BUSINESS
03/06/2012 03:55 pm ET | Updated Mar 07, 2012

Edward Lampert, Sears Holdings Chairman, Buys $40 Million Private Island Home As Sears Shutters Stores

While Sears downsizes and lays off employees, company chairman Edward Lampert is buying a sprawling estate on a semi-private island.

The billionaire hedge fund manager and chairman of Sears Holdings Corp. is reportedly set to close on a $40 million estate with seven bedrooms and Versailles-style reflection pools on Indian Creek Island, north of Miami. Meanwhile Sears is selling off 1,200 stores and closing 100 to 120 for good, with Florida seeing the most closings of any state.

The $40 million price tag will set a record for a single family home sale in flashy Miami-Dade county, according to the Wall Street Journal, which first reported the news on Friday.

Local real estate agents boast that Indian Creek Island has the "eighth highest income" of any locale in the U.S. Membership to its exclusive country club costs an initial fee of $125,000 plus $10,000 per year.

On the island, Lampert, 49, will rub golf clubs with VIPs like former Miami Dolphins coach Don Shula and singer Julio Iglesias.

To protect the 40-some island-dwellers is a police force of 14 officers, who circle around the island in 24/7 boat patrol, according to real estate agents. All this will be good news for Lampert, worth about $3 billion, who was kidnapped and held for ransom for two days back in 2003.

Four hours north, in New Smyrna Beach, Florida, the city's only Kmart is preparing to close. Sears, which Lampert and his hedge fund ESL Investments acquired and merged with Kmart in 2005 to form Sears Holdings, has suffered from declining sales in aging store locations for years. In December, Sears Holdings announced it would close 100 to 120 underperforming stores. Florida will be the hardest hit state, with 11 total closures, according to a list the company published in December.

In February, Sears announced further plans to rid itself of stale real-estate: spinning off roughly 1,200 stores to investors and selling 11 stores to General Growth Properties. The company hopes the actions will raise much-needed cash, in the range of $670 to 770 million, according to Lampert's February 23 letter to investors.

"Our poor financial results in 2011, culminating in a very poor fourth quarter, underscore the need to accelerate the transformation of Sears Holdings," Lampert wrote.

Lampert owns about 60 percent of Sears Holdings shares, which have risen 155 percent since their low point in early January, in part thanks to cost-cutting strategies.

While the company will no doubt profit from its transformation, towns and cities around the country are anxious about the loss of jobs. In New Smyrna Beach, residents organized a petition that garnered roughly 6,000 signatures to keep their Kmart open. So far, it has gone unnoticed by the company.

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