Sears Holdings Corp (NASDAQ:SHLD) has announced today that it is working on the possibility to convert about 200 to 300 stores into a Real Estate Investment Trust (REIT). As Sears is already struggling, therefore, the retailer through REIT would provide a platform to its shareholders to raise cash. On Friday, Sears share value was $41.39 in premarket trading after 27 percent increase. A part of the retailer’s real estate is going to be monetized making use of a sales-leaseback transaction. Sears confirms that its shareholders would be able to buy common shares or other equity interests proportionately in REIT.

CEO, Eddie Lampert, along with his hedge funds holds 48.5 percent of Sear’s equity and in an endeavor to generate enough cash to sustain forthcoming winter shopping season, the retailer has time and again approached its Chief Executive. In the last decade, Sears (NASDAQ:SHLD) experienced declining sales and diminishing profit margins. The last nine quarters reported losses so the only option left with Sears to raise cash is by closing its stores, cutting down its inventory and selling its assets.

Sears (NASDAQ:SHLD) confirms that it generated $102.5 million in cash this October by selling off one of its full line store located at Cupertino, California. Sears full line store on the average covers 136,000 square feet area and is located in malls. Last month, the company set a target of generating approximately $625 million through unsecured loan and equity warrants. Besides it would also be disposing off a portion of its stakes in Sears Canada (SCC.TO) to generate $380 million through a rights offering. As per the company’s statement it has been able to raise almost $300 million from rights offering of Sears Canada as of Nov 6^th and it would not be adding Sears Canada’s results from third quarter onwards.

Sears (NASDAQ:SHLD), which had reported a net loss of $497 million last year, is now expecting a net loss of $590 million to $630 million for its shareholders for the period ended Nov 1^st. Sears is the owner of a total of 1077 Kmart stores and 793 Sears stores in the United States acoording to its Aug 2^nd data. On one hand comparable sales showed an increase of 0.5 percent at Kmart stores but on the other, sales at Sears stores dropped by 0.7 percent in the U.S.

As per Brian Sozzi, an analyst with Belus Capital Advisors, Sears losses depicts its passion on low margin sales model just like Costco Wholesale Corp (NASDAQ:COST), Sam’s Club by Wal-Mart Stores Inc’s (NYSE:WMT), and BJ’s Wholesale Club Inc. Although Sears (NASDAQ:SHLD)  must focus on ensuring quality sales also while the low quality sales are progressing as normal.

Sears (NASDAQ:SHLD) claims to have almost $330 million in cash and another $234 million under its credit facility to meet forthcoming season’s requirements. The company had a debt of $6.3 billion at the end of third quarter which might reduce by year end if both its rights offerings are subscribed.

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