Sears Seeks Offers on Stores Lampert Needs for Turnaround

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(Bloomberg) -- Sears Holdings Corp. is shopping around its stores, looking to gauge what they’re worth in the open market while it weighs Chairman Eddie Lampert’s $4.6 billion bid to buy the entire chain and keep it open.

The firm has hired real estate firm Jones Lang LaSalle Inc. to market its portfolio of about 500 U.S. stores and so far has seen high interest in major markets, according to people with knowledge of the matter. Bids have come in from retailers and mall owners, and other parties are interested in potentially converting stores for non-retail use, said the people, who asked not to be identified discussing the private plan.

Strong prices could complicate Lampert’s effort to buy Sears if it turns out the chain is worth more dead than alive to its creditors. The company has struggled to line up support from lenders and suppliers to keep its doors open after filing for bankruptcy in October, with liquidation seen by some analysts as increasingly likely.

Burlington Stores Inc., At Home Group Inc., Dick’s Sporting Goods Inc. and U-Haul are among those that have expressed interest in some Sears properties, along with potential buyers interested in converting stores into residential or office space, one person said.

Naveen Jaggi, president of retail and brokerage services at JLL, confirmed that his firm had been hired by Sears to market the portfolio. Representatives for Sears and ESL Investments, Lampert’s hedge fund that’s backing his takeover plan, declined to comment. M-III Partners, Sears’s restructuring adviser, also declined to comment.

Quality Offers

The Sears bankruptcy filing listed 687 retail stores in 49 states plus U.S. territories under the Sears and Kmart banners. Lampert’s bid would cover about 500 stores, the company headquarters and distribution outlets.

JLL was hired to generate buyer interest in the retailer’s stores, but it hasn’t been asked as of last week to take part in any liquidation process or facilitate negotiations, the people said. Nevertheless, there is real interest from Sears in generating quality offers that compete against Lampert’s, they said.

Sears has asked parties bidding on multiple stores to include their offers for each individual asset, rather than just one price for all the locations they want, said the people. One consortium made a bulk offer without such details and was notified of the rules, they said. Suitors have until Dec. 28 to submit their proposals.

Sale Scenarios

Selling certain locations wouldn’t necessarily undermine Lampert’s bid, and could provide much-needed cash to keep the rest of the chain running. Stores in New York or Los Angeles, for example, might be highly valued, so it may make more sense to sell them than to keep them operating. It’s possible that Sears will end up disposing of some stores, or keeping portions of certain buildings and chopping up the rest for alternate uses.

Burlington expects to “take a piece of a building and somebody else will take another piece of the building and they’ll divide it up,” Chief Executive Officer Thomas Kingsbury told investors during the chain’s third-quarter earnings call. “Kmart is probably more of an opportunity for us because they’re in very good locations,” Kingsbury said. “We’d have to carve up the box based on the current size of our boxes we desire.”

U-Haul is working to acquire Sears and Kmart properties in a “bundle deal” for uses that could include indoor climate-controlled self-storage, retail showrooms and depots for truck and trailer rentals, according to an emailed statement. “We look forward to continue working with them in hopes of getting approval from the bankruptcy court for this transaction,” said spokesman Sebastien Reyes.

Representatives for Dick’s and At Home didn’t provide an immediate comment.

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