Author Topic: SRG - Seritage Growth Properties  (Read 534242 times)

koshigoe

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Re: SRG - Seritage Growth Properties
« Reply #250 on: March 15, 2017, 09:09:22 PM »
Today's SCHEDULE 14A says the annual meeting is in NY on April 25th.  Is anyone going?

I'm interested in going, but will have to fly in from Chicago. I'm guessing it won't be a dog and pony show like a Coke meeting considering the below the radar nature, maybe we can ask about why they pay the dividend?!
Found this helpful guide while researching http://www.concernedshareholders.com/CCS_ShareholderQuestions.pdf


Mephistopheles

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Re: SRG - Seritage Growth Properties
« Reply #251 on: March 16, 2017, 08:32:49 AM »
Today's SCHEDULE 14A says the annual meeting is in NY on April 25th.  Is anyone going?

I'm interested in going, but will have to fly in from Chicago. I'm guessing it won't be a dog and pony show like a Coke meeting considering the below the radar nature, maybe we can ask about why they pay the dividend?!
Found this helpful guide while researching http://www.concernedshareholders.com/CCS_ShareholderQuestions.pdf

Someone on this board called management and asked them the dividend question. They basically said some bullshit like "all REITs pay dividends".

I believe the real reason is because dividends vest immediately on their restricted stock whereas the stock doesn't vest unless it's above a certain price by a certain date.

CorpRaider

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Re: SRG - Seritage Growth Properties
« Reply #252 on: March 16, 2017, 10:35:54 AM »
EQC pay no divvy.  Is buying back stock tho.

scorpioncapital

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Re: SRG - Seritage Growth Properties
« Reply #253 on: March 16, 2017, 10:46:55 AM »
There's some truth that all REITs pay dividends. Aren't they by law required to pay out 90% of profits each year? I.e. they can't have retained earnings? But I wasn't clear if this is net income or NOI. For example, SRG shows a net loss figure of $51 millionn in 2016 but if you back out certain non-cash charges and look at the cash-flow statement,  it is in fact earning an operating profit of $92 million for 2016.

SlowAppreciation

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Re: SRG - Seritage Growth Properties
« Reply #254 on: March 16, 2017, 11:02:47 AM »
There's some truth that all REITs pay dividends. Aren't they by law required to pay out 90% of profits each year? I.e. they can't have retained earnings? But I wasn't clear if this is net income or NOI. For example, SRG shows a net loss figure of $51 millionn in 2016 but if you back out certain non-cash charges and look at the cash-flow statement,  it is in fact earning an operating profit of $92 million for 2016.

I'd be surprised if they were required to pay out 90% of a non-GAAP number? But I don't really know one way or the other

scorpioncapital

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Re: SRG - Seritage Growth Properties
« Reply #255 on: March 16, 2017, 11:37:24 AM »
Yes I think you're right. I read that it is taxable income that should be distributed to not be taxed. And depreciation expense is deducted from taxable income. However, some websites write, "REITs also distribute money from operating profits that are currently tax sheltered by depreciation and other deductions. These payments are considered a return of capital that lowers one's cost basis. If an investor holds the REIT for more than one year, it is fair to assume that the return-of-capital adjustments to basis give rise to long-term gains taxed at a favorable rate. In 2013, return-of-capital distributions constituted 14% of REIT payments". I'm now wondering if the SRG dividend is in fact an income taxable dividend or adjusts the cost basis of your shares.


SlowAppreciation

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Re: SRG - Seritage Growth Properties
« Reply #256 on: March 16, 2017, 11:56:57 AM »
Yes I think you're right. I read that it is taxable income that should be distributed to not be taxed. And depreciation expense is deducted from taxable income. However, some websites write, "REITs also distribute money from operating profits that are currently tax sheltered by depreciation and other deductions. These payments are considered a return of capital that lowers one's cost basis. If an investor holds the REIT for more than one year, it is fair to assume that the return-of-capital adjustments to basis give rise to long-term gains taxed at a favorable rate. In 2013, return-of-capital distributions constituted 14% of REIT payments". I'm now wondering if the SRG dividend is in fact an income taxable dividend or adjusts the cost basis of your shares.

Hmm interesting. I found this:

"What determines the breakdown of each distribution? Put simply, the REIT's earnings and profits and its business activities in general. A REIT generates earnings and profits. To the extent that it makes distributions out of these earnings and profits, this portion is taxable to unit holders at their ordinary income levels. To the extent that the REIT makes distributions that result from the sale of capital assets -- such as buildings -- this portion will be taxable to unit holders at long term capital gains rates. Finally, to the extent that the REIT makes distributions in excess of earnings and profits, this portion constitutes a return of capital. Why would a REIT make a distribution in excess of earnings and profits? There are a variety of reasons. A REIT that suffered a sharp decline in funds from operations, for example, might make a distribution with an unusually large "return of capital" component. REITs tend to avoid cutting back on distributions. As a result, a REIT facing a fairly unprofitable year but with a traditionally high distribution rate would necessarily need to draw on investors' capital to make the distributions."

I guess because GAAP income is negative, dividends are in excess and therefore considered return of capital? Odd since I my brokerage doesn't treat it as such.

I've got SRG in a rIRA so I think I'll need to figure this out. If memory serves me correctly, return of capital and Roth IRAs have some weird rules.

koshigoe

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Re: SRG - Seritage Growth Properties
« Reply #257 on: March 16, 2017, 12:51:34 PM »
The reit.com website has the dividend classification, looks like ordinary income for seritage and not return of capital, but I'm not sure why.

https://www.reit.com/data-research/data/year-end-tax-reporting-data/2016/seritage-growth-properties

scorpioncapital

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Re: SRG - Seritage Growth Properties
« Reply #258 on: March 16, 2017, 02:06:58 PM »
Yeah same here and I did see on bogleheads wiki (https://www.bogleheads.org/wiki/Return_of_capital_distribution):

"In the case of equity REIT funds, the return of capital distribution mainly reflects the accounting value of real estate depreciation (operating earnings are in excess of earnings including depreciation). As most dividends distributed by equity REITS are non-qualified dividends, taxed at marginal rates, the return of capital dividend serves, for taxable account investors, to both defer taxation and to switch the taxation of the distribution from marginal rates to usually lower capital gains rates"

Maybe there's an esoteric reason one can ask at the AGM - or you have to make a special election?

SlowAppreciation

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Re: SRG - Seritage Growth Properties
« Reply #259 on: March 20, 2017, 11:29:50 AM »