SRG - Seritage Growth Properties

[dutchman]

were it not for buffet, I think a lot of us would have no interest in this

[scorpioncapital]

 If you ignore the Sears base rental income drop which is a known factor, non-Sears rental revenue went up like 35% in 2017. A few more years like that and it will become very evident.

[Foreign Tuffett]

were it not for buffet, I think a lot of us would have no interest in this

You're making me hungry with this "buffet" talk

[zippy1]

were it not for buffet, I think a lot of us would have no interest in this

You're making me hungry with this "buffet" talk

re-purpose to eatery?! 

[NBL0303]

were it not for buffet, I think a lot of us would have no interest in this

If it were not for Buffett's position, perhaps the share price would be substantially lower, and then some of us would be very interested in it at a certain price.

[Spekulatius]

were it not for buffet, I think a lot of us would have no interest in this

If it were not for Buffett's position, perhaps the share price would be substantially lower, and then some of us would be very interested in it at a certain price.

Well, SRG pretty much trades at the price the old man bought it two years ago, so that is a start.

[peridotcapital]

As cap rates rise it gets harder to see where the value in SRG is.

Kimco owns 67.9M sf, gets $16 rent/sf, and trades at an E/V of $12.0B ($176/sf)

Seritage owns 37.3M sf, gets $7 rent/sf, and trades at an E/V of $3.3B ($89/sf)

At 2017 leasing velocity the portfolio is Sears-free in 10 years and SRG equity goes from $35 to $70 per share. Assuming it happens as planned, investors will earn 7%/year plus dividends, so call it 10%/year. Why not just buy Kimco with its 7.7% dividend yield and probably earn roughly same return without having to rely on the company finding new tenants for 60% of its GLA over the next decade?

[NBL0303]

As cap rates rise it gets harder to see where the value in SRG is.

Kimco owns 67.9M sf, gets $16 rent/sf, and trades at an E/V of $12.0B ($176/sf)

Seritage owns 37.3M sf, gets $7 rent/sf, and trades at an E/V of $3.3B ($89/sf)

At 2017 leasing velocity the portfolio is Sears-free in 10 years and SRG equity goes from $35 to $70 per share. Assuming it happens as planned, investors will earn 7%/year plus dividends, so call it 10%/year. Why not just buy Kimco with its 7.7% dividend yield and probably earn roughly same return without having to rely on the company finding new tenants for 60% of its GLA over the next decade?

Good points.  Is Kimco the cheapest REIT of this kind that you know of or are there other cheap options as well?

[Spekulatius]

As cap rates rise it gets harder to see where the value in SRG is.

Kimco owns 67.9M sf, gets $16 rent/sf, and trades at an E/V of $12.0B ($176/sf)

Seritage owns 37.3M sf, gets $7 rent/sf, and trades at an E/V of $3.3B ($89/sf)

At 2017 leasing velocity the portfolio is Sears-free in 10 years and SRG equity goes from $35 to $70 per share. Assuming it happens as planned, investors will earn 7%/year plus dividends, so call it 10%/year. Why not just buy Kimco with its 7.7% dividend yield and probably earn roughly same return without having to rely on the company finding new tenants for 60% of its GLA over the next decade?

Good points.  Is Kimco the cheapest REIT of this kind that you know of or are there other cheap options as well?

Depends on how you define cheap .KIM peers are DDR, KRG, BRX. All of them are either cheap or well disguised value traps. I would rate KIM to be the highest quality of the bunch

The big issue are deflationary trends on rents over the long run due to online gaining share.

[BTShine]

The factor I’m most concerned with is will humans find a use for space outside the home going forward?   Our civilization has repurposed real estate many times in our history and I believe this retail space will be repurposed, too.  What will the rents be?  That’s the only question I care about.

 My guess is much of that depends upon construction costs.  Replacement costs and cost of construction in general, since the cost of constructing other buildings will always compete against vacant space. 

Mega churches.  Restaurants.  Universities.  Office space.  All of those users are candidates in the future (for any failed properties, of course).  What will they pay? 

Retailers getting beat by Amazon are not the only candidates to tenant this type of property.