Sears Holdings: Confirmed Third Party Tenant Leases

As has been discussed on this blog, Sears Holdings (SHLD) has been devoting material resources in recent years to leasing out space in the company’s stores. That way the company can close or reduce the size of money-losing locations and lease them to other retailers in order to boost cash flow. This post will keep a running list of confirmed Sears and Kmart locations where retailers have signed a lease to occupy space. Since the company discloses minimal information about its leasing activities, my hope is that others will contribute to this list (please use the comments section to share links to articles or other evidence of leases not listed here) and it can be a valuable shared online resource for those who are watching the ever-changing operations of Sears.

Update: 04/01/15 – Today Sears Holdings announced the formation of Seritage Growth Properties, a new REIT that will commence trading on the public market in June 2015. Seritage will purchase and lease back 254 stores from Sears Holdings, as well as own a 50% interest in a joint venture with GGP that will operate another 12 stores. As a result, going forward the list below will only be updated with third party leases signed by Sears Holdings itself. Since Seritage will be filing publicly there is no need to reproduce updated information about that entity on this site going forward. The list below will be rearranged to better reflect these developments. Please continue to provide new leases for the list, as Sears Holdings is selling less than 40% of their owned stores to Seritage and will retain a large number of valuable properties for the time being. 

Update: 05/18/15:  – Seritage Growth Properties has updated their registration filings to include Q1 2015 pro-forma financial results:

Total revenue: $68 million

Operating expenses: $24 million

G&A expenses: $5 million (including $4 million of public company costs)

Joint venture income: $6 million

Pre-tax income: $45 million

Interest expense: TBD (example: debt of $1.25 billion at 5% implies interest of $16 million per quarter)

For those of you trying to pinpoint a value for Seritage, annualized funds from operations (FFO) should be in the neighborhood of $120 million annually. This figure assumes $1.25 billion of debt (leverage ratio of 6.9), which is simply a guess given that we do not know the capital structure yet. I will update these figures when the terms of the deal and the ratio of equity to debt is known.


Last Updated 04/01/15

LIST OF CONFIRMED SEARS HOLDINGS LEASES

Entire Kmart Stores (3 locations, ~250,000 SF)

Ansar Gallery – Free-Standing Store (Tustin, CA) – 108,000 sf >>> link
Fiesta Mart – Free-Standing Store (Houston, TX) – 42,000 sf >>> link
Zion Market – Free-Standing Store (San Diego, CA) – 94,500 sf >>> link

Kmart Box Splits (5 locations, ~200,000 sf)

Best Buy (proposed) – Free-Standing Store (Rockford, IL) – 45,000 sf >>> link
Gold’s Gym – Free-Standing Store (Charlottesville, VA) – ~25,000 sf (estimate) >>> link (photo only)
Kroger – Village Square at Kiln Creek (Yorktown VA) – 90,000 sf >>> link
Planet Fitness – Free-Standing Store Sublease (Sacramento, CA) – 22,000 sf >>> link
Rio Ranch Market – Free-Standing Store (Desert Hot Springs, CA) – 29,000 sf >>> link

Sears Box Splits (7 locations, ~350,000 SF)

Forever 21 – South Coast Plaza (Costa Mesa, CA) – 43,000 sf >>> link
Level 257 Restaurants – Woodfield Mall (Schaumburg, IL) – 40,000 sf >>> link
Primark – Willow Grove Park Mall (Willow Grove, PA) – 77,500 sf >>> link
Primark – Freehold Raceway Mall (Freehold, NJ) – 66,500 sf >>> link
Primark – South Shore Plaza (Braintree, MA) – 70,000 sf >>> reader tip
Sears Hometown Stores – Offices at Sears HQ (Hoffman Estates, IL) – 36,000 sf >>> see SEC filings
Whole Foods Market – Friendly Shopping Center (Greensboro, NC) – 34,000 sf >>> link

Sears Full Property Redevelopments (1 location, ~80,000 SF)

Marianos/Sears/TBD Rebuild (Elmwood Park, IL): ~80,000 sf (planning stages) >>> link

Sears Auto Center Redevelopments (9 locations, ~150,000 SF)

