ZOMBIE HELL
They’re the retail leases that just refuse to die!!!
They’re dark, they’re full of junk, they lose money — and they’re finally off the books.
Sears, which filed for bankruptcy on Monday, had quietly been paying rent on more than 200 Sears and Kmart locations that it had already shut down and abandoned, according to court documents reviewed by The Post.
That’s in addition to the 142 unprofitable stores that Sears said it will close by year-end as it scrambles to avoid a liquidation that could end the company’s 125-year run as one of America’s most iconic companies.
Hedge fund tycoon Eddie Lampert, who gave up his role as chief executive on Monday, is still looking to save 300 or so stores to operate beyond the holidays, out of about 700 that were operating as of Monday. The fate of another 250 or so stores will be determined early next year, sources said.
Meanwhile, according to court papers, Sears has handed over the keys and alarm codes to landlords for 217 already-shuttered properties on Monday.
“That’s an astounding number of stores,” said a restructuring expert, who did not want to be identified but who had expected the number of defunct stores to be between 50 and 75.
It’s not clear how long the stores had been shuttered or how much the company had been shelling out each month for each ghost store, but Sears described the leases as a “financial and unnecessary burden” in the filing.
A Sears spokesman declined to comment.
Adding insult to injury, Sears asked a judge for permission to abandon its unsold inventory, fixtures, furniture and other equipment still inside the abandoned stores to save money on dumpsters and other waste management services.
As reported by The Post, Waste Management National Services had expressed concerns in court on Monday that Sears might not have enough cash left to pay for its services when it’s ready to close stores at the end of the year.
The vast majority of the leases are up within the next several years, but some 15 expire after five years or much longer, including two that extend through 2046 and 2054.
“It used to be that in bankruptcy, companies tried to sell their leases to get some value,” said real estate lawyer Joshua Stein, “but Sears has made a judgment that these leases were so bad that they wouldn’t try to flip them.”
In some cases, Sears explained, the leases would be unattractive to another tenant because the rents were above market.
The dud locations mark an ironic end to Sears and Kmart under Lampert, who began his tenure by scooping Kmart out of bankruptcy in 2003 for $800 million, then quickly selling 70 Kmart locations to Sears and Home Depot for $900 million.
In 2015, Sears sold more than 200 Sears stores for $2.7 billion to Seritage Growth Properties, a REIT in which Lampert is the majority shareholder.