New development opportunities are being explored for the Sears Holdings Corp (NASDAQ:SHLD) store that CBL & Associates Properties, Inc. (NYSE:CBL) recently acquired in a sale-leaseback transaction. Though the Sears store is still operational, it was recently acquired by CBL in a deal worth approximately $72.5 million. Two Sears Auto Centers and four Sears stores were also part of the transaction. CBL & Associates’ core business is developing and managing shopping centers and malls.
New lease of life
The new deal will give Sears leases of ten years. CBL can, however, terminate the leases at any time after serving a six-month notice. The only exception to this rule is that the termination cannot occur during the busy holiday shopping period occurring in the weeks between November and January. On the part of Sears, the retailer also now enjoys the flexibility of closing its store at Brookfield Square after only serving a six-month notice. This will be possible after the expiry of a two-year expiry period.
The new agreement now presents CBL with an opportunity to explore a redevelopment plan.
“It presents us with a unique opportunity to recapture prime real estate at Brookfield and redevelop it into a more dynamic and productive use,” said Stacey Keating, a spokesperson for CBL, in an interview with the Milwaukee Business Journal.
Store to remain operational
Despite the fact that CBL is seriously considering redeveloping the property, currently, there are no immediate plans to have the store close down. Consequently, the normal operations of the store will continue unhindered, according to the CBL spokesperson.
With regards to the redevelopment plans, CBL has been engaging with various players in the retail sector with a view to finding the best fit for the Sears site at the Brookfield Square Mall. In a rapidly changing retail environment, Sears has struggled to adapt. Among other measures, it has shut stores across the United States besides purging its fleet. This, however, presents an opportunity for CBL in that it can reimagine and redevelop the property into something that generates more value for shareholders and customers alike.
In Thursday’s trading session, shares of CBL & Associates Properties, Inc. fell by 0.85 percent to close the day at $10.47.
