Author Topic: SRG - Seritage Growth Properties  (Read 162228 times)

Green King

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Re: SRG - Seritage Growth Properties
« Reply #20 on: March 13, 2016, 12:09:53 PM »
Yeah the 8% of the stockholders equity would work out to be ~4% of total diluted equity

can you show me how you are doing the equity please ?

TIA
GK
GK


moneyball

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Re: SRG - Seritage Growth Properties
« Reply #21 on: March 13, 2016, 05:43:43 PM »
Yeah the 8% of the stockholders equity would work out to be ~4% of total diluted equity

can you show me how you are doing the equity please ?

TIA
GK

Yeah so from YE 10-k

Outstanding shares (class A & C) = 31.4k
Operating Partnership units = 24.2 k

So common shares end up being 56.5% of the equity of the company.

As a bit of background Operating Partnership units are common in reit ownership structures as it allows for a seller of a property to the reit to gain control of a security that will pay them dividends, but the taxable capital gain only occurs when the OP unit is converted into equity in the reit. So it becomes a tax deferral instrument. ESL owns all of the OP units not owned by by Seritage.

See the attached org chart for clarification

Green King

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Re: SRG - Seritage Growth Properties
« Reply #22 on: March 13, 2016, 07:17:40 PM »
Yeah the 8% of the stockholders equity would work out to be ~4% of total diluted equity

can you show me how you are doing the equity please ?

TIA
GK

Yeah so from YE 10-k

Outstanding shares (class A & C) = 31.4k
Operating Partnership units = 24.2 k

So common shares end up being 56.5% of the equity of the company.

As a bit of background Operating Partnership units are common in reit ownership structures as it allows for a seller of a property to the reit to gain control of a security that will pay them dividends, but the taxable capital gain only occurs when the OP unit is converted into equity in the reit. So it becomes a tax deferral instrument. ESL owns all of the OP units not owned by by Seritage.

See the attached org chart for clarification

Thank you for the info
GK

moneyball

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Re: SRG - Seritage Growth Properties
« Reply #23 on: March 27, 2016, 02:30:36 PM »
There's a write up on VIC that came out recently (on 45 day delay) if anyone is interested.

Picasso

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Re: SRG - Seritage Growth Properties
« Reply #24 on: March 27, 2016, 03:33:40 PM »
moneyball, what do you think of aviclara's comments on the original VIC writeup?  He/she is pretty good about looking at the short end of things so I'm curious to your thoughts.  I'm not that worried about fraudulent conveyance risk but that risk may pop up in the future if SRG purchases new assets from SHLD. 

I sort of look at SRG like a low cost funding vehicle for SHLD, except SRG has a lot of low hanging fruit to capture over the next few years.  I don't think Lampert cares as much about the value of SHLD these days except from the standpoint of keeping them out of bankruptcy.  He's going to have an easier time creating new value for himself in SRG and having SHLD as a cheap call option on the retail business that he seems so fond of being overly involved with.  I haven't looked at the numbers lately but I believe he has more net worth tied up in SRG if you exclude SHLD debt.

You almost have to marvel at the financial engineering here and say it might be worth taking another close look at SHLD.  I mean SHLD owners didn't have to put up a lot of capital to buy the assets at $29 (given the difference was made up in debt) and it's already being valued at $49 with Buffett buying stock for his personal account.  I don't think it's a stretch to say SRG could be worth $75 or more in a few years. 

If you exclude the way out of the money warrants, SHLD only has a $1.6 billion market cap and can pull this maneuver again if they can keep themselves out of bankruptcy.  I don't know if Lampert has the capital to do it, but another rights offering for more real estate sales could send SHLD back up to $30 within a week of the announcement.  When you look at the current liquidity picture for SHLD it's almost given that they'll need to do that.  What else can they sell at this point now that store closures aren't turning the business cash flow positive?

