Author Topic: SRG - Seritage Growth Properties  (Read 535890 times)

CorpRaider

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Re: SRG - Seritage Growth Properties
« Reply #100 on: July 01, 2016, 08:16:20 AM »
Man, is English his first language?  In first three sentences we have: Sears "needs to sale the stores..."; and "Although we are not typically akin to shorting..."

He also has many references to some Lambert gentleman.
« Last Edit: July 01, 2016, 08:18:13 AM by CorpRaider »


alpha asset strategies

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Re: SRG - Seritage Growth Properties
« Reply #101 on: July 01, 2016, 08:46:18 AM »
He's saying that he thinks SHLD will vacate 7mm sq ft and put the properties back to SRG *next month*. If you operate under that assumption then of course they'll face a funding gap.  But that's an extreme assumption and I'm not sure it's based in reality.


This is a good point that I hadn't considered.  SHLD announced in April, 2016 that they would be closing 78 more stores this summer - 68 Kmarts & 10 Sears locations.  In order to vacate 7mm sq ft and put the properties back to SRG this summer, that would imply that the large majority of the announced store closures would be SRG properties - which seems highly unlikely.

I now see your point with regard to some of the assumptions that Brad Thomas was using.  It appears that he was analyzing the company under almost a "worst case" scenario, which probably has a low probability of actually coming to fruition.

thinkpad

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Re: SRG - Seritage Growth Properties
« Reply #102 on: July 03, 2016, 01:21:31 PM »
Hello
If I remember correctly a list of the stores to be closed was given earlier this year. I can not find it again but I remember I checked each of these stores and no one belongs to SRG.

Edit: here is the list http://fortune.com/2016/04/22/sears-kmart-stores-close-where/
« Last Edit: July 03, 2016, 01:23:16 PM by thinkpad »
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shhughes1116

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Re: SRG - Seritage Growth Properties
« Reply #103 on: July 05, 2016, 07:12:47 AM »
He doesn't have a very strong background. IMO he's exceedingly average and has no real specialized knowledge in the space. So take that for what it's worth.

Your comment is a bit unfair.  If you have been following his articles, as you indicated in your message, you'd know that his background is in commercial real estate and more specifically in commercial real estate development.  So yes, I would argue that he does have some specialized knowledge in the space.  Are his articles a bit superficial?  Yes, but I would make the same argument about some of the analysis on this message board.  Take a look at the NXRT thread...I dinged someone for exactly this point.  When it comes to real estate, I believe you need to be willing to look under the hood (i.e. on an individual property basis) in order to be successful on a consistent basis.  However, people generally don't share that type of granular information/analysis for free, hence why you get the superficial stuff on Seeking Alpha.  You get what you pay for...       

glorysk87

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Re: SRG - Seritage Growth Properties
« Reply #104 on: July 05, 2016, 07:33:42 AM »
Your comment is a bit unfair.  If you have been following his articles, as you indicated in your message, you'd know that his background is in commercial real estate and more specifically in commercial real estate development.  So yes, I would argue that he does have some specialized knowledge in the space.  Are his articles a bit superficial?  Yes, but I would make the same argument about some of the analysis on this message board.  Take a look at the NXRT thread...I dinged someone for exactly this point.  When it comes to real estate, I believe you need to be willing to look under the hood (i.e. on an individual property basis) in order to be successful on a consistent basis.  However, people generally don't share that type of granular information/analysis for free, hence why you get the superficial stuff on Seeking Alpha.  You get what you pay for...       

Agree to disagree. Experience in real estate development is just that. It doesn't necessarily translate very well into valuing a security.  A company could have the best properties in the world or the worst properties in the world - I'm sure Brad would be able to determine that very well. But the price you pay for the company that owns those properties is the most important factor in the decision to invest in that company. And that's where I think Brad falls way way way short.  If you read his articles, almost all of the analysis and valuation is simply parroted back from either the company's investor presentation or from third-party research.  His own personal analysis doesn't get too far past P/FFO and Dividend Yields.

