Why The At Home Bankruptcy May "Uncover" This Long-Term Covered Land Play

In 2022 U-Haul acquired a Michigan property under long term lease to Big Box retailer At Home—likely as a “covered land play” with the intention to complete an adaptive reuse after the lease expired

Savvy real estate brokers and investors are quick to point out a “covered” land play:

A strategy where a leased, income-generating property is acquired on land that could be much more valuable in the future.

Like when the lease expires.

So investors value this type of property not only by its cap rate—or the yield generated by income from the in-place lease—but also from the value of a potential future use.

In the interim the investor or developer is “covered” by income generated from the tenant and utilize the time while the lease is in place to develop plans or plot a future use for the site.

But covered land plays can also be pursued by end users.

As evidenced by the December 2022 purchase of a 100,000 square foot property in Ypsilanti, Michigan.

At the time of purchase the property was leased on a long-term basis to home goods retailer At Home.

The Big Box retailer moved into the building—which was a former Kmart—in 2014 under a lease that provided it with control of the premises until 2034.

The purchaser of the fully leased At Home property, however, was not an investment fund, REIT or private buyer seeking the cash flow of a stabilized property.

But instead AMERCO Real Estate, the real estate development arm of U-Haul.

Why did U-Haul acquire a stabilized property under long term lease?

Not for the current income—but rather the future opportunity.

U-Haul has an existing storage property in Ypsilanti that it has occupied for ~40 years.

But at just ~8,000 square feet on ~2 acres, it is much smaller than most U-Haul sites.

The current U-Haul Ypsilanti property, however, happens to be located less than 1/2 mile east of the former Kmart now leased to At Home.

Not only that but the building leased to At Home is ~100,000 square feet—more than 10x the size of U-Haul’s existing facility—and is located on 12 acres at a prominent hard corner with excellent access and visibility.

So U-Haul likely acquired the former Kmart property now leased to At Home as a covered land play.

After all the ~$12 BB moving and storage company does not typically invest in net lease deals for yield.

Plus it has a track record of occupying former Kmart properties, having repurposed more than 120 vacant Kmart buildings over the past decade.

So U-Haul was likely content to wait out the end of the At Home lease in order to eventually relocate to the Ypsilanti property.

Even if it may have taken 10 years or more.

Now, though, U-Haul may be able to relocate much earlier than originally thought as At Home filed for Chapter 11 bankruptcy protection in June 2025.

Retailers that operate under Chapter 11 bankruptcy protection have the ability to “reject,” or cancel, existing leases without any consideration due to landlords.

For many property owners this presents a huge problem as the cash flow from the lease is instantly eliminated.

But for those covered land buyers that purchased with an intent to re-tenant a building or redevelop a site—like U-Haul with the Ypsilanti property—an expedited lease cancellation is an opportunity.

At Home initially announced the closure of 26 of its ~260 stores after it filed for bankruptcy in June.

The Ypsilanti site, however, was not on this closure list.

But documents filed with the bankruptcy court indicate that At Home may close additional “underperforming” stores.

Just this week At Home announced plans to close 6 more stores—including the Ypsilanti site.

A rejection of the At Home lease of the Ypsilanti property could soon follow.

Which would remove the "cover" from this land play.

And allow U-Haul to finally use the site.