Seritage Growth Properties

Seritage Growth Properties
Name	Seritage Growth Properties
Type	Public REIT (2015–2020)
Fate	Acquired by Brookfield Properties (2020–2021 spin/merge activities)
Founded	2015
Founder	Simon Koster, Steve Roth (related executives at Vornado)
Headquarters	New York City
Key people	Edward J. DeLuca, Michael J. Fascitelli
Industry	Real estate investment trust

Seritage Growth Properties is a former publicly traded real estate investment trust formed in 2015 to monetize a portfolio of retail parcels spun out of Vornado Realty Trust. The company assembled redevelopment rights from high-profile assets in Manhattan, Queens, Brooklyn, New Jersey, and suburban markets, pursuing mixed-use projects anchored by retail, residential, and office tenants. Seritage interacted with major retail and real estate actors including Sears Holdings Corporation, Macy's, Inc., Simon Property Group, Brookfield Properties, and institutional investors such as Blackstone Group and Goldman Sachs.

History

Seritage was created in 2015 through a spin-off transaction engineered by Vornado Realty Trust and announced amid restructuring at Sears Holdings Corporation and its affiliate Transform Holdco LLC. The spin-out reflected broader shifts following the 2011–2015 retail turmoil involving Kmart and Sears Roebuck and Co. assets and echoed precedents set by transactions involving Federal Realty Investment Trust and Equity Residential. In 2018–2020 Seritage pursued redevelopment agreements and joint ventures with developers such as Related Companies, L+M Development Partners, and Hines, while navigating market pressures from the 2019–2020 retail disruption and the COVID-19 pandemic. In late 2020 and 2021, consolidation trends involving Brookfield Asset Management and Brookfield Properties led to major portfolio sales, partial mergers, and asset-level dispositions, culminating in the winding down of Seritage as an independent listed entity.

Properties and Portfolio

Seritage's initial portfolio derived from properties originally owned by Sears and Kmart locations, many situated in shopping centers near assets owned by Vornado Realty Trust and other landlords like Taubman Centers and Macerich. Notable holdings included sites in SoHo, Upper West Side, Flushing, Queens, Staten Island, and suburban locations adjacent to Short Hills Mall-type centers and standalone urban corridors. The company pursued redevelopment of former department store footprints into mixed-use schemes featuring partners such as Trader Joe's, Whole Foods Market, Nordstrom Rack, Tesla, Inc., and restaurant operators including Chipotle Mexican Grill and Shake Shack. Seritage employed leasing relationships with mall operators including Simon Property Group, Westfield Corporation, and neighborhood developers such as Forest City Ratner Companies.

Business Model and Strategy

Seritage's business model combined a real estate investment trust structure with an opportunistic redevelopment playbook similar to value-add strategies used by Brookfield Asset Management and Blackstone Group. The company acquired long-term ground leases and redevelopment rights from Sears properties, then pursued entitlements, rezoning, and re-leasing to retail and residential partners including IKEA USA, Apple Inc., and fast-casual operators. Seritage deployed joint ventures and capital recycling techniques familiar to Goldman Sachs and J.P. Morgan Asset Management, structuring deals with developers like Related Companies and capital providers such as KKR and Apollo Global Management. The strategy sought to capture urban densification trends evident in New York City and other metropolitan areas while managing exposure to national retailers like Macy's and Nordstrom.

Financial Performance

As a publicly traded REIT, Seritage reported revenue streams from leasing, redevelopments, and property sales; its financial trajectory was influenced by macro events including the 2015–2016 retail downturn, the 2017–2019 e-commerce acceleration associated with Amazon (company), and the COVID-19 pandemic disruption of 2020. The company recorded periodic gains from parcel sales and joint venture contributions while facing occupancy and same-store rent pressures similar to peers such as Kimco Realty, Regency Centers Corporation, and Brixmor Property Group. Capital markets access involved equity transactions, secured financings with lenders like Wells Fargo and Bank of America, and negotiations with rating agencies including Moody's Investors Service and Standard & Poor's. Portfolio dispositions and a strategic sale to larger owners led to delisting and absorption-related accounting events.

Leadership and Governance

Seritage's executive leadership included board members and officers drawn from legacy real estate firms and former executives linked to Vornado Realty Trust and national developers. Governance structures reflected REIT compliance frameworks overseen by regulators such as the U.S. Securities and Exchange Commission and incorporated audit and compensation committees with oversight analogous to practices at Simon Property Group and Equity Commonwealth. Key leadership transitions involved executives who had prior roles at Vornado, SL Green Realty Corp., and advisory relationships with law firms and accounting firms including Skadden, Arps, Slate, Meagher & Flom and Ernst & Young.

Legal Issues and Controversies

Seritage's formation and operations intersected with contentious landlord-tenant disputes arising from the Sears restructuring, litigation over lease interpretation, and negotiations with creditors including Sears Holdings Creditors Committee and bondholders associated with Transform Holdco LLC. Controversies included accusations by community groups and local elected officials in New York City and suburban municipalities concerning rezoning, demolition permits, and the displacement of longtime retail tenants—matters similar to disputes involving Related Companies and Forest City Ratner Companies. Regulatory and securities inquiries touched on disclosure practices during the spin-off and subsequent asset sales, echoing scrutiny faced by other REIT spin-offs such as Gaming and Leisure Properties, Inc. and Extra Space Storage in different contexts.

Category:Real estate investment trusts Category:Companies established in 2015