Author Topic: SRG - Seritage Growth Properties  (Read 535319 times)

AJB96

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Re: SRG - Seritage Growth Properties
« Reply #320 on: May 30, 2017, 11:59:18 AM »
Buffett would need to file an amendment to his 13G filling if he sold or materially added to his Seritage stake:

Amendment Requirements for 13G Filers

Qualified institutional investors, including investment advisors registered with the SEC or a state, must amend their Schedule 13G within 10 days after the end of the first time their "beneficial ownership" exceeds 10% of the class of equity securities at month end.

After that, qualified institutional investors must amend their Schedule 13G within 10 days from when their "beneficial ownership" increases or decreases by more than 5% of the class of securities over the amount held at the previous month end.

Qualified institutional investors must also file a Schedule 13D within 10 calendar days after they cease being eligible to file a Schedule 13G rather than a Schedule 13D.

In addition, passive investors beneficially owning less than 20% of an equity security must amend their Schedule 13G promptly, within two business days, after acquiring beneficial ownership of more than 10% of the class of equity securities, and after that, within two business days of increasing or decreasing their ownership by more than 5%.

You must also file an annual amendment to the 13G if there have been any changes - immaterial or material - to your filed 13G. This must be done within 45 days of year end. You do not need to file an amendment if there have been no changes to the information filed or if the only change is to the percentage of securities owned resulting solely from a change in the number of shares outstanding.

Source:

https://ibkb.interactivebrokers.com/node/2654
https://www.sec.gov/Archives/edgar/data/315090/000119312515399523/0001193125-15-399523-index.htm


WneverLOSE

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Re: SRG - Seritage Growth Properties
« Reply #321 on: May 30, 2017, 01:28:05 PM »
Hey Alex, I was wondering if you can share a bit what's your view on the situation and how do you think about the valuation (or if you don't think about it at all), some info like how you see the future, what rate of return you expect for such "risk" and how do you calculate  if you will get it in this case ?


Mephistopheles

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Re: SRG - Seritage Growth Properties
« Reply #323 on: June 10, 2017, 04:48:40 PM »
Agreed.  If it happened in 2020 instead of 2017 there would be a difference of approximately $500m in cash flowing into SRG over the 3 years (much paid out via mandatory dividends).  $500 million dollars is significant for a company with an enterprise value of $3.5 billion, but shouldn't be a life changing factor for the business.   

It all boils down to if they continue to re-purpose and re-lease this space at 4X current rents.  If they do, this investment will be very profitable.  If they can't find new tennants in size, then the investment will be a big loss in one way or another.

In the May '17 presentation they show that the 38 redevelopments in process will be worth 1.3 Billion when finished.  This value essentially covers SRG's mortgage debt.  From here on out everything else is gravy. 

By SRG's calculations every 1 million square feet of redevelopment creates $160 million of net new value to equity.  An additional $110 million is also retained; this is existing value based upon acquisition value of RE.  The last 4 quarters they've signed 2.4 million sq ft of space.  If they get to 3 million a year, they'll create net new value to equity of $480 million, or about $8.75/share.  They'll also retain $330 million of existing value (think of what value exists w/ SHLD as a tennant) when leasing 3 million sqft. 

Overall, this example of redeveloping 3 million sqft per year means the company will lock in value of $810 million ($480m  + $330m).  If SHLD went bankrupt tomorrow we'd still have the $1.3 Billion of value in place from current redevelopments.   Then every year we'd see $810 million of value locked in, which brings us back to current enterprise value in 3 years.  From there, the company increase in value of $810m per year would give us a 33% return based upon a market cap of $2.2 Billion.

It all boils down to the market demand for this space continuing at it's current pace and price.

I think this company could redevelop and lease all of its 40 million sqft in the next 10 years, which would make shares worth about $200 and that doesn't include the dividends we'd collect along the way. 



Hi BT, thanks for the analysis. Where are you seeing the bolded parts? I can't find this information in any presentation.

BTShine

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Re: SRG - Seritage Growth Properties
« Reply #324 on: June 11, 2017, 10:40:24 AM »
Agreed.  If it happened in 2020 instead of 2017 there would be a difference of approximately $500m in cash flowing into SRG over the 3 years (much paid out via mandatory dividends).  $500 million dollars is significant for a company with an enterprise value of $3.5 billion, but shouldn't be a life changing factor for the business.   

It all boils down to if they continue to re-purpose and re-lease this space at 4X current rents.  If they do, this investment will be very profitable.  If they can't find new tennants in size, then the investment will be a big loss in one way or another.

