Author Topic: SRG - Seritage Growth Properties  (Read 256120 times)

BTShine

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Re: SRG - Seritage Growth Properties
« Reply #540 on: March 12, 2018, 02:59:23 PM »
37 mil x $17 = 629

629 / 0.06 = 10,483

2 to 10.4 in 10 years is ~18%

if takes 10 years to do it, that's 18% CAGR, if it takes more, worse cap rate, etc that's lets say 15% a year. But, SRG predicts average $25 square foot when stabilized, so worst case is 15-18 CAGR, better case...20+?

Koshigoe,

Where did you learn that they expect rents to be $25 in the future?   That's very interesting information. 


koshigoe

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Re: SRG - Seritage Growth Properties
« Reply #541 on: March 12, 2018, 03:46:57 PM »
top page 14 on the supplement.  1,066 k in total cost for redevelopment, 6.197 k square feet, expected $25 / sq ft once stabilized, IE current tenants pay higher rates.

most of redev capital should be debt, shouldn't change the fact that equity will go from 2 B to 10 B over a ten year stretch.  So they go from 1.3 B to 5 B in debt over time, shouldn't change the overall return much.  Yeah lots of weird things could happen over ten years with interest rates etc. But the rough numbers are in the ballpark. And the bears main concern is a peanuts short-term shortfall of 30-100m. The fear doesn't match the reality it seems.

Also, the other companies that were mentioned, DDR and WPG for a couple. I think some underestimate the unique situation of SRG. SRG has majority eccentric billionaire owner, proven no-frills  leadership team and they're executing with first mover advantage. They have a unique profile of land in nearly every state, and many trophy properties. They're nearly through permitting for several mixed use sites at Asheville, Overlake, and Hicksville.  To lump SRG with DDR and WPG is sort of an insult to the unique character of SRG assets and operational execution so far, in my opinion! But hey, bet with the $$.


CorpRaider

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Re: SRG - Seritage Growth Properties
« Reply #542 on: March 12, 2018, 03:58:47 PM »
Are you putting a 6% cap rate on their total gross rents (as projected)?

Spekulatius

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Re: SRG - Seritage Growth Properties
« Reply #543 on: March 12, 2018, 04:00:02 PM »
top page 14 on the supplement.  1,066 k in total cost for redevelopment, 6.197 k square feet, expected $25 / sq ft once stabilized, IE current tenants pay higher rates.

most of redev capital should be debt, shouldn't change the fact that equity will go from 2 B to 10 B over a ten year stretch.  So they go from 1.3 B to 5 B in debt over time, shouldn't change the overall return much.  Yeah lots of weird things could happen over ten years with interest rates etc. But the rough numbers are in the ballpark. And the bears main concern is a peanuts short-term shortfall of 30-100m. The fear doesn't match the reality it seems.

Also, the other companies that were mentioned, DDR and WPG for a couple. I think some underestimate the unique situation of SRG. SRG has majority eccentric billionaire owner, proven no-frills  leadership team and they're executing with first mover advantage. They have a unique profile of land in nearly every state, and many trophy properties. They're nearly through permitting for several mixed use sites at Asheville, Overlake, and Hicksville.  To lump SRG with DDR and WPG is sort of an insult to the unique character of SRG assets and operational execution so far, in my opinion! But hey, bet with the $$.

The same eccentric billionaire owner has run Sears into the ground, so I think his acumen needs to be discounted somewhat. WPG is a Bad example since they own C malls (on average). KIM is a better proxy, except that they have  fully cash flowing properties right now, with the option to redevelop, while SRG needs to redevelop their entire real estate quickly,or they will sit on unproductive assets. KIM can take a more measured approach to redevelopment, since their properties are mostly cash flowing and will be for a while. I think it is a fair question, KIM may offer a similar total return Thant SRG at a lower risk.
To be a realist, one has to believe in miracles.

Compounder

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Re: SRG - Seritage Growth Properties
« Reply #544 on: March 12, 2018, 04:08:55 PM »
While most seem to be focused on the $17 average signed so far, on the large projects that are already underway stabilized rents of nearly $40 per sqf are expected.

CorpRaider

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Re: SRG - Seritage Growth Properties
« Reply #545 on: March 12, 2018, 06:59:30 PM »
I thought KIM owned no malls; only open air shopping centers. 

Gilp

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Re: SRG - Seritage Growth Properties
« Reply #546 on: March 13, 2018, 07:41:04 AM »
What basically is the difference business wise, between open air shopping centers and malls?

FiveSigma

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Re: SRG - Seritage Growth Properties
« Reply #547 on: March 13, 2018, 07:50:02 AM »
Fresh air?  ;D

peridotcapital

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Re: SRG - Seritage Growth Properties
« Reply #548 on: March 13, 2018, 08:03:08 AM »
I thought KIM owned no malls; only open air shopping centers.
True, but if we assume that rents in large part correlate to traffic and sales generation, then similar rents, regardless of enclosed or not, should indicate similar property values. I threw out WPG because they get similar rents and have both enclosed and strip centers.

peridotcapital

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Re: SRG - Seritage Growth Properties
« Reply #549 on: March 13, 2018, 08:07:31 AM »
top page 14 on the supplement.  1,066 k in total cost for redevelopment, 6.197 k square feet, expected $25 / sq ft once stabilized, IE current tenants pay higher rates.

most of redev capital should be debt, shouldn't change the fact that equity will go from 2 B to 10 B over a ten year stretch.  So they go from 1.3 B to 5 B in debt over time, shouldn't change the overall return much.  Yeah lots of weird things could happen over ten years with interest rates etc. But the rough numbers are in the ballpark. And the bears main concern is a peanuts short-term shortfall of 30-100m. The fear doesn't match the reality it seems.

Also, the other companies that were mentioned, DDR and WPG for a couple. I think some underestimate the unique situation of SRG. SRG has majority eccentric billionaire owner, proven no-frills  leadership team and they're executing with first mover advantage. They have a unique profile of land in nearly every state, and many trophy properties. They're nearly through permitting for several mixed use sites at Asheville, Overlake, and Hicksville.  To lump SRG with DDR and WPG is sort of an insult to the unique character of SRG assets and operational execution so far, in my opinion! But hey, bet with the $$.

I don't get why the amount of debt they have only has a minimal impact on the equity value. It is quite odd to ignore debt when valuing a REIT. How SRG would ever command a $15B E/V, even at $25 rents, is beyond me. That's a valuation of like $400 per sf.