Sears Holdings’ rejection of Seritage master lease effective March 12

By Caroline Salls

Pittsburgh, March 18 – Sears Holdings Corp.’s rejection of its master lease with Seritage Growth Properties subsidiaries Seritage SRC Finance LLC and Seritage KMT Finance LLC took effect on March 12, according to an 8-K filed Monday with the Securities and Exchange Commission by Seritage Growth Properties.

The lease rejection was approved by the U.S. Bankruptcy Court for the Southern District of New York as part of Sears’ Chapter 11 proceedings.

Seritage said the master lease had an initial term of 10 years, with three options for five-year renewals of the term and a final option for a four-year renewal.

As of Dec. 31, the annual base rent paid directly by Sears under the 2015 master lease was $52.7 million.

Seritage said Sears had provided notice by Dec. 31 that it intended to exercise its right to terminate the master lease for 87 stores, with a total annual base rent of $40.7 million.

Sears paid rent on those stores until they were vacated and paid a total of $77.3 million in termination fees, the 8-K said.

Sears is a retailer based in Hoffman Estates, Ill. The company filed bankruptcy on Oct. 15, under Chapter 11 case number 18-23538.

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