Sears turned into a Real Estate company?

[Zayre88]

SEPTEMBER 27, 2011, 2:02 PM ET
Sears Jumps; Is Eddie Lampert Turning It Into a Real Estate Company?

By Avi Salzman

Sears Holdings (SHLD ) is the top performer in the S&P 500 today, jumping nearly 12% in midday trading. The stock appears to be riding high on evidence that the company is getting more interested in profiting off its real estate.

Last week, the Wall Street Journal published a story  about how Sears is marketing its retail locations to other retailers. Almost 4,000 locations â€" nearly all of the company’s Sears and Kmart stores â€" are available to lease on the company’s website. Sears announced last week that it has signed deals with two other companies to rent hundreds of thousands of square feet. The company’s real estate website  now lists leasing opportunities at 3,768 locations.

Investors have speculated for years that top Sears shareholder Eddie Lampert would essentially turn the company into a real estate business, leasing space and attempting to spin-off brands or sell them at other retailers.

http://blogs.barrons.com/stockstowatchtoday/2011/09/27/sears-jumps-is-eddie-lampert-turning-it-into-a-real-estate-company/?mod=google_news_blog

http://seekingalpha.com/article/296062-is-sears-holdings-finally-turning-into-a-reit

[retailisking]

SHLD was ALWAYS a real estate play; Lampert knew going in that the stores themselves were beyond saving.  The idea was to strip mine the intellectual property (Craftsman, Kenmore, Lands' End) and flip the real estate at a big profit.  The only problem was, Lampert's game plan was derailed by the recession.  Now he's got a new game plan that is basically the same one as before modified by necessity by a persistent downturn in the economy.  But business has deteriorated so much at Sears and Kmart that it's questionable how much lease income Lampert can derive from this scheme.  And besides, what up-and-coming retailer would want to be associated with dowdy anachronisms like Kmart and Sears?

[Zayre88]

SHLD was ALWAYS a real estate play; Lampert knew going in that the stores themselves were beyond saving.  The idea was to strip mine the intellectual property (Craftsman, Kenmore, Lands' End) and flip the real estate at a big profit.  The only problem was, Lampert's game plan was derailed by the recession.  Now he's got a new game plan that is basically the same one as before modified by necessity by a persistent downturn in the economy.  But business has deteriorated so much at Sears and Kmart that it's questionable how much lease income Lampert can derive from this scheme.  And besides, what up-and-coming retailer would want to be associated with dowdy anachronisms like Kmart and Sears?

I totally agree!  Some Kmart and Sears locations have some value, but in this economy his plans won't be as profitable as originally planned.  It's not like retailers want to spend and expand when the economy is in the current state. 

Sears stores are in malls and many of them are declining.  Many Kmart stores are in old buildings or at older shopping centers and/or in areas that used to be prime retail spots but are not anymore.  All of these stores have various sizes, are in good or bad shape, are in good or bad malls...  It will not be easy to sell/lease them.

[Retail Fan+ (Justin Hill)]

It just makes me wonder what they'll do with the Sears at the Mall of America when it becomecomes vacant. It is one of four anchor tenants at the Mall of America, the largest shopping mall in the U.S., the other three are Macy's, Bloomingdales, and Nordstrom. Since the mall is located in a suburb of Minneapolis, Minnesota, I don't see a problem with replacing it. There could be the possibility of replacing it with a Target store (since Target is based out of Minneapolis). As for Kmart, there's only one store left in Green Bay next to Lambeau Field on Lombardi Avenue, which will be facing the wrecking ball in three years, once the Packers organization buys the land (they already bought the land around it).