Woodfield Mall (Schaumburg, IL): ~30,000 sf total >>> link
Colonial Park Mall (Harrisburg, PA): ~18,000 sf >>> link
Genessee Valley Mall (Flint, MI): 12,000 sf >>> link
Lincoln Mall (Matteson, IL): ~13,000 sf >>> link
Northwoods Mall (North Charleston, SC): ~16,000 sf >>> link
RiverTown Crossing Mall (Grandville, MI): 12,000 sf >>> link
Smith Haven Mall (Lake Grove, NY): 8,000 sf >>> link
Woodland Mall (Grand Rapids, MI): 20,000-40,000 sf >>>  link

In-Store Embedded Space (~3.65 Million SF)

Lands End: 236 locations (as of 01/22/15), 7,400 sf each = ~1.75 million sf >>> link
Sears Optical: 541 locations (August 2014), 1,500 sf each (est) = ~800,000 sf >>> link
Jackson Hewitt: 400 locations (December 2012), 2,000 sf each (est) = ~800,000 sf >>> link
Sears Hearing Centers: 191 locations (February 2014), 1,500 sf each (est) = ~300,000 sf >>> link

 

SERITAGE GROWTH PROPERTIES STORES PREVIOUSLY LISTED ABOVE:

24 Hour Fitness – The Village at Orange (Orange, CA) – 54,000 sf >>> link
Aldi – Free-Standing Store (Hialeah, FL) – 18,000 sf >>> link
Aldi (Hackensack, NJ) – 17,000 sf >>> no details known, headline only on seritage.com
At Home – Pueblo Plaza (Peoria, AZ) – 105,000 sf >>> link
At Home – Willowbrook (Houston, TX) – 134,000 sf >>> link
At Home – Kickapoo Corners (Springfield, MO) – 113,000 sf >>> link
At Home – Free-Standing Store (Ypsilanti, MI) – 92,000 sf >>> link
At Home – Free-Standing Store (Phoenix, AZ)- 152,000 sf >>> link
Altamonte Mall Auto Center (Altamonte Springs, FL): ~16,000 sf >>> link
Aventura Mall Redevelopment (Aventura, FL): ~275,000 sf (design plan submitted) >>> link
Corner Bakery – Westfield UTC Mall (San Diego, CA) – ~4,000 sf >>> link
Destination XL – Corbins Corner (West Hartford, CT) – 8,500 sf >>> link
Dick’s Sporting Goods – Mall at Rockingham Park (Salem, NH) – 79,000 sf >>> link
HomeGoods – Hastings Ranch Plaza (Pasadena, CA) – ~27,000 sf (estimate) >>> link
Kroger – Cumberland Mall (Atlanta, GA) – 93,000 sf >>> link
License Bureau Inc: (St Paul, MN) – ~3,500 sf (est) >>> link
McCain Mall Auto Center (North Little Rock, AR): ~21,000 sf >>> link
Nordstrom Rack – The Mall at Sears (Anchorage, AK) – 35,000 sf >>> link
North Riverside Park Mall Auto Center (North Riverside, IL): ~21,000 sf  >>> link
Oglethorpe Mall Redevelopment (Savannah, GA): ~50,000 sf (actively seeking tenants) >>> link
Old Time Pottery – Free-Standing Kmart Store (Orange Park, FL) – 84,000 sf >>> link
Primark – Staten Island Mall (Staten Island, NY) – 70,000 sf >>> link
Primark – Danbury Fair (Danbury, CT) – 70,000 sf >>> link

Ridgedale Center (Minnetonka, MN): ~25,000 sf total >>> link
Sears Outlet (6 stores in MA/NC/NV/VA/WI) ~150,000 sf (estimate) >>> see SEC filings
Sears Hometown (3 stores in IL/KS/MI~30,000 sf (estimate) >>> see SEC filings
Ulta – Marketplace at Braintree (Braintree, MA) – 11,000 sf >>> link
Westland Mall Auto Center (Hialeah, FL): ~43,000 sf (actively seeking tenants) >>> link
Whole Foods Market – Colonie Center (Albany, NY) – 32,000 sf >>> link

Pembroke Mall (Virginia Beach, VA)
REI – 27,500 sf >>> link
Nordstrom Rack – 32,500 sf >>> link
DSW – ~25,000 sf (estimate) >>> link

Landmark Crossing (Greensboro, NC)
Floor & Decor – 70,000 sf >>> link
Gabe’s –  50,000 sf >>> link
Sears Outlet – ~25,000 sf (estimate) >>> see SEC filings

