More than two years ago, Seritage Growth Properties, which owns the former Sears space at Colonie Center, embarked on an aggressive plan to sell off excess real estate in order to focus on holdings where redevelopment into topline retail, office and residential uses made the most sense.
Months later, though, that plan was amended so that Seritage’s entire real estate portfolio of former Sears and Kmart properties nationwide was for sale, from forlorn stores, to one-time mall anchors, to coveted sites where renderings anticipated office towers, hotels, condos, boutique shops and small parks.
How’s that going?
As of year-end 2023, Seritage still had a stake in 32 properties, down from 160 two years earlier, according to the annual report filed with regulators this month. And whereas Seritage once had 10 properties in New York, it’s down to just the Colonie Center Sears space and associated acreage, as well as an interest in a mall joint venture in Rockland County.
Seritage sold off 68 properties last year, the company said, using a chunk of the gross proceeds to pay down debt tied primarily to a $1.6 billion term loan from Warren Buffett’s Berkshire Hathaway. That debt is now a more manageable $330 million.
Some of the remaining Seritage properties have buyers in the wings, CEO Andrea Olshan noted in a news release on the 2023 results. Others have “important hurdles” to overcome or “specific objectives” to meet “prior to launching these assets for sale,” she stated.
Where the former two-story Sears store at Colonie Center stands in that scheme is unclear.
Last year, you may recall, retailer Floor & Decor took 57,000 square feet of first-floor Sears space next to Whole Foods, which had located in 34,000 square feet years earlier that was carved out while Sears still operated there.
Another new tenant, Sierra, an outdoors apparel and gear sibling to TJ Maxx and Marshalls, is expected to fill much of the remaining 22,000 square feet on the first floor. But the entire 94,000-square-foot second floor remains empty.
Seritage did not respond to emailed questions sent to its public relations firm about the 2023 annual report and accompanying news release. “[T]he company has nothing to add here,” a representative replied.
The release acknowledges that commercial real estate as a whole “continues to experience challenging market conditions” that have applied “downward pricing pressure,” which is affecting decisions by Seritage on “whether and when to transact on each of the company’s remaining assets.” In turn, that could affect what shareholders eventually see from the sales.
A curious reference by CEO Olshan in the release indicates that with the ongoing sales, “We have a line of sight into a significantly more simplified portfolio of primarily premier development sites in prime markets” that, along with other financial efforts, “may position the company for potential strategic transactions as an alternative to continuing our plan of sale.”
My emailed question on whether that signals a new tack remains.
