Matthew Peterson of Peterson Capital Management presented his investment thesis on Seritage Growth Properties (US: SRG) at Best Ideas 2022.

Thesis summary:

Seritage engages in ownership, redevelopment, management and leasing of a diversified portfolio of 170 mixed-use ex-Sears properties in the US.

With high cost of capital, negative cash flow, and no dividend, Seritage is an easily misunderstood REIT.

New management has provided a transparent strategy and reorganized the portfolio assets into five end use cases. Four enhance long-term shareholder value while the final use case, classified as “other”, defines $1 billion in property liquidations that will pay down debt, reduce the cost of capital, and support the development needs of high-return-on-capital projects.

The path to positive cash flow is clear and a property-by-property assessment suggests a diluted per-share value that Matt estimates at more than twice the recent share price.

Listen to this session:

slide presentation audio recording

About the instructor:

Matthew Peterson is the Managing Partner of Peterson Capital Management, which he founded in 2011. PCM manages a long term, concentrated, value base fund with a ten year annual track record of nearly 19%. He has been a financial professional for two decades, is a Chartered Financial Analyst, and has worked with Goldman Sachs, Morgan Stanley, Merrill Lynch, American Express, and Ameriprise Financial.

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