Sears Will Be Forming a REIT to Raise $2.5 Billion

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By Jacob Maslow

searsholdings logoSears Holdings Corp (NASDAQ:SHLD) is the latest company to offset some of their holdings into a real estate investment trust (REIT). The company plans to split from 254 stores and put them into a real estate investment trust. Under the name of Seritage Growth Properties, the REIT will buy a mix of Sears and Kmart brand stores and lease them back to Sears.

Sears hasn’t turned a profit in years, and the REIT is an attempt to raise $2.5 billion for the company. The company’s stock is up 4.78% on the day.

The deal will be part of a bigger deal with General Growth Properties. Sears will partner with the company in a real estate venture. Under the terms of the deal, Sears will provide 12 stores located in GGP malls. General Growth Properties will then provide a 50% stake in the venture as well as $165 million in cash to Sears.

Shareholders should note that the Sears brand owns or leases 1,725 stores in total. The vast majority of the company’s stores will still be part of the Sears Holdings Corp.

Despite poor profits over the past few years, the company’s stock is up 23% year-to-year, with stock prices soaring after the November announcement of a possible REIT.

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