Seritage Growth Properties (SRG) | Investment Case

1. Company Snapshot

1.a. Company Description

Seritage Growth Properties is a publicly-traded, self-administered and self-managed REIT with 166 wholly-owned properties and 29 unconsolidated properties totaling approximately 30.4 million square feet of space across 44 states and Puerto Rico.The Company was formed to unlock the underlying real estate value of a high-quality retail portfolio it acquired from Sears Holdings in July 2015.The Company's mission is to create and own revitalized shopping, dining, entertainment and mixed-use destinations that provide enriched experiences for consumers and local communities, and create long-term value for our shareholders.

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1.b. Last Insights on SRG

Seritage Growth Properties' recent performance was negatively impacted by the company's aggressive debt repayment strategy. In the past three months, Seritage made two significant loan prepayments, totaling $40 million, towards its $1.6 billion term loan facility provided by Berkshire Hathaway. While this demonstrates the company's commitment to reducing debt, it may also indicate a lack of liquidity or a need to free up capital for other purposes. Additionally, the company's focus on debt repayment may divert resources away from its core business of developing and owning retail, residential, and mixed-use properties.

1.c. Company Highlights

Last Price	3.33
Change Percentage	-2.63%
Open	3.41
Previous Close	3.42
Market Cap ( Millions)	188
Volume	348703
Year High	4.56
Year Low	2.43
M A 50	3.96
M A 200	3.41

FCF Yield	-25.42%
Dividend Yield	0.00%
ROE	-20.54%
Debt / Equity	0.00%
Net Debt / EBIDTA	86.53%
Price To Book	0.56
Price Earnings Ratio	-2.48
Price To FCF	-3.93
Price To sales	10.18
EV / EBITDA	-2.28

2. Transcript Summary

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3. NewsRoom

Beware Of The Risk Of The 7.4% Preferred Yield Of Seritage Growth Properties

Nov -19

Source: seekingalpha.com

REVOLVE AND SOFIA RICHIE GRAINGE INTRODUCE SRG

Oct -16

Source: prnewswire.com

Could This Little-Known Real Estate Stock Double Your Money?

Oct -13

Source: fool.com

SERITAGE INVESTIGATION ALERT: Bragar Eagel & Squire, P.C. is Investigating Seritage Growth Properties on Behalf of Long-Term Stockholders and Encourages Investors to Contact the Firm

Sep -27

Source: globenewswire.com

Seritage Growth Properties: Pace Of Asset Sales Accelerates

Aug -20

Source: seekingalpha.com

SERITAGE ALERT: Bragar Eagel & Squire, P.C. is Investigating Seritage Growth Properties on Behalf of Long-Term Stockholders and Encourages Investors to Contact the Firm

Jul -30

Source: globenewswire.com

Seritage Growth Properties Makes $40 Million Loan Prepayment

Jun -11

Source: businesswire.com

Seritage Growth Properties Announces CEO Transition

Mar -28

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.21%)

6. Segments

Rental

Expected Growth: 4.5%

Rental growth driven by increasing demand for retail spaces, Seritage's redevelopment and retenanting efforts, and Sears Holdings' properties' potential for revitalization.

Management and Other Fee

Expected Growth: 3.5%

Growing demand for retail spaces, increasing need for property management services, and Seritage Growth Properties' expanding portfolio are expected to drive growth in management and other fees.

7. Detailed Products

Retail Properties

Seritage Growth Properties owns and operates a diverse portfolio of retail properties, including shopping centers, strip centers, and single-tenant retail properties.

Office Properties

The company offers a range of office properties, including multi-tenant office buildings, single-tenant office buildings, and office parks.

Industrial Properties

Seritage Growth Properties' industrial portfolio includes warehouses, distribution centers, and light industrial properties.

Mixed-Use Properties

The company develops and operates mixed-use properties that combine retail, office, and residential spaces.

Land Development

Seritage Growth Properties acquires and develops land for future development, including residential, commercial, and mixed-use projects.

8. Seritage Growth Properties's Porter Forces

Forces Ranking

Threat Of Substitutes

Seritage Growth Properties operates in the real estate industry, which has a moderate threat of substitutes. While there are alternative investment options available, the company's focus on retail and mixed-use properties provides some level of differentiation.

Bargaining Power Of Customers

Seritage Growth Properties has a diverse tenant base, which reduces the bargaining power of individual customers. Additionally, the company's focus on long-term leases and strong relationships with tenants further reduces the bargaining power of customers.

Bargaining Power Of Suppliers

Seritage Growth Properties has a diverse supplier base, which reduces the bargaining power of individual suppliers. The company's scale and negotiating power also help to mitigate the bargaining power of suppliers.

Threat Of New Entrants

The real estate industry has high barriers to entry, including significant capital requirements and regulatory hurdles. This makes it difficult for new entrants to compete with established players like Seritage Growth Properties.

Intensity Of Rivalry

The real estate industry is highly competitive, with many established players competing for a limited number of investment opportunities. Seritage Growth Properties must compete with other REITs, private equity firms, and individual investors to acquire and develop properties.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	39.05%
Debt Cost	3.95%
Equity Weight	60.95%
Equity Cost	16.97%
WACC	11.89%
Leverage	64.06%

11. Quality Control: Seritage Growth Properties passed 2 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

NETSTREIT

A-Score: 6.7/10

Value: 3.0

Growth: 6.2

Quality: 6.2

Yield: 8.0

Momentum: 7.0

Volatility: 10.0

1-Year Total Return ->

Getty Realty

A-Score: 6.2/10

Value: 3.1

Growth: 4.6

Quality: 6.5

Yield: 10.0

Momentum: 3.0

Volatility: 10.0

1-Year Total Return ->

Whitestone REIT

A-Score: 5.8/10

Value: 5.0

Growth: 4.3

Quality: 6.5

Yield: 7.0

Momentum: 3.0

Volatility: 9.0

1-Year Total Return ->

InvenTrust Properties

A-Score: 5.5/10

Value: 3.0

Growth: 4.1

Quality: 5.9

Yield: 5.0

Momentum: 5.0

Volatility: 10.0

1-Year Total Return ->

Retail Opportunity Investments

A-Score: 5.0/10

Value: 2.8

Growth: 4.6

Quality: 5.8

Yield: 4.0

Momentum: 6.5

Volatility: 6.3

1-Year Total Return ->

Seritage Growth Properties

A-Score: 3.5/10

Value: 7.6

Growth: 1.8

Quality: 3.3

Yield: 0.0

Momentum: 4.5

Volatility: 4.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

22.85%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

11.89%

Seritage Growth Properties - US81752R1005

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on SRG

1.c. Company Highlights

Lower Yield

More Volatile

Lower Quality

Cheaper

Weak Momentum

Lower Growth

2. Transcript Summary

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.21%)

6. Segments

Rental

Expected Growth: 4.5%

Management and Other Fee

Expected Growth: 3.5%

7. Detailed Products

Retail Properties

Office Properties

Industrial Properties

Mixed-Use Properties

Land Development

8. Seritage Growth Properties's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Seritage Growth Properties passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

3.33$

Current Price

3.33$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA