Fairholme Capital Reduces Seritage Growth Properties Position

Bruce Berkowitz's Fairholme Capital has filed an amended 13G regarding its position in Seritage Growth Properties (SRG).  Per the filing, Fairholme now owns 4.9% of the company with 1.69 million shares.

The filing was made due to activity on March 16th.  This is down from the previous 3.27 million shares Fairholme owned at the end of 2017.

Per the company's website, Seritage is "a publicly traded, self-administered, self-managed REIT with a portfolio of 235 wholly-owned properties and 31 joint venture properties, consisting of approximately 42 million square feet of building space."

Amos Meron Long Seritage: Invest For Kids Chicago Presentation

We're posting up notes from the Invest For Kids Chicago Conference 2017.  Next up is Amos Meron of Empyrean Capital Partners who pitched long Seritage (SRG).


Amos Meron's Invest For Kids Chicago Presentation: Long Seritage

Looking for dramatic life-cycle changes that create opportunities in the market.  There is an ongoing misunderstanding of the Seritage (SRG) - Sears (SHLD) relationship.

SRG was created as a way to carve out (siphon) some of a SHLD’s best real estate – deal was structured as a giant sale-leaseback,  235 properties, 37 million square feet.  SRG can “claw back” certain properties from SHLD over time and redevelop them.

“I’m not dead yet” – all mall-based or retail real estate is pressured, but it’s not all the same. SRG has a national portfolio of really good assets with solid demographics.  SRG is nearing its goal of having 50% of its rent from non-SHLD tenants by FYE 2017; could be 2/3 by FYE 2018.  SHLD pays <$5 per square foot, while the average for new tenants is $19.

SRG trades at $80 per square foot versus $128 for “C” space companies.  SHLD chapter 11 would have a fleeting impact on SRG.  At a 6% cap rate on FY18 NOI, SRG has 40% upside to $60.

Risk is a further fall in retail, so short retail REITS against SRG long.



For more from this event, check out the rest of the presentations from Invest For Kids Chicago 2017.

What We're Reading ~ 5/3/17

The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail [Christensen]

Warren Buffett's money managers Combs and Weschler speak [Yahoo Finance]

The new moats [Greylock]

Staying competitive as the world changes [Collaborative Fund]

A look at Seritage Growth Properties [Barrons]

Profile of Fidelity's Will Danoff [FT]

How Trump's pick for top Antitrust cop may shape competition [NYTimes]

Big name food brands lose battle of the grocery aisle [WSJ]

Thoughts on retailer L Brands [Intrinsic Investing]

Is the lingerie market on the verge of another disruption? (possible NSFW image) [Business of Fashion]

Amazon strategy teardown: building new business pillars [CB Insights]

UnderArmour tripped up in its run to become the world's next sneaker giant [Qz]

CEO pay is out of control [Fortune]

Apple's China problem [Stratechery]

With $6.2 billion spectrum spree, DISH's Charlie Ergen buys himself options [Bloomberg]

Can Facebook fix its own worst bug? [NYTimes]

Dyson is the Apple of Appliances [NYTimes]

Elon Musk's 2017 TED talk interview [YouTube]

Fairholme Capital Shows Seritage Growth Properties Position

Bruce Berkowitz's investment firm Fairholme Capital has filed a 13G with the SEC regarding shares of Seritage Growth Properties (SRG).  Per the filing, Fairholme now owns 13.2% of Seritage with over 3.25 million shares.

This is a newly disclosed position for Berkowitz as Sears (SHLD), one of his top holdings, recently formed a REIT (Seritage) to hold 254 stores.  The filing was made due to activity on July 6th.  Seritage recently announced expiration and oversubscription of its rights offering.