Blue Light Special: Seritage Considers Selling Itself

In mid-2015, Seritage Growth Properties (NYSE: SRG) was formed to buy hundreds of Kmart and Sears stores. Unfortunately, Sears Holdings' rapid downfall, budget constraints, and the impact of the COVID-19 pandemic on demand for retail space sabotaged Seritage's efforts to gradually replace Sears and Kmart stores with higher-paying tenants. As of the middle of 2021, Seritage's portfolio was just 28% leased.

Over the past year, new CEO Andrea Olshan has attempted to reset Seritage's strategy to focus on a much smaller number of redevelopment opportunities. But while this strategy shift represented a step in the right direction, it didn't fix Seritage's biggest problems: rapid cash burn and a high debt load. As a result, Seritage announced last week that it launched a "review of strategic alternatives."

Just a few years ago, Mr. Market was enthusiastic about Seritage Growth Properties' prospects. However, in addition to Kmart and Sears closing all of their stores in Seritage's portfolio over the past few years, several other key tenants ran into trouble and leasing activity stalled out during the COVID-19 pandemic.

Source Fool.com