Landpimp

Numbers Check on Sears Holdings - It's Cheap

The valuing of leasehold interest in their real estate is assuming the Landlord has no leverage in how these stores can be used or redeveloped. In most cases that is simply not the case, and I would bet most Landlords of below market leases will want to renegotiate their leases if SHLD tries to sell their interest to another retailer. I am sure there would be a few cases where another retailer could move into a store exactly as it exists today, and the landlord would not have any leverage, but how many? We all know that many of the stores are run down and need major renovations. In addition, many retailers will want to reconfigure the store's footprint on the site which will almost certainly require the landlord's consent.

Value Investing in Sears: Avoid Current Perceptions & Look Forward

As both a Sears and Kmart landlord, I see a completely different picture. When dealing with them, they are extremely bureaucratic, cover your butt people who are unwilling to make a decision unless absolutely forced to. They also do not pay their contractors on time, often delaying payment by months based on flimsy excuses. However their rent checks arrive like clockwork.

While I have a tremendous amount of respect for Lampert, he has a huge task in front of him that so far he has been either unwilling or unable to tackle. In my opinion, the whole corporate philosophy of the company needs to change to become more nimble and responsive to changes in the retail environment. He will only be able to ride the cash flow off aging, unattractive, understocked stores for so long, before losing what remaining market share they have left.