Author Topic: SRG - Seritage Growth Properties  (Read 283180 times)

GCA

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Re: SRG - Seritage Growth Properties
« Reply #610 on: July 10, 2018, 02:11:50 PM »
Perhaps they've waiting on more word from Amazon about the headquarters to put out anything more specific about plans, but the Valley View mixed use project is expected to cost around 800 mil, so probably worth something like 1.5 bil when complete. https://www.cpexecutive.com/post/kdc-seritage-plan-1-msf-dallas-office-project/

...

It seems the value is really building behind the scenes, just their in-redevlopment portfolio should be near their EV soon to say nothing of the rest 3/4 of the portfolio carried for nothing.


Unfortunately, as far as I can tell, Valley View is being delayed because of zoning issues.  I should think would ultimately get resolved but sometimes things move very slow in real estate:
https://www.bizjournals.com/dallas/news/2017/01/30/dallas-valley-view-center-stands-as-scott-becks.html
https://www.dallasnews.com/opinion/commentary/2017/09/28/valley-view-mall-supposed-gone-now-remains-zombieland

On your second point ABOVE, the EV is $3,616MM while the total projected project income is $176MM, for a ratio of 20.5, when GGC, MAC, and SPG all trade around 14... so I think they've got a ways to go.


koshigoe

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Re: SRG - Seritage Growth Properties
« Reply #611 on: July 11, 2018, 08:58:15 AM »
i don't have any special knowledge on Valley View, though I would say the news articles cited are much older than the Dec 2017 announcement of the KDC partnership, and the statement they would be filing plans soon with the city. Valley View is still in contention for Amazon, I wouldn't expect any info until that is settled. And since they've come so far in that process, social proof would only elevate the property in eyes of other major companies.

On the valuation, at what point does the switch flip and we must assign value to the enormous backlog of developable property? Right now, it's assigned at basically nothing!

At the soon-coming time when the in-dev properties account for reasonable valuation of total EV, perhaps the switch flips and immediately a NPV of something like a few billion should be added to account for 20-30 mil of 4x rent opportunity.

We're already into Q3, so add something like 200 mil to EV (assuming 100 mil of redevelopment in Q2). That's already 3.2 something. In 80 days, it's 3.4  or 3.5 something. By end of year we're well within reasonable values for current redeveloped portfolio.

I don't believe it's fanciful to assume share price should be something like double what it is right now, just factoring in their captive backlog at reasonable discount rates and their demonstrated operating performance so far. But the doubting will continue...until it stops!. Anyway not arguing with you personally, I hope you're long too.

GCA

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Re: SRG - Seritage Growth Properties
« Reply #612 on: July 11, 2018, 12:19:55 PM »
I have some newer articles, here is one from after (like the day after) the KDC deal:
https://www.dallasnews.com/opinion/commentary/2017/12/12/valley-view-mall-plan-revive-shambles

Here's an article on another development in Dallas but in the comments some locals are talking about Valley View and it still sounds stalled to me:
https://www.dmagazine.com/frontburner/2018/06/dallas-city-council-oks-sending-millions-to-red-bird-mall-redevelopment/

So maybe the delay has to do with Amazon but I kind of doubt it.

Would love to see your math on this.  Yes I'm long but not as bullish as you are.

koshigoe

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Re: SRG - Seritage Growth Properties
« Reply #613 on: July 11, 2018, 01:08:25 PM »
Yes, regarding the new links, I believe that's what separates SRG from the pack, they just plow through and don't stop to try to get funding or concessions - beyond already laid out development or improvement concessions by the cities, like get an extra couple stories in your office building if you improve some streets. They don't even try to get the last dollar, for example at Redmond they're only going 6 stories or something with the office, but have option to go 9 I believe.

I think these qualitative factors, such as not wanting - or needing - a helping hand will further differentiate SRG form other publicly traded REITs and private developers. You see this at Redmond and Hicksville. I have watched many of the planning commission and study session videos and SRG comes across as quite professional with quality partners with much successful experience. Look at their architect partners for Hicksville and Redmond among others, the cream of the US. I think a lot of this culture stems from Eddie who is a perfectionist and only does business in first class way.

If you had Ben Schall doing promotional visits on Cramer like WPG and KIM I would bet value would be more reflected in the stock price. But that's not Eddie's style, he's weeding out the non-believers like Buffett did with Berkshire long ago.
 
