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Sears Canada will likely continue selling off its store leases including those held as joint ventures, according to sources. It just sold off 8 more store leases for a total of about $315 million in the province of Quebec, though these particular Sears stores will be staying open for now. Each of these leases is a 50% joint venture interest that Sears Canada holds with The Westcliff Group of Companies. The purchaser of these leases is Montez Income Properties Corporation

More interestingly, Sears Canada is seeking to liquidate real estate assets before its possible bankruptcy, according to another source. Page 73 of Sears Canada's 2012 Annual Report provides a list of joint venture leases (see below). Of the 10 joint venture leases that Sears Canada had with Westcliff Group, only 8 have been sold, meaning that Sears could possibly sell two more. The company also has three joint venture leases with landlord Ivanhoe Cambridge, namely for Sears stores at Winnipeg's Kildonan Place, Les Rivières Shopping Centre and Les Galeries de Hull. These three joint ventures are only 15-20% interests that our source thinks could be sold next. 

From Page 73 of Sears Canada's 2012 Annual Report. 
1) The 8 joint venture leases sold to Montez,
2) Two Westcliff joint venture leases, still held at 50% by Sears Canada,
3) Three joint venture leases held by Sears Canada and Ivanhoe Cambridge

A retail analyst further notes that Sears Canada's dividend payouts point to an otherwise gloomy future for the retailer. Keith Howlett of Desjardins Securities mentioned to the Toronto Star that in the first half of 2013, Sears Canada generated a loss from its retailing operations before tax of $56.9 million, while its profit before tax from joint venture real estate investments was $5.8 million. Howlett expects Sears Canada to pay a special dividend to shareholders before the end of 2013, and he estimates it to be as high as $6/share given recent lease sell-backs. 

We see these dividends as indicative of a company seeking to cash-out its real estate, rather than a company looking to reinvest profits in a turnaround. 

We'll continue to report on the winding-down of Sears Canada, as our source speculates that the company may no longer be in operation by the Spring of 2014. 

[Sears Canada website]