Janss Marketplace (Thousand Oaks, CA)
DSW – ~25,000 sf (estimate) >>> link
Sports Authority – ~45,000 sf (estimate) >>> link
Nordstrom Rack – 40,000 sf >>> link

King of Prussia Mall (King of Prussia, PA)
Primark –  – 100,000 sf >>> link
Dicks Sporting Goods – ~75,000 sf >>> link

Burlington Mall (Burlington, MA)
Primark –  70,000 sf >>> reader tip
Auto Center –  ~60,000 sf (actively seeking tenants) >>> link

Westfield Countryside Mall (Clearwater, FL)
Whole Foods Market –  – 38,000 sf >>> link
Nordstrom Rack – Westfield Countryside Mall (Clearwater, FL) – 38,000 sf >>> link

Oakbrook Center (Oak Brook, IL)
Pottery Barn – ~16,000 sf (estimate) >>> link
Pinstripes – 40,000 sf >>> link
Auto Center – ~17,000 sf total >>> link
West Elm – ~14,000 sf (estimate) >>> link

 

33 thoughts on “Sears Holdings: Confirmed Third Party Tenant Leases”

  1. Thanks Chad, I just read a comment by someone who was in North Dakota, they said a new Kmart and a new Sears were built there, I can’t find anything on this. If it’s true why no press release?

    1. They just don’t announce things to the public very often, or unless its material enough that they have to. I don’t understand it, but it is what it is. It would make sense though… shale oil exploration is booming up there so its one of the few places in the US where large retailers (e.g. Home Depot) are opening new stores.

  2. “They just don’t announce things to the public very often, or unless its material enough that they have to. I don’t understand it, but it is what it is.”

    The only reason I can think of to announce each leasing would be to ease the nerves of investors. Otherwise, why let the competition know you are actively leasing a chunk of your real estate?

    1. I would agree that announcing individual leases is not important (though they do announce some… why not do none or all…). Adding one or two paragraphs in their annual report wouldn’t hurt anything. Right now they don’t even acknowledge in their 10-K that they are leasing out space at all, either full stores or carve-outs. They also don’t disclose that they own stores that are sitting vacant and therefore are not counted in their disclosed store counts. Their disclosures are really quite poor. And they could change that very easily without giving out too many details, just a few sentences updated once a year to truly represent to their shareholders how they are deriving revenue.

      I don’t understand how doing so would be a competitive disadvantage. When you have a web site devoted to leasing out your real estate, it is clearly not your intention to keep that information from being known. If you are trying to lease out space, there would be no reason to hide it… that would just slow down the time it takes to find tenants.

    1. Yes, it has been a slow start, but they have partnered with a data center specialist to convert former auto center locations into data centers. I am unaware of any properties that are under construction, but we could probably use that city list to generate some likely candidates.

  3. Whole Foods Kmart Ashville, NC
    Whole Foods Kmart Charlotte, Va
    Whole Foods Former Kmart Davie, FL

    1. I’m not sure I can add any of those to the list: The Asheville NC store is not owned by Kmart (and was demolished by the developer), the Davie FL store is not owned by Kmart, and the Whole Foods in Charlottesville VA is across the street from the Kmart on a separate parcel.

  4. 4 leases to add
    – Burlington Coat Factory (kmart) – 5405 University Ave, San Diego CA (~104,000 SF)
    – Planet Fitness (Kmart) – 5200 Stockton Blvd, Sacramento CA (~22,000 SF)
    – Ansar Gallery (Kmart) – 2505 El Camino Real, Tustin CA (~108,000 SF)
    – Corner Bakery (Sears) – Westfield UTC, San Diego CA (~4000 SF)

    1. I am not tracking each SHOS store opening per se, but I do monitor KCD sales from SHOS stores, which they have begun to disclose in their annual 10K filings. Since SHLD consigns inventory to SHOS at cost, and then takes a sales commission only upon resale, the financial benefit to SHLD from SHOS is relatively immaterial. But yes, the pace of decline of KCD sales will be largely impacted by SHOS’s results. Unfortunately, SHOS is not doing much better than SHLD lately, for many of the same reasons.

