Winnipeg Free Press - PRINT EDITION

Sears exits Toronto malls for cash

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TORONTO -- Sears Canada Inc. (TSX:SCC) will be vacating at least two major Toronto-area stores and possibly a third in return for cash payments from its landlords, who, analysts say, will be able to offer the prime space to tenants such as Nordstrom and Holt Renfrew.

Sears, operator of a national chain of department stores, says it will get $191 million in cash for vacating its locations at Yorkdale Shopping Centre in Toronto and Square One Shopping Centre in Mississauga, Ont., by next March.

It could also receive up to an additional $54 million if the landlords exercise an option to have Sears withdraw from its location at Scarborough Town Centre within five years. That would include $1 million Sears gets for the option.

Calvin McDonald, president and chief executive of Sears Canada, said the offer came from the landlord, Oxford Properties Group, who co-owns the properties with Alberta Investment Management Corp., the provincial pension fund also known as AIMCo.

"They obviously have their plans," McDonald said in an interview, but he would not speculate on what they are.

The amount of money Oxford offered for the leases far exceeds how much money Sears believes it can generate at those locations, said McDonald.

Analysts at RBC Dominion Securities and RBC Capital Markets said they think Nordstrom -- a Seattle-based chain -- will get the Yorkdale location while Montreal-based Holt Renfrew will lease the Square One space.

In a research note published Friday, the analysts say they think the landlords will shelve planned expansions.

"Our educated guess is that those expansions to accommodate another anchor tenant will be tabled and both Nordstrom and Holt Renfrew will enter the Sears Canada locations," they said.

-- The Canadian Press

Republished from the Winnipeg Free Press print edition June 15, 2013 $sourceSection0

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