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Real estate investment trusts

Sears Completes Major Real Estate Transactions, Generating $2.3 Billion in Proceeds

Strategic Insights

— 1 min read

Sears, Roebuck and Co. has completed the sale of its Homart Development Co. unit, a major real estate transaction that generates $2.3 billion in gross proceeds. The move marks a significant step in the company's repositioning strategy, which began in November 1994. The transaction eliminates approximately $1.75 billion in debt and provides Sears with net proceeds for future growth strategies.

Key Takeaways:

  • Sears sells Homart Development Co. unit to General Growth Properties, Inc. (GGP) for approximately $2.3 billion in gross proceeds.
  • The transaction eliminates about $1.75 billion in debt and provides Sears with net proceeds for future growth strategies.
  • General Growth assumes ownership of Homart's interests in 26 regional malls, two malls under construction, five community centers, five community centers under construction, and various stages of development.
  • Morgan Stanley real estate funds acquire approximately $4 billion in various classes of real estate, including office, industrial, retail, hotel, multi-family, and land assets.
  • Hines Interests Limited Partnership, a major real estate developer and owner, acquires a portfolio of 15 Class A office buildings with 4.5 million square feet.
  • The transaction includes a diverse range of properties across the United States, including malls, community centers, and office buildings.
  • Sears chairman and chief executive officer, Edward A. Brennan, states that the transaction completes the company's repositioning strategy, leaving the new Sears with the strongest balance sheet in the company's modern history.

Statistics:

  • Gross proceeds: $2.3 billion
  • Debt elimination: approximately $1.75 billion
  • Number of regional malls: 26
  • Number of community centers: 5
  • Number of office buildings: 15
  • Square footage: 4.5 million
  • Total real estate assets acquired by Morgan Stanley: approximately $4 billion

Sources:

  • PRNewswire, "Sears, Roebuck and Co. Announces Agreement to Sell Homart Development Co. Unit" (July 31, 1995)
  • General Growth Properties, Inc. (GGP)
  • Morgan Stanley Group, Inc. (MS)
  • Hines Interests Limited Partnership

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