Ian Ritter is national online editor of GlobeSt.RETAIL.

NEW YORK CITY-Open-air center and mall owners had different takes on the Kmart-Sears merger during two separate panel discussions in Manhattan yesterday as part of the Deutsche Bank Securities Real Estate Outlook Conference.

Sears Holding Corp., which the two companies expect to create in an $11 billion deal by the end of March, will likely close a significant amount of stores, said open-air center owners. "A lot of real estate will go on the market," said Glenn Rufrano, CEO of locally based New Plan Excel Realty Trust. "I think both of them are poor retailers that are trying to figure out their business." He predicted that the companies will put up for sale 500 of the 3,500 units owned by the new entity.

Daniel Hurwitz, EVP of Cleveland-based Developers Diversified Realty agreed, saying that the combine chains undertake "significant store closures." But he also said that many of the empty spaces could be in demand by many other retailers that are expanding.

The mall panel discussed the possibility of Sears leaving its mall stores to open off-mall units in former Kmart locations after the merger. Michael Glimcher, president of Columbus, OH-based mall owner Glimcher Realty Trust, pointed out that "it will be a long cumbersome, multi-year process" for Sears to go off-mall, given that 95% of its real estate is currently attached to a mall.

"I really think that everyone has overreacted," to the merger, said Charles B. Lebovitz, chairman and CEO of Chattanooga, TN-based mall owner CBL & Associates. "The Sears-Kmart evolution is pat of the ongoing evolution of retail," he said, stressing that mall owners have successfully weather department store closures for decades.

Meanwhile, Bob Michaels, president and COO of Chicago-based General Growth Properties predicted future consolidation in the general merchandise department store sector. "There's still way too much sameness."Overall, both panels were upbeat about retailers in general. "I'm optimistic about 2005," said Michaels. "The retailers are aggressive."

Instant Insights /

Center Owners Speak Out on Kmart-Sears Merger

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