America's largest mall has failed to get the U.S. Supreme Court to void a $10-a-year Sears lease signed over three decades ago.
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The nation's top court chose to not hear a case brought by Mall of America owner Triple Five Group to nix a 34-year-old agreement with the bankrupt retailer, CoStar News reports.
The landlord of the Minneapolis-area mall was seeking a reversal of a December ruling by the Second Circuit Court of Appeals that let the 100-year-long lease stand.
Sears signed the lengthy lease for cheap in 1991. The retail titan was given discounted rent as a powerhouse department store chain that served as a foot traffic driver for the mall.
The property at the center of the legal action is about 160K SF and three stories tall.
“In the 1970s and 1980s, mall developers gave super-cheap and sometimes rent-free leases to department stores for several reasons,” Rudy Milian, president and CEO of retail consultant Woodcliff Realty Advisors, told CoStar News.
“Mall of America opened in 1992 with Nordstrom, Macy's, Bloomingdale's and Sears, which was a coup for Melvin Simon and Associates, a predecessor of Simon Property Group, who together with Triple Five Group developed the gigantic mall.”
Litigation over the lease for the former Sears anchor at Mall of America in Bloomington, Minnesota, began about five years ago. The case was brought on by Sears filing for bankruptcy in 2018, and the bankruptcy has complicated the matter ever since.
Sears Holdings' bankruptcy led to a chain of restructurings, asset sales and store closures. Closures included the Mall of America location, which shuttered in 2019.
The Supreme Court gave Triple Five Group a chance to get out from under the deal it made with the retailer two years ago when it ruled the mall owner could challenge the transfer of the lease to Transform Holdco, a new company formed by former Sears CEO Eddie Lampert and other post-bankruptcy shareholders,
Lampert and his fund ESL Investments acquired Sears assets for $5.2B in 2019.
That company received the lease for the vacant Sears at Mall of America as part of the deal, kicking off multiple bouts of litigation over the past several years.
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