Transformco behind the redevelopment of the Long Island shopping center
Transformco, owner of Sears and Kmart stores, acquired a large retail building in Long Island that once housed one of its Kmarts.
The Illinois-based company now owns the 237,000 square foot commercial building in the Sayville Plaza shopping center in Bohemia, The real deal has learned. The company held a head lease on the building until recently.
In February 2020, Transformco closed the Kmart store in that building – along with 95 Sears and other Kmart stores – leaving 182 of the two chains’ stores operating nationwide. At that time, the company cited a “tough retail environment and other challenges”. The pandemic has accelerated the shift for shoppers to the internet, although recent studies show retail foot traffic is rebounding.
The seller was Sayville Menlo, an entity owned by Arctrust, a private real estate investment trust based in Clifton, New Jersey. Financial terms were not disclosed, but based on the town of Islip’s property assessment, the fair market value of the 24-acre property is approximately $ 44 million. Arctrust and Transformco declined to comment on the price, citing a confidentiality agreement.
The transaction stems from a 2017 lawsuit brought by Arctrust initially against Sears Holdings and later Transformco, arguing that the tenant failed to perform the repairs and maintenance required by the lease. The tenant denied the allegation and the case ultimately resulted in a negotiated settlement, court records show.
Robert Ambrosi, chief executive officer of Arctrust, wrote in an email that the recent transaction was “all related to making a settlement.” Transformco did not immediately respond to a request for comment.
Founded in 2019 by billionaire Eddie Lampert, Transformco has acquired more than 420 still bankrupt Sears and Kmart stores from Sears Holdings Corporation. The company still owns over 330 locations – through ownership or leases – and uses a variety of tactics to monetize its portfolio, including renting out its properties to other tenants or redeveloping them, said Scott Carr, president of the business. real estate agency of Transformco.
While a major facelift is underway at the Sayville Plaza building, Transformco has secured three tenants – discount grocer Aldi, interior design chain At Home, and flooring retailer Floor & Décor – who will occupy more than 80% of the property. Transformco markets the remaining 39,600 square feet.
Transformco’s other recent deals include one with New York owner Vornado Realty to replace Astor Place Kmart with Wegmans. The company also sold five Kmart store leases in different parts of the country to Target in January.
The company’s business isn’t limited to retail, Carr added.
“A number of our assets have either been leased or sold to non-retail users where they become industrial, residential medical offices and auto dealerships,” he said.