If you’ve wondered why the old two-story Sears space at Colonie Center still sits vacant, 4 1/2 years after the store closed, here’s the reason: It’s on a list of properties to be sold off by owner Seritage Growth Properties.
Seritage, a publicly traded real estate investment trust, or REIT, based in Manhattan, owes its existence to the store and others like it nationwide, which were bundled together in 2015, bought for $2.5 billion, and then leased back to Sears in an attempt to help the retailer stay afloat.
Today, Seritage has a stake in more than 160 properties, encompassing millions of square feet, on which it is aiming to “unlock the underlying value” through redevelopment. Its holdings no longer are encumbered by Sears leases.
Most of the real estate — like the 200,000 square feet available at Colonie Center — is owned directly by Seritage, although some two dozen properties are part of joint ventures involving big-name U.S. mall developers. (Colonie Center itself and the Macy’s anchor have their own separate owners.)
A year ago, Seritage named a new CEO, Andrea Olshan, a veteran commercial real estate developer and manager, who set about reorganizing the property portfolio by end use: multi-tenant retail; premier mixed-use; residential; joint venture retail.
In New York, where Seritage has 10 holdings, redeveloped former Sears stores in Huntington, Long Island, and at Eastview Mall, near Rochester, are now in the multi-tenant category. A 30-acre freestanding site in Hicksville, Long Island, is classified as premier mixed-use, with plans for apartments, retail, offices, restaurants, a cinema and green space.
But Olshan also established a fifth portfolio category, “non-core properties,” which numbered 63 as of Dec. 31 and includes the Colonie Center site and five other former Sears stores in New York. All “are being aggressively liquidated” to provide working capital for redevelopment of properties in the other four categories, says one investment professional.
“This is their capital-recycling program,” Matthew Peterson of Austin-based Peterson Capital Management told an investor group in a January presentation posted to YouTube that offered a deep dive into Seritage.
He characterized the REIT as “easily misunderstood” due to its high-cost debt, negative cash flow and lack of common share dividend, but praised Olshan and other new executives for their work so far.
“They’re not liquidating to simply keep the lights on; they have a long-term view of the strategic property set and they are strategically allocating capital to the highest … opportunities available,” he said.
Sale of the non-core properties, listed by street address in supplemental filings Seritage has made quarterly, including one on Tuesday, could yield $1 billion, Peterson contends.
Seritage declined comment this week on the Colonie Center space, the REIT’s plans to cull holdings, and whether the malls where former Sears stores once were anchors — Sears was an original tenant when Colonie Center opened in 1966 — could be potential buyers.
Marlene Kennedy is a freelance columnist. Opinions expressed in her column are her own and not necessarily the newspaper’s. Reach her at [email protected].