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Sears and Kmart are in Chapter 11 bankruptcy. They got permission to hold going-out-of-business sales at 142 unprofitable stores, forcing shopping centers to find new anchors.
Simon Property Group CEO, David Simon, called that an opportunity — and possibly the end of the traditional mall anchor.
Seritage Properties, the real estate investment trust (REIT) with a slate of Sears properties said it would lose some $84 million from 82 Sears tenants that remain in its “master lease.”
Seritage Properties said that based on the leases that are already signed and the remaining lease
up of current projects in the wholly-owned portfolio, they project an annualized rental income of over $195 million.
Simon said that the era of a mall anchored by a massive anchor retailer may be over, “It depends on the mall, but doesn’t need the department stores.”
Many smaller, already underperforming malls anchored by Sears Holdings stores will be hit hard by the closures including 77 Sears and 65 Kmart locations.
For many malls, smaller stores, including e-commerce pure-players, will increasingly define them.
Of 33 stores that are closed or are closing at the end of the year, Simon controls 22 and another five in a joint venture with Seritage.
Of the 17 that we have unmitigated control, Sears will no longer exist in 2019,” Simon said. “They will either be torn down, redeveloped, re-leased, but they’ll be in our rearview mirror.”
“We’re going to redevelop this,” he said. “We’re going to generate positive momentum with the properties due to this. We’re going to reinvest in the communities. We’re going to be able to drive traffic now from this box.”
Sears has 687 stores remaining, including Kmart locations.