CBL is looking to redevelop the Sears sites at Hamilton Place mall and Northgate Mall.
CBL & Associates Properties, Inc. has bought the Sears Department store at Hamilton Place Mall and the Sears Auto Center at Northgate Mall as part of a $72.5 million purchase and leaseback deal involving seven Sears facilities at CBL malls in six states.
The Chattanooga-based shopping mall developer announced today that it is buying the Sears stores and auto centers and is leasing them back to the retailer under 10-year lease agreements. The purchase will provide additional equity for Sears and provide CBL with control of these locations for future redevelopment.
"We are pro-actively transforming our market-dominant shopping centers to meet the changing preferences of consumers," CBL President Stephen Lebovitz said in a statement today. "This transaction provides CBL with the opportunity to redevelop prime real estate and attract exciting new uses at some of our best shopping centers. 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."
Sears and its Kmart subsidiary have closed or announced plans to close 200 stores in the current fiscal year.
The five locations acquired by CBL include the Sears' parcels at Hamilton Place Mall in Chattanooga, the Cross Creek Mall in Fayetteville, N.C., Brookfield Square in Brookfield, Wisc., Eastgate Mall in Cincinnati, Ohio; and Jefferson Mall in Louisville, Kentucky. The two acquired Sears Auto Centers are located at Northgate Mall in Hixson and Volusia Mall in Daytona, Fla.
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.
Although CBL has developed and owns most of its 79 shopping malls, anchor tenants such as Sears own their sites at many of the retail properties.
After the announcement of the lease-back purchase of the Sears properties, shares of CBL were trading higher this morning on the New York Stock Exchange.