SRG - Seritage Growth Properties

[beaufort]

If anyone attends the annual meeting and can post notes, I would appreciate it.

[doughishere]

https://www.sec.gov/Archives/edgar/data/1628063/999999999717005898/filename1.pdf

ORDER GRANTING CONFIDENTIAL TREATMENT UNDER THE SECURITIES EXCHANGE ACT OF 1934

excluded information from the following exhibit will not be released to the public for the time period specified: Exhibit 10.4 through July 7, 2025

[johnny]

Is there an obvious set of possible implications here or is it a Total Mystery?

[SlowAppreciation]

https://www.sec.gov/Archives/edgar/data/1628063/000156459017008851/srg-ex991_6.htm

[glorysk87]

by my math, SRG is a mere 3 quarters of redevelopment activity away from being "safe" from a worst case scenario, assuming they continue to redevelop at the same pace. by that, i mean that by the beginning of 2018, even if Sears declares bankruptcy, ceases all rent payments immediately, and SRG is on the hook for all costs associated with old Sears properties, they'll be cash flow positive.

[LongTermView]

It's exciting that La Jolla and Carson are now both 100% recapture.

[koshigoe]

pg 9 has the layout for the new orlando build. Phase 2 includes residential. It seems like the old enclosed mall concept really is dying and transitioning into a community feel with lots of pads in the parking lots.

http://www.cityoforlando.net/greenworks/wp-content/uploads/sites/27/2016/11/MPBStaffReport2016-11_MPL2016-00048.pdf

[tylerdurden]

by my math, SRG is a mere 3 quarters of redevelopment activity away from being "safe" from a worst case scenario, assuming they continue to redevelop at the same pace. by that, i mean that by the beginning of 2018, even if Sears declares bankruptcy, ceases all rent payments immediately, and SRG is on the hook for all costs associated with old Sears properties, they'll be cash flow positive.

Interesting. thanks for sharing. According to the recent Barron's article, Pabrai thinks they are safe early 2019 or late 2018 I believe.

[BTShine]

From my read of the shareholders letter, the CEO expects to start over $500 million of development in the next 12 months.  Assuming they'll only start developments that currently have, or will soon have,  tenants for the space, and assuming they're only  doing redevelopments with an expected 12% return on new capital, then we can expect $60+ million in additional annual rent from this $500+ million investment.   

They'll likely raise some capital for this via a financing package.  But, with Lambert, Buffett and Berkowitz as shareholders I'm not worried about satisfying this capital need. 

[LongTermView]

I'm trying to figure out how long it will take to cover key expenses without relying on Sears.

The 2017 Q1 supplemental shows key expenses for the first quarter:
($ thousands)
  $4,472 Property Operating
$12,422 Real estate taxes
  $6,274 General and administrative
$16,592 Interest expense
---------
$39,760

Annualizing brings the total to about $160 million per year.

The supplemental breaks down Third-Party rent:
Annual     PSF        GLA
Rent
$44,528   $12.97   3,432   In-Place Third-Party

$47,194   $18.21   2,591   SNO Third-Party
---------
$91,722 thousand

The remaining Third-Party rent needed is around $160 million - $92 million or $68 million

The supplemental shows that over the last 4 quarters SRG has leased 2.4 million square feet at an average of $16.06 per sf:
Quarter   GLA     A_Rent    PSF
Q2 2016   422     $7,240   $17.15
Q3 2016   543     $7,470   $13.74
Q4 2016   891   $14,900   $16.72
Q1 2017   535     $8,780   $16.41
             ------   ---------   --------
             2,391   $38,390   $16.06

If they keep going at the same pace then $68 million/$16.06 means they need to lease about another 4.2 million square feet.

If they keep re-leasing 2.4 million sf per year then they'll re-lease another 4.2 million sf within 2 years, right?