New real estate development company

NPK Redevelopment has been formed as an LLC, jointly owned by Sears Holdings (80%) in New Plan Excel Realty Trust (20%). This move sends a powerful signal that the days of the Kmart brand may be numbered.

When Edward Lampert purchased a majority stake in the then Kmart Holding, it was widely suspected that Lampert was more interested in the valuable real estate than continuing the retail side of the business. Although denied by Kmart leadership, this move signifies that the earlier suspicions were correct.

Integrity was widely questioned following the Kmart-Sears merger. Senior executives at Kmart assured local residents Kmart would keep a "significant presence" in Southeastern Michigan. It was widely thought, and not denied, that this meant the base Kmart operations would be in Troy. Time proved this was not the intention.

Likewise, the corporation had assured other stakeholders that it was committed to retailing. Forming a real estate venture confirms earlier suspicions that the lucrative Kmart land is a major part of the long-term Sears financial plan.

SEC filings show New Plan operates hundreds of strip malls throughout the nation. Wal-Mart is their largest tenant followed by Kroger and Sears.

According to Louis Taylor, an analyst at Deutsche Banc Securities in New York, quoted in Crain's Business, "This could start the process in earnest of unlocking the value of the real estate. If the economics are what Sears hopes it will be, I think you'll see Sears broaden it. Instead of three at a time, they can do a hundred and split it up geographically, or have three or four different real estate companies handle pieces of it"

Most industry analyst have expected that lamp or would sell 200 to 300 Sears stores that are falling short of required revenue. However according to a recent report from Morgan Stanley, Sears properties are worth only about $50 a square foot. This is due primarily to their location in malls, which continues to be a lesser desired location for large stores and big boxes. On the other hand Kmart's properties are estimated to be worth an average of $85 a square foot, according to the same report. Kmart's locations are in well-developed areas where land is premium and their locations in strip malls are a target of big-box retailers.

This development, along with prior experiences with Kmart dating back to pre-bankruptcy days, shows a continued problem with the integrity. MaxImpact's TrustBall™ explains it this way: once trust is questioned, the individual or organization must go to the on-deck circle before they can enter into a trusting relationship with customers, suppliers, and employees. It is in the on-deck circle that a batter warms up and prepares for the next at-bat. Once at-bat, the hitter will once again be able to establish trust. However without the proper "warm-up" the batter will not even get the opportunity.

TrustBall is available as a workshop, keynote address, and as part of a Catapult coaching program. For more information contact MaxImpact at 248-802-6138.

This release was published on openPR.