Picasso

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Re: SRG - Seritage Growth Properties
« Reply #105 on: July 05, 2016, 07:46:13 AM »
Your comment is a bit unfair.  If you have been following his articles, as you indicated in your message, you'd know that his background is in commercial real estate and more specifically in commercial real estate development.  So yes, I would argue that he does have some specialized knowledge in the space.  Are his articles a bit superficial?  Yes, but I would make the same argument about some of the analysis on this message board.  Take a look at the NXRT thread...I dinged someone for exactly this point.  When it comes to real estate, I believe you need to be willing to look under the hood (i.e. on an individual property basis) in order to be successful on a consistent basis.  However, people generally don't share that type of granular information/analysis for free, hence why you get the superficial stuff on Seeking Alpha.  You get what you pay for...       

Agree to disagree. Experience in real estate development is just that. It doesn't necessarily translate very well into valuing a security.  A company could have the best properties in the world or the worst properties in the world - I'm sure Brad would be able to determine that very well. But the price you pay for the company that owns those properties is the most important factor in the decision to invest in that company. And that's where I think Brad falls way way way short.  If you read his articles, almost all of the analysis and valuation is simply parroted back from either the company's investor presentation or from third-party research.  His own personal analysis doesn't get too far past P/FFO and Dividend Yields.

+1.  His articles are just a copy/paste job from company presentations. 

rogermunibond

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Re: SRG - Seritage Growth Properties
« Reply #106 on: July 11, 2016, 07:51:04 AM »
http://www.wsj.com/articles/mall-owners-push-out-department-stores-1468202754

Nice WSJ piece on malls repurposing department store space.

buylowersellhigh

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scorpioncapital

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Re: SRG - Seritage Growth Properties
« Reply #108 on: August 05, 2016, 09:35:42 AM »
Just wondering how do people value SRG? I get the conversion of real estate. I estimate if all the property is converted we could see base rents of perhaps $300-$350m in 4-5 years. How would one think about the mortgage rate and valuation for this income stream for a REIT? There are 57m shares out and debt is about 1 billion. So the current value (@ $48/share) is $2.7 billion equity + $1 billion debt. If all goes according to plan this would be a P/E of around 8-9x and a return of maybe 11-12% on your investment. Since this is the minimum return I'd like to get, is there a reason this would be worth more than ~$50/share to get that return in a few years? Obviously if rates stay at very low levels the market might value it more and if rates go back to somewhat more normal, it would be dangerous to overpay. But neither of these considerations change the return that an initial investor would demand on purchase price. Is real estate somehow valued at higher multiples - like a utility - due to being safer?

« Last Edit: August 05, 2016, 09:37:36 AM by scorpioncapital »

glorysk87

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Re: SRG - Seritage Growth Properties
« Reply #109 on: August 05, 2016, 11:27:36 AM »
Just wondering how do people value SRG? I get the conversion of real estate. I estimate if all the property is converted we could see base rents of perhaps $300-$350m in 4-5 years. How would one think about the mortgage rate and valuation for this income stream for a REIT? There are 57m shares out and debt is about 1 billion. So the current value (@ $48/share) is $2.7 billion equity + $1 billion debt. If all goes according to plan this would be a P/E of around 8-9x and a return of maybe 11-12% on your investment. Since this is the minimum return I'd like to get, is there a reason this would be worth more than ~$50/share to get that return in a few years? Obviously if rates stay at very low levels the market might value it more and if rates go back to somewhat more normal, it would be dangerous to overpay. But neither of these considerations change the return that an initial investor would demand on purchase price. Is real estate somehow valued at higher multiples - like a utility - due to being safer?

Base rent of $300-$350mm seems way way too low for me.  If you assume $14/sq ft in rent on redeveloped properties that gets you to $552mm, and there's likely upside to that number down the road.

When I did my analysis (both NAV and FFO analyses) I calculated an intrinsic value of about $60-$65 2 years down the road.  Upside past that is much higher as the properties continue to be redeveloped.

My analysis also concluded that it will take 2-3 years for SRG to diversify their portfolio enough away from Sear's to be safe.  I have long dated puts on Sears as a hedge through that time frame. Past that, it should be able to survive even if Sears disappears off the Earth.