As a young boy in Omaha, Warren Buffett was no doubt transfixed when the first Sears catalog his his doorstep in 1894. And wouldn’t you know it, but he still loves the historic retailer. Specifically, he loves the 253 Sears and Kmart stores Eddie Lampert spun off from the company as part of his highly complex and probably extremely profitable plan to close the book on that history. Sure, most of those stores are dingy, run-down and half-empty (both of merchandise and customers), but even at his advanced age, Buffett foresees a time when those stores can be gussied up and filled with profitable, market-rate-rent-paying vendors like Whole Foods and CVS and Jared and Nordstrom Rack. And, since no one else will take his money, he’d like to help.
Berkshire agreed to provide a $2 billion loan to Seritage Growth Properties, the real estate investment trust owns Sears stores, as well as properties the department-store chain has vacated. Seritage is using a portion of the money to refinance debt, while adding to capital. Buffett bought 2 million shares in December 2015 that are valued at about $85 million….
Seritage used to focus mainly on properties occupied by Sears. But that has changed as the department store chain shrank. In June, Seritage said Sears Holdings is on track to eventually account for less than 35 percent of contractual rental income by the end of this year, down from 80 percent when the business began.