Even before COVID-19 decimated the U.S. retail industry, retail REIT (and Sears Holdings spinoff) Seritage Growth Properties (NYSE: SRG) was struggling to redevelop properties as fast as Sears and Kmart were vacating them. The pandemic has made what was already a tough task even more difficult.
Many of the new tenants that Seritage was counting on to replace income lost due to Sears and Kmart store closings temporarily stopped paying rent this spring. A few even went bankrupt or canceled previous expansion plans.
As a result, Seritage's redevelopment plans have stalled, for the most part, while it continues to burn cash. The REIT has turned to asset sales to get through this period of weakness in 2020. It appears to be continuing this strategy in the third quarter.