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In a move to strengthen a struggling company, Sears has reorganized into 5 major units. The interesting point for us is that there will be a real estate unit. Speculation is that the company will be selling off some if not all of it’s 765 company owned stores.

While this strategy would have been great a year ago when commercial real estate was booming, now we are in a very different market. Many of the Sears and KMart stores that are company owned are in not the best areas. These properties may have been accepted as part of a deal in a red hot market, but today they will be seen as a liability.

Timing and Sears have not gone together since the 1970’s. The company has always seemed to miss the beat and lost traction in the market place. It looks like they have done so again with regards to their real estate holdings.

Even so, investors long have speculated that Sears’s chairman, hedge-fund manager Edward S. Lampert, may sell some or all of the roughly 765 company-owned Sears and Kmart locations to raise capital and then lease them back from the buyer. He had indicated he might do so if the struggling company’s value as a retailer fails to exceed that of its real estate.
The trouble is, the continuing credit crisis has sapped the value of residential and commercial real estate alike in recent months. Credit Suisse Securities estimates the value of Sears’ real estate has “declined materially” in recent months to nearly $4.7 billion. Sears’s market value was $13.74 billion as of yesterday’s close. In addition to its owned stores, the retailer leases 2,032 store sites and an additional 974 stores are owned and operated by independent companies. via WSJ.com (subscription site)

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