Sears Holdings Corp. has entered into its third venture that will bring in at least $150 million — potentially $300 million — to its coffers.
The company signed a deal with The Macerich Co. for a joint venture agreement similar to the ones Sears signed in the last few weeks with General Growth Properties and Simon Property Group. All three combined, including deals with Seritage Growth Properties, would add $858 million in cash to Sears’ balance sheet.
In the deal with Macerich, Sears will contribute nine of its stores in Macerich malls to the venture and then lease back the sites so the retailer can continue to operate them. The transaction value is $300 million. Macerich has paid Sears $150 million, representing its contribution for its 50 percent interest in the venture.
Sears on April 1 formed Seritage Growth Properties, a real estate investment trust. Seritage, a Maryland trust company, will include 254 properties that currently operate as Sears and Kmart nameplates. A subscription rights offering to purchase Seritage shares to Sears stockholders is planned.
Once the rights offering is completed, Seritage will acquire Sears’ 50 percent interest in the venture with Macerich for $150 million, the same amount paid to Sears by Macerich. After both deals are done, Sears will gain $300 million in cash on its balance sheet. The total $858 million expected includes the deals with General Growth Properties — $165 million from the GGP contribution to the joint venture and $165 million from Seritage when it acquires Sears’ interest — and Simon Property Group — $114 million for SPG’s interest in the venture and $114 million when Sears sells its interest to Seritage.
The master lease agreement with Macerich is similar to the two other joint ventures and includes an initial 10-year term and two five-year renewal options. The initial base rent under the Macerich master lease is about $14.8 million. The lease allows for a portion of the space occupied by the Sears stores to be re-leased to others at potentially higher rents.