Supreme Court: Mall Of America Owner Can Challenge 100-Year, $10 Lease For Vacant Sears Box

An Entrance To The Mall Of America In Bloomington, Minnesota

The U.S. Supreme Court has granted the owner of the largest mall in the U.S. another chance to get out from under a deal it made with Sears that looks more regrettable every year.

In a unanimous vote, the nation's high court ruled that Mall of America owner MOAC Mall Holdings LLC can challenge the transfer of a lease it signed in 1991 with Sears for a 120K SF anchor box, Reuters reports. The 100-year lease only obligated Sears to pay $10 per year.

The Supreme Court opinion, written by Justice Ketanji Brown Jackson, overturns a lower court ruling preventing MOAC Mall Holdings from challenging the transfer that preserved the three-story box's lease and gave the tenant the ability to sublease the space, Reuters reports.

MOAC, a subsidiary of Triple Five Group, sued Sears Holdings during its 2018 bankruptcy case in an attempt to stop the transfer of the long, cheap lease to Transform Holdco, a new company formed by former Sears CEO Eddie Lampert and other post-bankruptcy shareholders, Reuters reports.

Sears Holdings' bankruptcy in 2018 was one major event in a series of restructurings, asset sales and store closures, including the Mall of America location, which went dark in 2019. It came after years of slow decline for a brand that Triple Five deemed a strong enough anchor in 1991 to merit a century-long lease for essentially no cost.

The Triple Five affiliate is now free to appeal the bankruptcy court's initial decision to approve the lease transfer and attempt to negotiate a new lease, but courts' abilities to unwind such deals is limited, Reuters reports.

Any opportunity to boost cash flow at Mall of America will be welcome to Triple Five, which faced issues with paying debt service on its American Dream Mall in New Jersey almost immediately after the pandemic hit. Triple Five put up a 49% stake in Mall of America as collateral for a loan to finance American Dream's construction.

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