But the bearish side of me knows that Lampert is sitting majority position fulcrum in the 2019 bonds so maybe he just wants to get outside the fraudulent conveyance window given how little capital he has left after the last several rights offerings.  I don't get that vibe off his actions but it's a possibility.

moneyball

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Re: SRG - Seritage Growth Properties
« Reply #25 on: March 29, 2016, 09:03:25 AM »
moneyball, what do you think of aviclara's comments on the original VIC writeup?  He/she is pretty good about looking at the short end of things so I'm curious to your thoughts.  I'm not that worried about fraudulent conveyance risk but that risk may pop up in the future if SRG purchases new assets from SHLD. 

I sort of look at SRG like a low cost funding vehicle for SHLD, except SRG has a lot of low hanging fruit to capture over the next few years.  I don't think Lampert cares as much about the value of SHLD these days except from the standpoint of keeping them out of bankruptcy.  He's going to have an easier time creating new value for himself in SRG and having SHLD as a cheap call option on the retail business that he seems so fond of being overly involved with.  I haven't looked at the numbers lately but I believe he has more net worth tied up in SRG if you exclude SHLD debt.

You almost have to marvel at the financial engineering here and say it might be worth taking another close look at SHLD.  I mean SHLD owners didn't have to put up a lot of capital to buy the assets at $29 (given the difference was made up in debt) and it's already being valued at $49 with Buffett buying stock for his personal account.  I don't think it's a stretch to say SRG could be worth $75 or more in a few years. 

If you exclude the way out of the money warrants, SHLD only has a $1.6 billion market cap and can pull this maneuver again if they can keep themselves out of bankruptcy.  I don't know if Lampert has the capital to do it, but another rights offering for more real estate sales could send SHLD back up to $30 within a week of the announcement.  When you look at the current liquidity picture for SHLD it's almost given that they'll need to do that.  What else can they sell at this point now that store closures aren't turning the business cash flow positive?

But the bearish side of me knows that Lampert is sitting majority position fulcrum in the 2019 bonds so maybe he just wants to get outside the fraudulent conveyance window given how little capital he has left after the last several rights offerings.  I don't get that vibe off his actions but it's a possibility.

Picasso are you asking about my opinion on fraudulent conveyance, specifically? As far as financial engineering goes, I believe the market is just pricing in the fact that the real estate is actually being monetized. I don't view that as financial engineering just more the fact that people think the real estate is worth more under new ownership and is now pricing in future development yield. I for one think it would be insane for a court to believe that SRG's assets are worth a 6 cap on current income under SHLD ownership and I think the appraisals would support that. I mean these projects are highly capital intensive and require years of planning and operational expertise.

accutronman

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Re: SRG - Seritage Growth Properties
« Reply #26 on: March 29, 2016, 11:27:05 AM »
Superb performance today

moneyball

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Re: SRG - Seritage Growth Properties
« Reply #27 on: March 29, 2016, 12:02:22 PM »
Superb performance today

I'm just happy I'm finally making some gains on WPG

accutronman

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Re: SRG - Seritage Growth Properties
« Reply #28 on: May 06, 2016, 06:51:04 AM »
A great quarter! And this is why Eddie was so brilliant at creating this stock: "During the first quarter, we signed 214,000 square feet of new leases at average base rents of $32.65 PSF compared to the $6.00 PSF paid by Sears Holdings on a same space basis."

BTShine

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Re: SRG - Seritage Growth Properties
« Reply #29 on: May 06, 2016, 10:06:40 AM »
A great quarter! And this is why Eddie was so brilliant at creating this stock: "During the first quarter, we signed 214,000 square feet of new leases at average base rents of $32.65 PSF compared to the $6.00 PSF paid by Sears Holdings on a same space basis."

Yes, it was an excellent quarter.  They are definitely starting with the lowest hanging fruit, which is logical. At some point in the future their psf lease rates will not be this high, but the point where we are signing leases at $10 psf instead of $30 seems pretty far off.