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Sears Holdings Corp (NASDAQ:SHLD) And Simon Property Form Joint Venture

In order to expand the reach and overcome financial losses, Sears Holdings Corp (NASDAQ:SHLD) has decided to sign a JV agreement with Simon Property. As per the reports, this joint venture between struggling retailer Sears and mall owner Simon is expected to help the former coming out of its miserable financial situation.

Insights On The Announcement:

It’s not the first time that Sears has entered into a deal like this. As per the reports, the company announced a similar deal with General Growth Properties a few days back. The prime objective of this deal was to explore the prevailing market opportunities in the world. General Growth Properties is the second largest mall owner in the country after Simon.

The retailer has contributed with ten properties in this joint venture, which are collectively valued at $228 million. Sears Holdings Corp (NASDAQ:SHLD) looks forward to leasing back those properties that are located at Simon Malls. In order to make sure that this joint venture becomes a hit, Simon Property has invested $114 million in cash in this deal.

As soon as the announcement was made public, the shares of Sears Holdings surged 2% while Simon’s shares remained inactive.

Road Ahead:

The joint venture is a part of Sears’ plans to raise around $2.5 billion by executing spin-off transactions with the best 254 properties that it owns. As per the reports, the spin-off deal is to be executed with the help of Seritage Growth Properties, a separate real estate investment trust. Sears is looking forward to putting stores from Seritage on lease.

This move is an ideal chance for all the shareholders of the company including its Chief Executive Officer Edward Lampert┬áto buy company’s assets for raising cash. The company has witnessed huge loss during the last few months, and if the current transaction is executed as per plans, then it can easily recover from the existing situation.

Published by Steve Hackney

Steve Hackney is a corporate finance professional with over 14 years of experience in cash management and investing. He earned a Bachelor of Science in Finance from Florida State University and holds a Certified Treasury Professional certification. Steve lives in Orlando, Florida with his family.

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