KMart makes a funny commercial

With cutting edge commercials like this, they might make a solid comeback. I'm going to adjust our models to treat them a little more favorably as tenants.

ESL to sell off Land's End?

RetailTrafficMag noted an article in the NY Post stated they were expecting to shop it through Goldman Sachs and targeting a $2billion valuation.

The best part of the article is the picture (below) of Lampert doing his Daffy Duck impression.

Come See the Softer Side of Sears

The WSJ reports that yesterday (I totally missed it) Big Ed announced they'd jettison the real estate - a drunk hobo nearby reportedly overheard him say, "If only I had thought of this 6 years ago!".

Sears is selling 11 stores to General Growth Properties Inc., the company that owns the malls they anchor, for $270 million. Sears also intends to raise $400 million to $500 million through a rights offering, spinning off a company that will control roughly 1,250 small but profitable franchised stores that sell Sears products.

For the remaining 2,000-ish stores:

executives offered few new specifics about their plans for Sears over the next couple of years, reiterating their intention to use technology to revive the fortunes of the more than 2,000 remaining Sears and Kmart stores.

Phew, technology will save them. Glad they covered that one /end sarcasm.

They also are verbally stating that a Land's End sale is not off the table, the one piece of the pie that my wife is convinced has any value at all (she bought me a nice sweater and button up shirt from Land's End for Valentine's Day, reaffirming that we are, in fact, old and prudish). I like the real estate play - there is value there - but the timing is off.

Sears for sale?

There are so many options with Sears headlines: The Good Life at a Great Price. Guaranteed. Come See the Softer Side of Sears, Blue Light Special, etc.

Anyway, we noticed over in Traffic Court that there are purportedly "rumors" going around that it is for sale...

Whoever buys Sears would likely do so for the value of its real estate rather than for the value of its retail brand, given that the company owns properties in many of the nation’s oldest and best malls.

Blue Light Special - Sears Closing List

I like Eddie Lampert. I want him to win. How can you not like the story of how he got to where is, well, at least up until about 2003-ish when he bought K-Mart, followed a year later by the Sears acquisition. In all fairness, he quickly shuttered hundreds of stores and turned the new company into a cash cow in the short-term, but ever since the stores have allegedly (I haven't been in a K-Mart since at least 1995, and not in a Sears since at least pre-9/11 - if ever) suffered from a lack of adequate CapEx and ever-changing leadership. Never mind that the retail environment is just tougher today than it was a few years ago.

Then he missed an opportunity to capitalize on the value of the real estate at the peak of the market. Even in back in '04 when the Sears merger was underway, splitting the company into an OpCo/PropCo strategy where you would split the retailer into a Real Estate company (and leverage it up with CMBS debt) and an Operating Company made a lot of sense. The debt likely would have been fine today as well, given that they would have signed some long-term leases (of course, the OpCo may be stuck with lease payments if it shuttered 120 stores...). Within a few months, KKR/Bain/Vornado were divvying up ToysRUs in precisely the same manner.

Well, I'm still rooting for the guy. He announced over the break that they're closing 100-ish stores and they released a list of 80 closures in the last couple of days. They're list is in a PDF and doesn't copy out cleanly, so I pasted a complete list at the bottom of this for anyone who wants it.

CMBS Exposure - Please note that this is not an attempt to be a thorough or complete list, just a quick snapshot. There is a HIGH probability that there are some missing or incomplete data in the list below. The analysis simply consisted of pulling every property with a tenant with a name like "%Sear%" or "%K%Mart%" and matching against ZIP codes on their closure list (Zip codes change, Annex A's misspell stuff, etc.):

Deal	Loan Name	Loan Status	PCT of Deal
MSC 2007-IQ14	Ershig Mall Portfolio	Perform(w)	0.83%
GMACC 2004-C2	Shoppes at St. Lucie West	Grace(w)	2.06%
MSC 2005-IQ10	69th Street Philadelphia (I)	Grace(w)	4.43%
JPMCC 2006-CB15	Lightstone Portfolio	Del 90+ ss	3.31%
MSC 2005-T17	Coventry Mall	Del 30 ss	9.26%
CSFB 2002-CKN2	Crystal River Mall	REO	4.16%
MCFI 1996-MC1	Kmart/Rocky Mount	REO	100.00%
BACM 2005-6	Island Walk Shopping Center	Perform(w)	0.50%
WFDB 2011-BXR	BXR Loan	Perform	100.00%
CSFB 2001-CKN5	Manhattan Plaza	In Foreclosure	2.45%

In the table above, the formatting kept cutting off columns - if you'd like the complete mapping of columns shoot me an email at credarkspace@gmail.com

Full Closure List (Source)


Also, CRE Console put together a little map using one of my favorite free online mapping tools here. Over at Retail Traffic, Elaine Misonzhnik postulates that the real estate may be in high demand at many of these locations.

2009 was a tough year for retail...

This summary is not available. Please click here to view the post.