In the May '17 presentation they show that the 38 redevelopments in process will be worth 1.3 Billion when finished.  This value essentially covers SRG's mortgage debt.  From here on out everything else is gravy. 

By SRG's calculations every 1 million square feet of redevelopment creates $160 million of net new value to equity.  An additional $110 million is also retained; this is existing value based upon acquisition value of RE.  The last 4 quarters they've signed 2.4 million sq ft of space.  If they get to 3 million a year, they'll create net new value to equity of $480 million, or about $8.75/share.  They'll also retain $330 million of existing value (think of what value exists w/ SHLD as a tennant) when leasing 3 million sqft. 

Overall, this example of redeveloping 3 million sqft per year means the company will lock in value of $810 million ($480m  + $330m).  If SHLD went bankrupt tomorrow we'd still have the $1.3 Billion of value in place from current redevelopments.   Then every year we'd see $810 million of value locked in, which brings us back to current enterprise value in 3 years.  From there, the company increase in value of $810m per year would give us a 33% return based upon a market cap of $2.2 Billion.

It all boils down to the market demand for this space continuing at it's current pace and price.

I think this company could redevelop and lease all of its 40 million sqft in the next 10 years, which would make shares worth about $200 and that doesn't include the dividends we'd collect along the way. 



Hi BT, thanks for the analysis. Where are you seeing the bolded parts? I can't find this information in any presentation.

You're welcome.

It's a combination of their information on page 7 of the June '17 Investor presentation (link below), which relates to the 38 referenced projects.  This info was also in the May Presentation.  The sq ft of those projects is in the 10-Q (and was in the 10-K, etc) and is 3.275 million square feet.  To be clear they never explicitly stated the numbers of $160 and $110 per square foot.  I use their information and get there with some simple division, etc.

http://ir.seritage.com/Cache/1500100572.PDF?O=PDF&T=&Y=&D=&FID=1500100572&iid=4584761

« Last Edit: June 11, 2017, 10:49:32 AM by BTShine »

LongTermView

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Re: SRG - Seritage Growth Properties
« Reply #325 on: June 11, 2017, 11:19:30 AM »
The June presentation has some encouraging info.

The percentage of annual base rent from leases signed by the Company from inception in July 2015 through March 31, 2017 on page 5 is helpful:
37% Entertainment, food & beverage
20% Value fashion
17% Home
14% Specialty
10% Everyday uses
  2% Other

The Entertainment, food & beverage category should be relatively safe over the next 10+ years imo.

It would be nice if they were more specific with the Everyday uses category. LA Fitness and 24 Hour Fitness are in this group and gyms should be safe over the next 10+ years imo. There are different types of business from other companies in this group like Lucky's Market that are apples to oranges with respect to gyms.
« Last Edit: June 11, 2017, 11:23:08 AM by LongTermView »

texual

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Re: SRG - Seritage Growth Properties
« Reply #326 on: June 12, 2017, 05:14:41 AM »
https://www.wsj.com/articles/german-discount-grocer-aldi-sets-u-s-expansion-plan-1497229200

https://www.bloomberg.com/news/articles/2017-06-12/european-grocery-rivalry-expands-to-u-s-as-aldi-lidl-bulk-up

Don't just focus on US store growth (although I do believe there is robust growth ahead for a number of up and coming retail upstarts including Amazon and small concepts like Design Within Reach as well as Equinox). There are many opportunities coming and Sears has the real estate. Not saying the above companies are taking over the SRG portfolio but there are signals. I've been a net buyer of SRG in the past weeks.

CorpRaider

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Re: SRG - Seritage Growth Properties
« Reply #327 on: June 12, 2017, 06:44:02 AM »
So when Sears says it intends to raise an additional $1 billion via RE sales this year (right?), you guys conclude it is likely that SRG will bid on that and if successful fund with a rights issue?

BTShine

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Re: SRG - Seritage Growth Properties
« Reply #328 on: June 12, 2017, 06:56:57 AM »
No, not in my opinion.  Possible but not necessarily likely.

merkhet

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Re: SRG - Seritage Growth Properties
« Reply #329 on: June 12, 2017, 06:59:55 AM »
So when Sears says it intends to raise an additional $1 billion via RE sales this year (right?), you guys conclude it is likely that SRG will bid on that and if successful fund with a rights issue?

Apparently, SRG's management was asked this at the annual meeting and was quite coy about it.