Sears Holdings: A History Of Selling Its Top Locations

| About: Sears Holdings (SHLD)

Summary

Sears has been monetising its top-tier properties at malls owned by various REITs and shopping center owners.

A look at CBL, Macerich, Simon Property Group, General Growth Properties and Westfield reveals that Sears has few remaining top-tier unencumbered locations at their malls.

Sears has more mid-tier and lower-tier properties, but the mall owner interest in those properties is probably limited unless they receive a very good deal.

Sears' remaining real estate does not appear to be comparable in quality to what it has previously sold.

While looking at Sears Holdings' (NASDAQ:SHLD) sale-leaseback transaction with CBL, I was struck by how Sears had monetized most of its unencumbered owned locations within top CBL malls. Of the nine Sears owned locations (owned as of 2013) in CBL malls with $400+ sales per square foot, Sears has now sold six, and another two are REMIC properties, leaving only one potentially owned and unencumbered location remaining for Sears. It is even uncertain whether that location is unencumbered since Sears also has pledged some of its real estate as collateral for secured loans.

Looking at other major REITs and shopping center owners results in a similar conclusion. Sears already has monetized most of its top unencumbered and owned locations. I will discuss some of that information below.

Macerich

Macerich ranks properties in groups of ten, based on sales per square foot. As shown below, all of the top properties that Sears owned at Macerich malls ended up being contributed to the Macerich Joint Venture. Most of the remaining owned properties were sold directly to Seritage (NYSE:SRG), leaving Sears with just one owned property at a Macerich mall. The Sears store at NorthPark Mall is a REMIC property and thus not immediately available to be monetized. It is also located at one of Macerich's bottom-tier malls, and thus would be of limited value anyway.

Sears also has seven leased stores at Macerich malls, although none of these are in Macerich's top 20 malls by sales per square foot.

Rank

Property

2016 Status

Sales Per Square Foot (2016)

Group 1

Washington Square

Macerich JV

$972

Group 1

Los Cerritos Center

Macerich JV

$896

Group 2

Arrowhead Towne Center

Macerich JV

$751

Group 2

Vintage Faire Mall

Macerich JV

$704

Group 2

Kings Plaza Shopping Center

Lease Ended

$697

Group 2

Chandler Fashion Center

Macerich JV

$657

Group 2

Danbury Fair Mall

Macerich JV

$648

Group 3

Green Acres Mall

Leased

$625

Group 3

Freehold Raceway Mall

Macerich JV

$613

Group 3

Stonewood Center

Leased

$576

Group 3

Deptford Mall

Macerich JV

$558

Group 3

Victor Valley, Mall of

Leased

$539

Group 3

Inland Center

Seritage

$489

Group 4

West Acres

Lease Ended

$479

Group 4

La Cumbre Plaza

Leased

$469

Group 4

Pacific View

Seritage

$448

Group 4

South Plains Mall

Macerich JV

$425

Group 4

Superstition Springs Center

Seritage

$377

Group 4

Desert Sky Mall

Seritage

$336

Group 5

Towne Mall

Leased

Group 5

NorthPark Mall

REMIC

Group 5

Wilton Mall

Leased

Community/Power Centers

Southridge Center

Lease Ended

Redevelopment

Paradise Valley Mall

Leased

General Growth Properties

While General Growth Properties doesn't provide individual sales per square foot information for its malls, it did previously classify its malls into Tier I, Tier II and Other. Of the 14 Sears stores in Tier I GGP malls, seven ended up in the GGP Joint Venture and another four were sold to Seritage directly. That leaves only three owned Sears stores in Tier I GGP malls and two of those stores are REMIC properties. Only Oxmoor Center is potentially unencumbered, and it is uncertain whether than has been pledged as collateral for Sears' secured debt.

Of the 37 Sears stores in Tier II GGP malls, 11 ended up in the Seritage REIT (either through the GGP JV or a direct sale to Seritage). Another seven stores are leased and 10 are REMIC properties, leaving nine potentially unencumbered owned Sears stores in GGP's Tier II malls.

Sears' remaining unencumbered owned properties in GGP malls skews heavily toward mid-tier and lower-tier properties, as it has sold most of its best locations again.

