Edward Lampert is raising another $2.5 billion in his big bet on reinventing retailing and his struggling Sears Holdings Corp.

This story first appeared in the April 2, 2015 issue of WWD. Subscribe Today.

Sears on Wednesday filed plans for its real estate investment trust with the Securities and Exchange Commission. The REIT will be called Seritage Growth Properties, a Maryland trust company. The filing includes a rights offering by Seritage to partially finance the purchase of 254 properties operated as Sears and Kmart nameplates. Sears said proceeds from the sale, which will go to Sears, are expected to be over $2.5 billion, which will be used to increase the retailer’s liquidity — although credit analysts say the funds will cover just two years of cash burn based on last year’s levels.

As part of the structure, Sears will enter into a master agreement to lease back the properties from Seritage. The subscription rights would be distributed on a pro rata basis to Sears shareholders.

In a separate move, Sears and General Growth Properties Inc. entered into a joint venture for 12 Sears properties located at General Growth’s malls. As part of the JV’s structure, a subsidiary of General Growth has made a cash contribution of $165 million in exchange for a 50 percent interest in the JV. The properties Sears is contributing have been valued at $330 million. The $165 million will go to Sears, which in turn will own a 50 percent stake in the JV upon closing of the transaction.

Once the rights offering is completed for the Seritage REIT, Sears plans to sell its 50 percent interest in the JV to Seritage for the same amount — $165 million — that General Growth paid for its 50 percent stake. Separately, General Growth has also committed to investing $33 million to acquire Seritage common shares in a private placement at a purchase price equal to the subscription price for the rights offering.

Lampert, chairman and chief executive officer of Sears, said the transactions are examples of the company’s ability to unlock a portion of its real estate portfolio, and that the JV and its structure are consistent with the company’s move from a store based business to an asset-light, member-focused model.

In a letter to company employees about the real estate maneuvers, he said: “Importantly, we expect little, if any, disruption from these transactions to our day-to-day operations and the overall shopping experience for our members. In essence, it’s business as usual and that’s what you should reiterate to our members. We have said numerous times that Sears Holdings has a vast and valuable real estate portfolio and these transactions represent a way of monetizing a small portion of that portfolio to support our continued transformation.”

Credit analysts from ratings agency S&P said, “While the transaction will enhance liquidity in the near to intermediate term, it’s still uncertain if Sears can return to profitability given the headwinds in the business and some additional rent expense.”

Scott Tuhy at Moody’s Investor Service was more critical of the prognosis for Sears’ future, noting that the transactions do not “address Sears’ continuing operating challenges.”

He said that the total base rent paid by Sears for the REIT and JV is $189 million at current market rates. With cash burn at $1.2 billion, adding in the rental obligation increases the amount to $1.38 billion. While the transactions provide “meaningful liquidity, it is sufficient only to cover approximately 24 months of cash burn at fiscal 2014 levels.” Further, Tuhy noted that Sears still needs to repay the $200 million balance of its short-term real estate loan to ESL, as well as $565 million required pension contributions in 2015 and 2016. One concern of Tuhy’s is whether Sears can “meaningfully reduce its cash burn.” Other considerations are the April 2016 maturity of its asset-based revolver and other debt maturities in 2018 and 2019.

While Sears still has 381 stores that it owns and can leverage for additional flexibility, its options are slowly dwindling.