01 December 2014 (13:53 UTC-07 Tango)/08 Safar 1436/10 Azar 1393/11 Bing-Zi 4712
Sears Canada’s 3rd quarter 2014 report showed Sears is actually being paid to shutdown stores.
Sears Canada (hand in hand with Sears Holdings) administrators have been making deals with property owners to essentially ‘buyout’ the leases on Sears stores, so they can be shutdown. The lease buyouts, called by Sears a “Gain on lease terminations”, makes money for Sears because it’s the landlords who pay “for the right” to shutdown Sears: “Yorkdale Shopping Centre (Toronto) and Square One Shopping Centre (Mississauga). The landlords approached the Company with a proposal to enter into a series of lease amendments for a total consideration of $191.0 million, being the amount the landlords were willing to pay for the right to require the Company to vacate the two locations.
…The transaction resulted in a pre-tax gain of $185.7 million…
The Company also granted the owners of the Scarborough Town Centre (Toronto) property an option to enter into certain lease amendments in exchange for $1.0 million….”
Sears is also making money off selling off their other properties: “…the Company announced that it had reached a definitive agreement with Montez Income Properties Corporation (‘Montez’) to sell its 50% joint arrangement interest in the eight properties it owned with the Westcliff Group of Companies (‘Westcliff’) for cash consideration of approximately $315.0 million.”
“…the Company sold its 15% joint arrangement interest in Les Galeries de Hull shopping centre (‘Hull’) that it co-owned with Ivanhoé, to Fonds de placement immobilier Cominar (‘Cominar’) for total proceeds of $10.5 million…”
“…the Company sold its 20% joint arrangement interest in Kildonan Place Shopping Centre (‘Kildonan’) that it co-owned with Ivanhoé, to H&R Real Estate Investment Trust for total proceeds of $27.7 million…”
“…the Company sold its 15% joint arrangement interest in Les Rivières Shopping Centre that it co-owned with Ivanhoé Cambridge II Inc. (‘Ivanhoé’) for total proceeds of $33.5 million…”
Sears Canada also warned that “…the Company determined that the Montreal distribution centre (‘MDC’) may be considered for disposition.” That means it’s going to be sold off.
Also, “…Broad Street Logistics Centre located in Regina (”Broad Street”). Broad Street, including the adjacent vacant property which is owned by the Company, is being marketed for sale…”
Despite selling off half a dozen properties, Sears Canada also revealed it was building new Sear stores: “…the Company announced that it entered into a binding agreement with Concord Pacific Group of Companies (‘Concord’) to pursue the development of the 12-acre Sears site located at the North Hill Shopping Centre in Calgary, Alberta (the ‘North Hill Project’).”
“…the Company announced that it entered into a binding agreement with Concord to pursue the development of nine acres of the Company’s property on and adjacent to the Company’s store located at the Metropolis at Metrotown in Burnaby, British Columbia (the ‘Burnaby Project’).”
Sears Canada also blamed the almighty U.S. dollar for part of its problems: “The Company enters into foreign exchange contracts to reduce the foreign exchange risk with respect to U.S. dollar denominated assets and liabilities and purchases of goods or services.”
In the United States, Sears Holdings announced it will reveal its Third Quarter 2014 results during the morning of 04 December.
Sears & Kmart closing update, 22 November 2014
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