Bruce Berkowitz Comments on Seritage

Guru stock highlight

Feb 05, 2018

Seritage (NYSE:SRG) is a simple redevelopment story clouded by a complex tenant relationship with Sears. Seritage owns 40 million square feet of retail space and surrounding parking lots; Sears occupies 75% of its retail space. When Sears closes stores at Seritage locations, the real estate is re-rented at market rates three times higher to tenants such as Whole Foods and Nordstrom Rack. Proportionally higher cash distributions to owners then follow. I believe this opportunity to recapture valuable real estate is why Warren Buffett (Trades, Portfolio) personally became one of the largest shareholders of Seritage.

From Bruce Berkowitz (Trades, Portfolio)'s Fairholme Fund (Trades, Portfolio) fourth quarter 2017 shareholder letter.

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