Author Topic: SRG - Seritage Growth Properties  (Read 374392 times)

TwoCitiesCapital

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Re: SRG - Seritage Growth Properties
« Reply #840 on: April 18, 2019, 04:49:33 PM »
"Old Sears", aka the insolvent shell left behind when "New Sears" was bought by ESL, is pursuing....well, they are pursuing just about everyone and every entity (including SRG) that was involved with Sears in the years leading up to its bankruptcy. 

Docket #3728

https://restructuring.primeclerk.com/sears/Home-DocketInfo

I don't have the requisite legal knowledge to handicap the odds of this claim being successful, but I do think that SHLD was effectively insolvent in the years leading up to its bankruptcy.

I just have a hard time thinking anything could happen to Seritage or subsequent asset sales. Outside of Land's End, nothing was spun-off to shareholders without some payment to Sears.

Everything...and I mean everything....was paid for via rights offerings, IPOs, etc. Shareholders had to pay cash to maintain their ownership in existing assets OR have themselves diluted by IPOs of those assets to give Sears more cash.  No false conveyance. No shareholders stripping the assets and leaving the company with nothing.

Assets were sold, for cash, to shareholders and third party market participants.  That cash is what allowed Sears to live as long as it did. 

 It's the primary reason I sold Sears - I was tired of Lampert monetizing the shareholders instead of the assets.



Saluki

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Re: SRG - Seritage Growth Properties
« Reply #841 on: April 21, 2019, 09:09:52 AM »
I didn't read the whole filing, but I'm not particularly concerned.  SRG's price didn't move and if there was something to this, I think it would have.  It looks like they just added every possible person and entity that they could to the law suit to get them in the crosshairs before the statute of limitations expires.  Some of them will likely get dismissed early on after the discovery period. Suing board members?  If I were looking for a quick settlement from the Board of Director's insurance carrier, that's what I would do, but it would be a hard thing to win on with these facts.

Most of these transactions were open to all investors, not just insiders, so it would be hard to prove a fraudulent conveyance.  If you are being sued and, say, sell your house to your brother in law for half what it's worth to avoid your creditors getting a hold of it, that's fraudulent conveyance. Generally, you have two years to void a sale/transfer for fraudulent conveyance but some states allow a longer time frame.  Plus, its been a few years since these transactions were spun out and it doesn't look like investors got rich off them, so if they were really given away at fire sale prices, why is SRG at mid 40s from a mid 30s spin off price after 4 years and not much higher?

Disclosure:  I used to practice securities law, but have never practiced bankruptcy so take this opinion with a grain of salt.  If there is anyone that is regularly involved in bankruptcies (as an accountant , trustee or investor) and would like to chime in, please do.   
If it's important, do it every day. If it's not important, don't do it at all.  -Dan Gable

GCA

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Re: SRG - Seritage Growth Properties
« Reply #842 on: April 26, 2019, 06:44:40 PM »
There's not one, but two entire VICs on this fraudulent conveyance stuff.  They're old enough now that you can read them and most associated comments.

My $0.02 (not a lawyer) is that the threat is real but the Sears estate isn't likely to win the case.  If I've got this right, then SRG probably settles at some point.  Remember, SRG already settled with SHLD shareholders once over this transaction, why wouldn't they have to settle with bondholders as well?  The fact that all shareholders got to participate doesn't really mean much because its the bondholders who are saying they got ripped off.

To prove FC you need to show two things:
1.  Insufficient consideration was paid in the transaction
2.  The company was insolvent at the time of the transaction

There is pretty good evidence for #1 in how SRG has traded above the consideration paid pretty much its entire existence (including a huge jump on day 1.   #2 is a bit trickier with arguments on both sides.  It had negative book value and never earned another year of positive EBITDA again but on the other hand had billions in positive market cap.
« Last Edit: April 26, 2019, 06:47:54 PM by GCA »

LongTermView

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Re: SRG - Seritage Growth Properties
« Reply #843 on: May 02, 2019, 01:48:59 PM »
The 1Q19 numbers are interesting.

