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Sears Considers Sale-Leaseback to REIT Seritage

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  Published in Media and Entertainment on Saturday, March 14th 2026 at 17:44 GMT by WSOC
      Locales: Michigan, Ohio, Pennsylvania, Illinois, UNITED STATES

Chicago, IL - March 14th, 2026 - Sears, the once-dominant department store chain, is reportedly exploring a drastic measure to stave off further decline: selling off its real estate assets to its affiliated real estate investment trust (REIT), Seritage Growth Properties, and simultaneously leasing those same properties back. This unconventional strategy, first reported by the Financial Times and confirmed by sources close to Transformco - the parent company of Sears and Kmart - represents a significant attempt to address the company's ongoing financial struggles and maintain a physical retail presence.

The situation at Sears has been precarious for years. Plagued by declining sales, fierce competition from online retailers like Amazon, and a failure to adapt to changing consumer preferences, the company has steadily closed stores across the nation. While bankruptcy was narrowly avoided in 2018 with a restructuring plan spearheaded by Eddie Lampert, the underlying issues remain. The company continues to operate with a significantly reduced footprint, and questions about its long-term viability are constantly raised.

This proposed sale-leaseback arrangement involves Transformco offloading some of the approximately 260 Sears and Kmart stores currently owned by Seritage. Seritage, also headed by Lampert in his role as Chairman of Sears' board, would then be responsible for redeveloping or repurposing these properties, potentially attracting new tenants or mixed-use developments. Sears, in turn, would continue to operate stores within these locations under a lease agreement with Seritage.

The logic behind this move is multifaceted. For Transformco, it represents a crucial opportunity to free up capital tied up in real estate, reducing liabilities and providing much-needed liquidity. The funds generated from the sale could be used to invest in areas like online shopping platforms, supply chain improvements, and potentially, store renovations - if any stores remain profitable enough to warrant them. Shedding the ownership burden also removes the costs associated with property maintenance, taxes, and potential depreciation.

For Seritage, the deal is a continuation of its established business model. The REIT has actively been transforming former Sears and Kmart locations into more profitable ventures, including mixed-use properties featuring retail, entertainment, and residential spaces. However, the pace of redevelopment has been slow in some instances, and a significant influx of properties could strain Seritage's resources and potentially lower the overall value of its portfolio if profitable tenants aren't secured quickly. The REIT's success is intricately linked to the revitalization of these often-underperforming properties, and the pressure to deliver results will be immense.

This isn't the first time Lampert has employed a sale-leaseback strategy. During his tenure at Sears Holdings, similar transactions were utilized to raise capital. While these maneuvers provided short-term relief, they were often criticized as being merely delaying tactics that failed to address the fundamental issues facing the business. Critics argue that relying heavily on lease agreements ultimately transfers wealth from the operating company (Sears) to the real estate entity (Seritage), both of which Lampert controls, creating a potentially unsustainable cycle.

The bigger question remains: can this strategy truly revitalize Sears as a viable retail competitor? Simply transferring ownership of the real estate doesn't address the core problems of outdated store formats, lack of compelling merchandise, and the shift towards online shopping. While a modernized, omnichannel approach is critical, implementing such changes requires substantial investment and a clear understanding of the evolving consumer landscape. Some analysts suggest that Sears may need to dramatically reduce its store count, focusing on a smaller number of flagship locations and niche markets to survive.

The deal, still in its early stages of negotiation, faces potential hurdles. Securing favorable lease terms, attracting new tenants to redeveloped spaces, and managing the complex logistics of transitioning ownership are all significant challenges. Moreover, the market's reaction to another major restructuring at Sears remains to be seen. The future of Sears remains uncertain, but this sale-leaseback arrangement represents a gamble - a desperate attempt to breathe life into a struggling retail giant.