Sears is continuing to sell its assets in order to survive. The retailer plans to sell 254 properties to a real-estate investment trust in order to raise $2.5 billion. The REIT, Seritage Growth Properties, will then lease the properties back to Sears, and offer stock options to existing shareholders. In order to raise an additional $165 million, Sears will give 12 properties to a 50-50 joint venture with General Growth Properties.
After last year’s attempt to raise cash with their decrease of stake in Sears Canada and their spinoff endeavor of Land’s End clothing, this year’s REIT transaction will give Sears essential cash funding. At the end of their previous fiscal year, Sears maintained $1.6 billion in negative free-cash flow, which left them with only $250 million in cash. Although the company still has room to downsize in order to raise money, Sears will have to start selling more in their stores and less of their assets if they want to thrive as a retailer.