From the release:
Quote
Signed new leases totaling 440,000 square feet (365,000 square feet at share) at an average base rent of $30.37 PSF ($30.06 PSF at share).

...

Increased the Company’s share of annual base rent from diversified, non-Sears tenants to 83.3% of total annual base rent from 54.3% in the prior year period, including all signed leases and net of rent attributable to associated space to be recaptured. Diversified, non-Sears rental income has increased by over 260% since inception to $158.7 million, including all signed leases.

...

[GLA at share is 33,210,000 and it is 55% leased.]

[Annual base rent: $31.7 mn Sears/Kmart; $74.7 mn in-place non-Sears; $84 mn SNO non-Sears.]

Foreign Tuffett

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Re: SRG - Seritage Growth Properties
« Reply #844 on: May 02, 2019, 02:47:52 PM »
The 1Q19 numbers are interesting.

From the release:
Quote
Signed new leases totaling 440,000 square feet (365,000 square feet at share) at an average base rent of $30.37 PSF ($30.06 PSF at share).

...

Increased the Company’s share of annual base rent from diversified, non-Sears tenants to 83.3% of total annual base rent from 54.3% in the prior year period, including all signed leases and net of rent attributable to associated space to be recaptured. Diversified, non-Sears rental income has increased by over 260% since inception to $158.7 million, including all signed leases.

...

[GLA at share is 33,210,000 and it is 55% leased.]

[Annual base rent: $31.7 mn Sears/Kmart; $74.7 mn in-place non-Sears; $84 mn SNO non-Sears.]

IMO there isn't much to get excited about here.

46.8% of their wholly-owned properties are vacant. Keep in mind that this % would actually be worse if they weren't selling off so many properties. At the spin they had 235 wholly-owned properties and 31 JV properties. Now they have 198 wholly-owned properties and 27 JV properties.

It will be interesting to see what Q2's cash flow statement looks like, as I believe that will be the first full Q with the revised master lease in effect.


GCA

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Re: SRG - Seritage Growth Properties
« Reply #845 on: May 07, 2019, 04:34:36 PM »
This is something to get excited about: demolition finally starting on their Dallas mega-project

https://www.bizjournals.com/dallas/news/2019/05/06/mayor-rawlings-says-valley-view-redevelopment-will.html?ana=yahoo&yptr=yahoo#g/453555/4
https://www.nbcdfw.com/news/local/Former-Sears-Building-at-Valley-View-Mall-To-Be-Demolished-509385321.html

In general, I'd call the previous quarter pretty bad, other than they signed some high PSF leases (but not many of them).

LongTermView

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Re: SRG - Seritage Growth Properties
« Reply #846 on: May 07, 2019, 05:01:00 PM »
This is something to get excited about: demolition finally starting on their Dallas mega-project

Indeed, this Dallas project is a big one.

GCA

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Re: SRG - Seritage Growth Properties
« Reply #847 on: May 16, 2019, 11:30:35 AM »
This is something to get excited about: demolition finally starting on their Dallas mega-project

Indeed, this Dallas project is a big one.

Yes it is.  News articles state $1B project with 1.8MM sqft of office space (which I believe includes the retail near the bottom) + 300 residential units (phase 1).

I think this is the next big catalyst for the stock.  They have enough liquidity on their balance sheet only to complete the projects already in their official pipeline.  This is not in their official pipeline.  They'll be needing to bring on a partner to provide capital for this project much like they did with Santa Monica and La Jolla.  That means selling part of their interest in the development.  That means there will be a price tag put on the development and an 8k announcing it.  It also means this project will go on the official pipeline of projects so investors can see the eventual bump to annual rental income.  Will happen within the next 6 months.

This stock already has a lot of positive future developments priced into it but I think this is the next positive catalyst. 

SlowAppreciation

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Re: SRG - Seritage Growth Properties
« Reply #848 on: July 15, 2019, 05:27:04 AM »
Why Amazon Is Gobbling Up Failed Malls: https://www.youtube.com/watch?time_continue=1&v=k53IDbtP-58