As to the math, I don't have anything detailed!  Don't wish to be curt but it is quite obvious to me there is essentially zero downside and from satisfactory to very good returns over next 7-10 years, ie: 15%+ a year (3x 4x over that time).

Progress just moves slowly (albeit consistently) which leads many to mental masturbation while waiting I guess, but personally I feel very comfortable.

Foreign Tuffett

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Re: SRG - Seritage Growth Properties
« Reply #614 on: July 11, 2018, 03:25:54 PM »
Yes, regarding the new links, I believe that's what separates SRG from the pack, they just plow through and don't stop to try to get funding or concessions - beyond already laid out development or improvement concessions by the cities, like get an extra couple stories in your office building if you improve some streets. They don't even try to get the last dollar, for example at Redmond they're only going 6 stories or something with the office, but have option to go 9 I believe.

I think these qualitative factors, such as not wanting - or needing - a helping hand will further differentiate SRG form other publicly traded REITs and private developers. You see this at Redmond and Hicksville. I have watched many of the planning commission and study session videos and SRG comes across as quite professional with quality partners with much successful experience. Look at their architect partners for Hicksville and Redmond among others, the cream of the US. I think a lot of this culture stems from Eddie who is a perfectionist and only does business in first class way.

If you had Ben Schall doing promotional visits on Cramer like WPG and KIM I would bet value would be more reflected in the stock price. But that's not Eddie's style, he's weeding out the non-believers like Buffett did with Berkshire long ago.
 
As to the math, I don't have anything detailed!  Don't wish to be curt but it is quite obvious to me there is essentially zero downside and from satisfactory to very good returns over next 7-10 years, ie: 15%+ a year (3x 4x over that time).

Progress just moves slowly (albeit consistently) which leads many to mental masturbation while waiting I guess, but personally I feel very comfortable.

With all due respect, you lack imagination if you cannot see any risk of downside here, especially given SRG's weak liquidity position and the continued deterioration of the retail real estate market. 

koshigoe

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Re: SRG - Seritage Growth Properties
« Reply #615 on: July 11, 2018, 09:06:51 PM »
If I had physical stock certificates I'd fondle them, but alas only street name!

Foreign Tuffett

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Re: SRG - Seritage Growth Properties
« Reply #616 on: July 12, 2018, 09:39:43 AM »
Q2 leasing activity was strong. 853K sq feet at a 3.6x "releasing" multiple.


https://www.businesswire.com/news/home/20180712005231/en/

koshigoe

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Re: SRG - Seritage Growth Properties
« Reply #617 on: July 12, 2018, 10:19:00 AM »
Yes, 3.6x a little lower as I believe that includes the U of F taking over an entire sears box at The Oaks.

It's potentially a 60 yr lease, but at a low absolute rate, like $6 a foot. But that's a fabulous use of capital as it's locked in for at least 20 years at something like 25% or more per annum return on original basis.

http://www.gainesville.com/news/20180607/two-uf-health-offices-may-move-into-sears

The back half of the year has potential to be record setting as Hicksville, Redmond, Asheville execute. The cities are really dragging their feet - many board members don't do their homework and come unprepared to meetings - but there is a clock, something like 90-120 days that starts when the proposal hits. And the cities will have to make definitive decision in Q3.

johnny

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Re: SRG - Seritage Growth Properties
« Reply #618 on: July 13, 2018, 03:26:29 PM »
Ex-UofF still makes for an average $16.19 per foot, which isn't quite knocking it out of the park.

I'm not sure I understand the rationale for celebrating the return-on-book if the entire thesis of the thread is that book is significantly understated. $6 a square foot is $6 a square foot--what's fair value if the company signs similarly extraordinary RoR deals on the rest of their boxes?

Foreign Tuffett

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Re: SRG - Seritage Growth Properties
« Reply #619 on: July 13, 2018, 06:02:40 PM »
Ex-UofF still makes for an average $16.19 per foot, which isn't quite knocking it out of the park.

I'm not sure I understand the rationale for celebrating the return-on-book if the entire thesis of the thread is that book is significantly understated. $6 a square foot is $6 a square foot--what's fair value if the company signs similarly extraordinary RoR deals on the rest of their boxes?

Agree on the book value issue. I think even many bearish on SRG would agree that book value is understated.

On a quarterly basis I think square footage leased and their releasing multiple figure are the two key #s to look at.

$6 per sq foot is (obviously) not great, but it's still almost double what SHLD was paying ($3.10).