Since Edward Lampert merged Kmart and Sears in 2005, the hedge-fund manager has kept his shrinking retail empire afloat with a web of complex transactions, the Wall Street Journal reported today. Lampert is chairman and chief executive of Sears Holdings, its biggest shareholder and among its biggest lenders, through his hedge fund, ESL Investments. He is also chairman of, and a major investor in, Seritage Growth Properties, a real-estate investment trust that ranks among Sears’s biggest landlords. Sears said that its board reviews transactions with Lampert and related entities and requires them to be on terms at least as favorable as arm’s-length transactions, where buyers and sellers independently pursue the best deal possible. Outside lenders have generally demanded more onerous terms. A spokesman for Mr. Lampert’s hedge-fund company said the investments show he believes in Sears’s future, and noted other investors can typically invest alongside ESL on similar terms.
