CBL & Associates Properties, Inc. is proactively buying up Sears anchor boxes at its malls in order to quickly convert them to new uses if the troubled department store chain continues its downward spiral.
The Chattanooga-based REIT announced that it has closed on a sale-leaseback transaction for five Sears department stores and two Sears Auto Centers located at CBL malls, providing CBL with control of these locations for future redevelopment.
CBL has acquired the locations for a total consideration of $72.5 million. Sears will continue to operate the department stores under new 10-year leases. Under the terms of the leases, CBL will receive aggregate initial base rent of approximately $5.075 million, with Sears also responsible for paying common area maintenance charges, taxes, insurance and utilities.
CBL will have the right to terminate each Sears lease at any time (except November through January), with six months’ advance notice. In addition to CBL’s termination right, after a lock-out period of four years for the Sears store at Jefferson Mall, two years for the other four Sears stores and one-year for the two Sears Auto Centers, Sears may terminate each store lease upon six months’ notice. Upon termination by either party, Sears has the option to relocate its operations at each mall to a location of up to 15,000 square feet.
“We are pro-actively transforming our market-dominant shopping centers to meet the changing preferences of consumers. This transaction provides CBL with the opportunity to redevelop prime real estate and attract exciting new uses at some of our best shopping centers,” said Stephen Lebovitz, president & chief executive officer. “The leaseback of the real estate by Sears will generate income to CBL and gives us control over the timing of closures while we finalize our redevelopment plans at each location.”
The five locations acquired include the Sears’ parcels at Cross Creek Mall in Fayetteville, North Carolina; Brookfield Square in Brookfield, Wisconsin; Hamilton Place Mall in Chattanooga, Tennessee; Eastgate Mall in Cincinnati, Ohio; and Jefferson Mall in Louisville, Kentucky. The two acquired Sears Auto Centers are located at Northgate Mall in Chattanooga, Tennessee, and Volusia Mall in Daytona, Florida.