  5. Great work Chad and real interesting stuff. Is there a good way to look up if they own or lease specific stores?

    1. County property records are mostly available in online databases these days, so it takes some effort, but you can find the property owners in most cases for free via the web.

  6. HI, I have definate knowledge of Primark going to Burlington, ma and Braintree, MA upper levels of Sears.
    The interesting part for me as I work in a Sears Optical:
    The employees of the upper level were told access to the floor will be closed starting Feb 9th, with moving of things starting after Xmas. We were told by Sears that the optical was NOT shown on the lower level blueprint plans. (we would need plumbing, electrical etc). Meanwhile Luxottica, the owners of the optical will not give an answer if we are closing or moving downstairs! Our regional just keeps saying she spoke to someone in corporate and they said it (the move downstairs) will be worked out by February.
    I just feel they wont tell us for fear of the opticians and optometrist quitting tomorrow. But in my opinion they need to tell us the truth, and it looks unlikely to me there will be space for optical, with Sears condensing to one floor.
    ALSO, I heard, this a rumour though, that Lands end will move out of the bottom level into a free standing store in Burlington. ALso you have this BUrlington sears listed under an active real estate lisitng for 60,000 square feet on lower level. So another reason to think no optical.
    (the 2 malls I reference are high class malls with Nordstroms, Neimans etc.)
    What do you think?

    1. Interesting, thanks for sharing. Obviously I do not have any knowledge as to what the plans are for the Optical location, but I would point out that the drawings for the Burlington Sears redevelopment include multiple spaces embedded in the existing Sears. If Luxottica wanted to keep the location, they could use one of those dedicated spaces for it. Do you know roughly how many square feet the typical Optical store uses?

      As for Lands End, it also makes sense that they could move into their own dedicated space at the Burlington mall, perhaps also in one of the smaller carved out spaces that is proposed on the leasing drawings. All very interesting. Please do keep me posted as you learn more. Thanks!

  7. Hi,
    I believe Burlington Lands End is going across the road to a new open air marketplace type shopping compound with some high end stores. This is not confirmed though.
    With Feb 9th fast approaching, the LUX regional is now saying that Burlington and Braintree Sears and LUX are arguing over who pays for the moving of the optical downstairs in Sears, and that’s why we aren’t on the blueprints. I find this amusing as I am sure it is all spelled out in the lease agreement, and they are stalling us. The amount of lease a Sears Optical pays is a very small % based on volume of maybe $450,000, in other words its not much compared to the rent they can get from Primark etc. or a well selling appliance. I would say the opticals are about 1000 sq ft. at the most.
    Miracle ear was taken over by Beltone, in New England anyway, inside the sears, and the Burlington Beltone has been told they are closing and not moving downstairs. The Peabody Beltone is down to 2 days a week of staff. They are not doing well at all, whereas the freestanding hearing aid centers are doing great.
    The Sears where I work in Peabody, which is a very nice looking store, well stocked, has had much lower traffic lately, so bad that the higher ups from corporate Sears made an emergency visit last week. (another higher end mall). But the only floor of my 3 level sears accessible to the mall is the middle level, so my sears is not so easy to rent out a floor to Primark for example.
    I have also been hearing for about a year that Dicks Sporting is going to Rockingham Mall Sears in Salem NH but I have not seen any confirmation of this.
    A store manager did hint to me that nothing much will come in general for big announcements from Sears, until February. Upon asking him if my store was safe from closing, he said well at least one more year.
    As far as Burlington Sears optical going in to one of those for lease spaces shown by Atlantic Realty, I doubt they would pay such high rent that those spaces would require. I know by the lease they need to give at least 30 days notice to the optometrist, so I should know the answers soon. Not that the optical means anything to Sears investors but I think its a clue as to where Sears is heading, and what LUX thinks about Sears.
    I am just appalled that no one from either company can speak the truth if people are losing their jobs or not in 7 weeks time.

  8. Kmart in Huntsville Alabama 104, 000 square ft plus 8000 square ft pad, Chad do you have record of this being owned by SHLD?

  9. I noticed atlantic realty has taken the burlington mall sears listing off their listing page. The town has approved a new fancy sign with a new stone front on the sears building in anticipation of primark arriving upstairs. The optical is moving downstairs near package pickup but the clearing of the floor has been delayed a few months. Something with Simon mall not approving some changes.

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