Seritage Considering Strategic Alternatives For Better Shareholder Value

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Seritage Growth Properties, the real estate investment trust that spun out Sears in 2015, underwent a major change in leadership and said on Tuesday that it was exploring “a broad range of strategic alternatives.”

Seritage, a national owner and developer of 170 residential, retail and mixed-use properties, announced that its chair, Edward Lampert, had retired effective immediately and that CEO Andrea Olshan, who assumed that role last year, would become chair. Aside from Lampert, board members David Fawer and Thomas Steinberg said they wouldn’t seek reelection.

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In anticipation of Lampert’s retirement, the real estate investment trust created a special committee of the company’s board of trustees to explore options aimed at reconciling the discrepancy between the firm’s hard asset values and its stock price, which traded for about $11 a share on Tuesday afternoon. 

“The board and management believe that there is an ongoing disconnect between the company’s stock price and net asset value,” Olshan said in a statement. “The opportunities for these underlying assets are extremely strong, and we believe that embarking on this process represents the most efficient way to unlock the full potential of this portfolio.”

The company has worked over the past year to diversify its tenant base as part of the strategic alternatives, Olshan said, by injecting high-quality tech office, life sciences and medical businesses into the mix. The committee retained Barclays (BCS) as its financial adviser for the restructuring effort.

“I have decided to retire to allow additional time to focus on my other investments and to provide me with greater flexibility to explore alternatives for my investment in Seritage, which could include participating with parties that may be interested in acquiring [a certain amount] of the company’s assets and trading shares in open market transactions,” Lampert said in a statement.

As of September 2021, Lampert owned 22 percent of the company’s shares and served as chair of Sears (while he was the CEO of Seritage) when it filed for bankruptcy. Seritage has said that it no longer has Sears and Kmart as major tenants.

Beyond personnel changes, inn late 2021,Seritage announced it would sell ​​the 11-acre site of the former Landmark Mall in Alexandria, Va., into which the REIT entered as a joint venture with Foulger-Pratt and the Howard Hughes Corporation. The trio sold the land to the city of Alexandria’s Industrial Development Agency for $54 million.

Mark Hallum can be reached at mhallum@commercialobserver.com.