Major Kmart landlord Malan Realty Investors today announced that its board wants to liquidate all the REIT’s assets, including 58 properties with a total GLA of about 5.4 million sq. ft. The board cited Kmart’s bankruptcy filing as among the reasons for the move.
Kmart is Malan's largest tenant, with about 27% of Malan’s total rents coming from leases with the retailer, according to a recent report by CIBC World Markets.
Only four stores in Malan’s portfolio were on Kmart’s recently released list of stores to be closed. But many analysts believe the retailer will close more stores as its restructuring effort continues. Malan noted in a release that Kmart’s bankruptcy has created a significant amount of uncertainty for the company.
Malan’s board will ask shareholders to approve the plan at an annual meeting this summer.
The company’s stock price today dropped $1, or 17.7%, to $4.65 after the announcement. It reached a 52-week high of $10.45 in March 2001.
"At this juncture, the board has decided that liquidation offers the best possibility for shareholders to realize a premium to the current trading price of our stock," Jeffrey Lewis, Malan's CEO, said in a statement.
Malan, which first went public in 1994, also cited its own debt problems, impediments to the redevelopment of its property in Farmington Hills, Mich., and the recession as factors in its decision.
The company announced that it is indefinitely suspending its quarterly cash dividend payments. During the liquidation effort, cash generated from operations and property sales would be used first to make required repayments of debt and other liabilities, and then distributed to common shareholders, the company said.
The liquidation plan could two years or more to complete. Malan's common stock is expected to qualify for continued listing on the New York Stock Exchange until total market capitalization drops below $15 million.
Chicago-based Cohen Financial is advising the company on the sale of properties as part of the liquidation process.
— Staff and wire reports