DOWN TO BUSINESS: Seritage shareholders OK plan to sell portfolio piecemeal

Colonie Center's former Sears store is seen on June 22, 2017.
PHOTOGRAPHER:
Colonie Center's former Sears store is seen on June 22, 2017.

DOWN TO BUSINESS – The former Sears store at Colonie Center is getting closer – maybe – to a new lease on life.

Shareholders of owner Seritage Growth Properties approved a plan in late October to allow piecemeal sale of the company’s real estate portfolio, which includes 150 retail, residential and mixed-use sites in 32 states.

The whole shebang also could be sold, but since that has proven elusive so far, the Manhattan-based company asked shareholders in September to give management a thumbs up to sell properties individually, without the necessity of their okay, in order to streamline the dealmaking.

Sales already were occurring at a good clip before then, as developers staked out former Sears and Kmart sites for redevelopment. A part-owner of the NBA’s Miami Heat, for instance, bought a retail property from Seritage in North Miami for $38 million last month, according to media reports, following a $28 million deal over the summer for another Seritage property.

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Created in 2015 to become landlord to Sears and Kmart to aid the ailing retailers, Seritage now holds the once-ubiquitous stores’ real estate remnants.

The company hatched a plan with a new chief executive last year to renovate and re-tenant many of the sites, but that was slow going. Meantime, Seritage faced a big bill coming due next summer: a $1.6 billion term loan from Warren Buffett’s Berkshire Hathaway.

Seritage has been paying that down – most recently by $100 million in August and $180 million in October – with an eye toward reducing the debt to $800 million by July 2023 to trigger a two-year extension.

Hence the proposal that shareholders approved at Seritage’s Oct. 24 annual meeting, which not only was meant to speed individual property sales but also to wind down the entire company after all assets are sold and liabilities are paid off. Shareholders could see a return of $18.50 to $29 per share from potential total gross sale proceeds of $2.8 billion to $3.5 billion, the company says.

At Colonie Center, Seritage owns 20 acres that include the former two-story Sears store, which has been vacant for five years, and a lot of surface parking. An outparcel that once was a Sears Auto Center was redeveloped for five tenants, and a portion of the main store was walled off and leased to Whole Foods for a supermarket.

The site, separately owned but part of Colonie Center, is a “featured property” on the website of Trinity Realty Group of Colonie, where it’s marketed as the Shops at Colonie Center.

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Touted as being located “along the Capital Region’s ‘miracle mile’ on Wolf Road,” the 10 pages of marketing materials include maps, site schematics and demographic data that lists the trade area with an estimated population of 1.03 million and estimated average household income of $92,400.

A broker for the firm did not respond to my inquiries about the property.

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]

Categories: Business, News, News, Opinion, Opinion, Schenectady County

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