Sears Holdings (Nasdaq:SHLD) which controls Sears Canada (CA:SCC) is committing suicide. They will be vacating the lease they hold at Eaton Center in downtown Toronto. This is the prime retail space in Canada’s largest city Toronto.
Toronto is North America’s fourth largest city ranking after New York, Chicago and Los Angeles. Giving up the Eaton Center space is like Macy’s giving up on its West 34th St Herald Square location in Manhattan.
Several other locations also of great value will be vacated in complicated sale lease back transactions which generate short-term cash to deal with looming debt obligations. It’s that bad.
So if location location and location drive retail. Sears is dead, dead and more dead. End of analysis.
Rumoured new tenant is to be Nordstrom which has long wanted an entry to Canada’s richest and largest metropolitan market.
At the other end of Eaton Center is the Bay which currently is in a take-over offer for Saks. So you can just see the two square off for some serious competition when the financial engineers quit flipping leases around.
In the meantime the pension fund investors in Eaton Center are rejoicing over the coming rent increases.
George Gutowski writes from a caveat emptor perspective.