Dealmaker: PREIT Repositions Portfolio Away from Sears, K Mart

Pennsylvania Real Estate Trust, Philadelphia, reached agreement with Sears Holdings, Hoffman Estates, Ill., to replace closing Sears and K Mart stores in three PREIT centers.

Sears Holdings announced in January that it will close 42 Sears locations and 108 K Mart stores by April.

PREIT CEO Joseph Coradino called the store “recaptures” an opportunity to drive more traffic to the centers and to create value. He noted that PREIT will add a 90,000-square-foot Von Maur department store and signed a lease with a fashion department store to replace the 313,000-square-foot Sears at Woodland Mall in Grand Rapids, Mich.

Founded in 1871 in Davenport, Iowa, Von Maur currently operates 31 stores in 14 states.

At PREIT’s Viewmont Mall in Scranton, Pa., Dick’s Sporting Goods, Field & Stream and HomeGoods will replace the former Sears store and an under-construction Whole Foods will replace a former K Mart anchor store at Exton Square Mall in Chester County, Pa.

Coradino said PREIT is finalizing lease documents with replacement tenants at the REIT’s Capital City and Magnolia Malls Capital City Mall near Harrisburg, Pa., Magnolia Mall, Florence, S.C.

Coradino noted that PREIT has reduced the number of Sears and KMart stores in its portfolio from 27 to 11 through dispositions and store recaptures.

The real estate investment trust has made a concerted effort since 2012 to reduce its exposure to select department stores. “Department store rationalization is a net positive for our industry,” PREIT said.