HOFFMAN ESTATES, IL—Sears Holdings Corp. said Wednesday it's moving ahead with its plans to spin off some of its stores into a REIT and then lease them back, filing a registration statement for Seritage Growth Properties. In related news, the financially challenged retailer announced a 50/50 joint venture with General Growth Properties for a sale-leaseback of 12 SHLD properties at GGP malls.

In the S-11 filing Wednesday, Seritage says its initial portfolio will consist of 254 stores covering a broad geographic swath and spanning 40.3 million square feet. It will include 158 Sears stores, 85 Kmart locations and 11 leased entirely to third parties. SHLD owns or leases a total of 1,725 Sears and Kmart locations.

The registration statement provides for a rights offering to help finance Seritage's acquisition of the 254 stores, a sale that's expected to bring $2.5 billion in proceeds to SHLD. The rights offering is expected to be completed by the end of the second quarter. SHLD says that following the sale to Seritage, it would lease back the Sears and Kmart locations and continue operating stores at those locations.

The JV formed by SHLD and GGP assumed control on Tuesday of 2.15 million square feet of retail space valued at $330 million, with a GGP subsidiary contributing $165 million in cash to the JV. Third-party tenants have leased about 150,000 square feet of that space, according to an SEC filing.

SHLD says the JV is designed to unlock real estate value and enhance financial flexibility for the company, while also providing the JV the opportunity to create additional value through re-development and re-leasing of up to 50% of each property. The JV encompasses properties in Bakersfield, CA; Pembroke Pines, FL; Oak Brook, IL; Columbia, MD; Natick, MA; Minnetonka, MN; Paramus, NJ; Albuquerque, NM; Staten Island, NY; Norman, OK; Frisco, TX; and Lynnwood, WA.

Eddie Lampert, SHLD's chairman and CEO, says the JV “demonstrates our ability to unlock a small portion of SHLD's vast and valuable real estate portfolio, and represents an important step in the continued transformation” of the company. He adds that the JV and its structure are “consistent with our transition from a store-focused network to a more asset-light, member-centric retailer and it provides additional capital to invest in the future of our membership and integrated retail platforms. Importantly, we will continue to operate these 12 stores and there will be minimal impact on the day-to-day operations of our stores or the overall shopping experience for our members.”

GGP's CEO, Sandeep Mathrani, says the partnership with SHLD fits his company's strategy of “acquiring interests in high-quality retail properties located in the US. This transaction provides an opportunity to potentially redevelop certain SHLD locations within our portfolio and further strengthen each mall within its trade area. We look forward to working with SHLD to maximize the value of these locations for our shareholders.”