Author Topic: SRG - Seritage Growth Properties  (Read 535304 times)

Foreign Tuffett

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Re: SRG - Seritage Growth Properties
« Reply #490 on: January 19, 2018, 06:38:19 AM »
1/18/2018 Release: http://ir.seritage.com/file/Index?KeyFile=391812307


Cliffs:

Signed new leases totaling over 870,000 sf in 4Q17.

Leased GLA is now 4.83 million with $86 million in annual rent compared to leased GLA of 3.96 million with annual rent of $71 million in the 3Q17 supplemental.

Development is now 6.20 million sf with projected annual income of $157 million compared to 4.95 million sf with projected annual income of $105 million in the 3Q17 supplemental.

Another solid quarter of leasing activity. The press release mentions that redevelopment activity has started at the Santa Monica, Adventura, and La Jolla properties. These are three of SRG's highest quality properties, with Adventura and Santa Monica probably being the two highest quality properties in SRG's entire portfolio. I don't think these properties have any signed leases yet. I think there is significant "hidden" upside from these properties getting leased up as their redevelopment continues.
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johnny

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Re: SRG - Seritage Growth Properties
« Reply #491 on: January 19, 2018, 05:00:10 PM »
Great article, thanks. I take it as long as net income is negative, there is no obligation to pay any dividend.

The article asks a good question: why are some REITs so generous when they are not obligated to pay anything due to a negative net income, they pay something.

For example, SRG just floated a 7% preferred security to raise 70 to 100m. That is just a little under the dividend and operating partner unit distributions paid from inception to the end of 2017. If they didn't pay me a 2.8% dividend yield over this period, they could have paid me a 7% dividend by NOT taking this loan. Another way to look at it, if new redevelopment is yielding unlevered 10-11%, then every dollar of dividend paid seems a lower return than the company can generate with those funds. I don't get - in this particular situation anyway - why they pay a single penny in dividend when all of their return, debt and equity yields 7 to 10% and they are not obligated to pay anything until their taxable income turns positive.

Think this has been covered, but if there's a norm in REITspace for paying dividends, then the costs of violating the norm may be much higher than following it. If, for example, your no-distribution rationality results in a huge chunk of institutional buyers shunning your equity (for being a "broken" REIT), then the pricing penalty you suffer may be quite a bit larger (especially in a case like this where we -know- that the opportunities are going to require significant extra capital to execute on a favorable timeline).

Is it better to raise $3B over the next decade under the No Shun Condition, or is it better to have to raise $2.7B under the Shun Condition?

Not saying that this is the "correct" decision, but I think it's what is somewhere in the back of one's mind when they're testing the idea that they should exercise Perfect Rationality on what is, in the big picture, a relatively immaterial decision about the company's capitalization.
« Last Edit: January 19, 2018, 05:44:01 PM by johnny »

scorpioncapital

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Re: SRG - Seritage Growth Properties
« Reply #492 on: January 20, 2018, 01:12:30 AM »
They can always start paying the dividend when they need the money. So far if they didn't pay a dividend for 2 years they wouldn't need any capital. They could start the dividend today...and let's say the dilution if you issued equity of 100 million at $40 is 2.5 million shares out of 55 million it's 4.5%. It seems small but over time it can add up. I'm not entirely sure that they need alot more money than what Lampert and the relatively small preference shares have gotten so far...at least perhaps for another little while. Also I'm of the philosophy if you have the luxury of a net loss and run a REIT and have the option to not pay a dividend it's like splitting doubles in blackjack, it's just something you almost always should take until that opportunity is no longer available. Also I think SRG is already pretty shunned at current prices and with such a low dividend, very few are buying it for the yield. For REIT yield you can buy a dozen other REITS yielding 5%+.

CorpRaider

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Re: SRG - Seritage Growth Properties
« Reply #493 on: January 20, 2018, 06:58:31 AM »
Pretty sure someone asked management and posted their response a few pages back in this thread.  Also, Mr. Lampert needs fuel for the yacht.
« Last Edit: January 22, 2018, 06:12:01 PM by CorpRaider »

DooDiligence

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Re: SRG - Seritage Growth Properties
« Reply #494 on: January 20, 2018, 09:59:05 AM »
Pretty sure someone asked management and posted their response a few paged back in this thread.  Also, Mr. Lampert needs fuel for the yacht.


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FiveSigma

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Re: SRG - Seritage Growth Properties
« Reply #495 on: January 22, 2018, 04:52:44 PM »
Hi,

I was wondering if someone with access to CMBS offering documents was kind enough to post/share the JPMCC 2015-SGP document with the annex that (see image attached to this post) excerpt from a ValueInvestorsClub report mentions.

I tried looking online - no dice. SRG investor relations told me that they cannot provide it to me.

Much appreciated.

AJB96

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Re: SRG - Seritage Growth Properties
« Reply #496 on: January 22, 2018, 05:03:03 PM »
Seritage CMBS annex attached.
« Last Edit: March 15, 2018, 02:34:39 PM by alexbossert »

Foreign Tuffett

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Re: SRG - Seritage Growth Properties
« Reply #497 on: January 22, 2018, 05:18:09 PM »
Hi,

I was wondering if someone with access to CMBS offering documents was kind enough to post/share the JPMCC 2015-SGP document with the annex that (see image attached to this post) excerpt from a ValueInvestorsClub report mentions.

I tried looking online - no dice. SRG investor relations told me that they cannot provide it to me.

Much appreciated.

I believe this document was posted earlier in this thread. The only version I have of it has been heavily modified and I'd rather not post it.
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frommi

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Re: SRG - Seritage Growth Properties
« Reply #498 on: February 28, 2018, 06:31:15 AM »
https://www.businesswire.com/news/home/20180227006647/en/

While the numbers look not that good on the first view, on a second look they are not that bad. My NAV valuation for the end of 2019 has increased by 5$ this quarter which is a lot for one quarter. Maybe the market now recognizes this as a true redevelopment story.

Q3 2019 NOI forecast: $232.32 (155+77.3)
Q4 2019 NOI forecast: $273.40 (155+118)

Q3 2019 NAV/share 50$ at 6% caprate
Q4 2019 NAV/share 55$ at 6% caprate

Spekulatius

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Re: SRG - Seritage Growth Properties
« Reply #499 on: February 28, 2018, 02:47:45 PM »
https://www.businesswire.com/news/home/20180227006647/en/

While the numbers look not that good on the first view, on a second look they are not that bad. My NAV valuation for the end of 2019 has increased by 5$ this quarter which is a lot for one quarter. Maybe the market now recognizes this as a true redevelopment story.

Q3 2019 NOI forecast: $232.32 (155+77.3)
Q4 2019 NOI forecast: $273.40 (155+118)

Q3 2019 NAV/share 50$ at 6% caprate
Q4 2019 NAV/share 55$ at 6% caprate

Where do you get above numbers from? The base rents from Sears (the $155 NOI/year, I assume) are not stable, they are falling quicker right now then the rents from redevelopment projects rise, due to accelerated store closures. I would also pretty much assume that Sears by  the end of Y2019 wonít exist in itís current form any more.

Also, the 6% CP rate assumption is too low. Kimco, which owns on average B properties like Sears does, trades at an almost 8% CP rate right now.I think 7% cap rate would be more realistic. Still, the redevelopments are value accrediting, but just not that much. I also predict that SRG will have to raise equity this year.

I like SRG, but there are a lot of headwinds to the redevelopment story.
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