan to exercise their rights in the offering.

The REIT, Seritage Growth Properties, will buy and lease back about 254 Sears and Kmart stores. An additional 12 stores will be sold as part of a joint venture with General Growth Properties. General Growth will pay Sears $165 million in cash for 50 percent of the stake, and Sears will lease back store space depending on its requirements.

News of a possible REIT broke last year and was subsequently confirmed by Lampert in February when he announced Sears would sell up to 300 stores.

Desperate for revenue, other recent strategic moves include raising $625 million through an unsecured loan, as well as potentially raising about $380 million by selling off a stake in Sears Canada. In addition, Lampert loaned Sears $400 million from his own hedge fund, ESL Investments, at the close of 2014.

For more:
-See this Reuters article

Related stories:
Sears CFO rebuts negative implications of faster vendor payments
Sears' Lampert optimistic, moving forward with REIT
Sears considering REIT to raise more cash
Sears Canada CEO resigns
No bids in Sears Canada auction

 

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