Sears Spinoff Seritage Looks To Unload Assets To Pay Creditor Warren Buffett

Sears spinoff Seritage Growth Properties plans to sell a 38-property portfolio to pay down $640M that the company owes investor Warren Buffett, CoStar reports.

The company tapped CBRE to facilitate the sale, which will involve mostly multitenant retail assets, according to CoStar.

As of the end of the first quarter, Seritage held a portfolio of interests in 161 properties totaling about 19M SF. The company also owns about 600 developable acres.

In Q1, the company approved a plan to terminate its REIT status and become a taxable C corporation, effective at the end of 2022.

Afterward, the company will no longer be required to operate under REIT rules, including the requirement to distribute at least 90% of REIT taxable income to its stockholders. 

Buffett's Berkshire Hathaway has been Seritage's major creditor since setting up a $2B loan facility in 2018, with the goal of facilitating its transformation from a company that mostly held retail — many of whose tenants were Sears and Kmarts — into a more diversified real estate company.

New York-based Seritage no longer has any former Sears or Kmart sites. Earlier this year, it was reportedly considering selling itself.

The company seems to have opted for asset sales instead. Since 2017, the company has raised about $1.5B in cash from the sale of wholly owned properties or joint venture interests in 123 properties, plus outparcels at various properties. 

Seritage is marketing over $700M of properties for sale, according to its first-quarter report, which the company says would provide sufficient proceeds to qualify for the extension of its loan facility.