Mall

Status

Tier

Alderwood

GGP JV

I

Baybrook Mall

Seritage

I

Mall Of Louisiana

REMIC

I

Natick Mall

GGP JV

I

Northridge Fashion Center

Seritage

I

Oakbrook Center

GGP JV

I

Oxmoor Center

I

Park Place

Seritage

I

Pembroke Lakes Mall

GGP JV

I

Staten Island Mall

GGP JV

I

The Mall In Columbia

GGP JV

I

Valley Plaza Mall

GGP JV

I

Willowbrook

Seritage

I

Willowbrook Mall

REMIC

I

Altamonte Mall

Seritage

II

Augusta Mall

REMIC

II

Carolina Place

Leased

II

Clackamas Town Center

Seritage

II

Coastland Center

Seritage

II

Columbia Mall

Leased

II

Crossroads Center

Leased

II

Cumberland Mall

Seritage

II

Deerbrook Mall

REMIC

II

Florence Mall

REMIC

II

Fox River Mall

II

Glenbrook Square

Seritage

II

Governor's Square

II

Greenwood Mall

Leased

II

Hulen Mall

REMIC

II

Lakeside Mall

REMIC

II

Meadows Mall

Seritage

II

North Point Mall

Leased

II

Northtown Mall

REMIC

II

Oak View Mall

II

Oglethorpe Mall

Seritage

II

Paramus Park

GGP JV

II

Park City Center

II

Prince Kuhio Plaza

Leased

II

River Hills Mall

Leased

II

Sooner Mall

GGP JV

II

Spokane Valley Mall

REMIC

II

Stonebriar Centre

GGP JV

II

The Crossroads

REMIC

II

The Maine Mall

II

The Oaks Mall

Seritage

II

The Parks At Arlington

II

The Shoppes At Buckland Hills

II

The Streets At Southpoint

REMIC

II

Town East Mall

II

Tucson Mall

II

White Marsh Mall

REMIC

II

Boise Towne Square

Seritage

Other

Brass Mill Center

Other

Coronado Center

GGP JV

Other

Eastridge Mall WY

Leased

Other

Grand Teton Mall

Leased

Other

Neshaminy Mall

Other

Oakwood Center

REMIC

Other

Oakwood Mall

Leased

Other

Pecanland Mall

REMIC

Other

Red Cliffs Mall

Leased

Other

Ridgedale Center

GGP JV

Other

Riverchase Galleria

Other

Rivertown Crossings

REMIC

Other

Southwest Plaza

REMIC

Other

Woodbridge

Leased

Other

Simon Property Group

Simon (NYSE:SPG) hasn't provided that much information about its top malls before, but there have been lists of its top 30 and top 25 malls in past years (as recently as 2014). Of the nine Sears locations in those malls in 2014, five were sold to Seritage directly, another two were part of the Simon Joint Venture and another location was sold to Simon in 2015. That leaves Sears' location at The Florida Mall, but a 2002 document indicates that Sears didn't own its land and building for that store.

Property

Sales Per Square Foot (2014)

Status

The Mall at Rockingham Park

$2,105

Seritage

Aventura Mall

$1,642

Seritage

Pheasant Lane Mall

$1,549

Seritage

The Florida Mall

$1,102

Leased?

Town Center at Boca Raton

$867

Seritage

The Plaza at King of Prussia

$773

Seritage

La Plaza Mall

$758

Sold To Simon In 2015

Brea Mall

$800 in 2012 presentation

Simon JV

Burlington Mall

$780 in 2012 presentation

Simon JV

Westfield

For Westfield, the situation is similar to the other shopping center owners. There are five Sears stores in malls that Westfield deems as flagship malls, but none of the Sears stores in those malls are owned and unencumbered (although Sears does own two flagship mall stores that are REMIC properties). Sears does have a handful of properties that may be owned and unencumbered in Westfield malls, but once again these are mid-tier and lower-tier properties.

Type

Westfield Mall

Sales Per Square Foot (2015)

Status

Flagship

UTC

$1,081

Seritage

Flagship

Southcenter

$735

REMIC

Flagship

Montgomery

$722

REMIC

Flagship

Roseville

$621

Seritage

Flagship

Annapolis

$525

Leased

Regional

Oakridge

$610

Leased

Regional

Brandon

$544

Regional

North County

$519

Regional

Valencia Town Center

$512

Ground Lease

Regional

Broward

$432

Seritage

Regional

Countryside

$411

Seritage

Regional

Citrus Park

$393

Regional

Palm Desert

$377

Seritage

Regional

Sunrise

$341

Regional

Meriden

$303

Regional

Sarasota

$233

Seritage

Conclusion

It appears that Sears has previously sold most of its top-tier unencumbered properties at various REITs and shopping center owners. This leaves it with a diminished ability to use its real estate as a source of liquidity. While it does retain a fair number of apparently unencumbered mid-tier and lower-tier properties, these properties are likely to be of lesser interest to the mall owners as they wouldn't be a priority for redevelopment.

Sears is not completely devoid of top-tier locations. However, any assertion that the quality of Sears' remaining real estate is close to being comparable to the real estate that it has already sold does not appear to be backed up by available information.

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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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