But rents have risen in the best locations and a bankruptcy like Sears poses an opportunity for landlords to refresh their properties with new or better tenants, provided they win control of the sites during Chapter 11, which can be complicated.
"What they've always said to me, we certainly are happy to get back the boxes," said Haendel St. Juste, a REIT analyst at Mizuho Americas in New York.
Simon Property Group, the largest U.S. mall operator, has 59 Sears Holdings stores in its malls, the most of any REIT, but its exposure to the bankruptcy is "de minimis," he said.
Leases with new tenants could easily double or triple the rent Sears or Kmart now pay, the REITs say. Kmart merged with Sears in a 2005 deal.