Gregmal

Here's another angle Ive been grappling with, that may perhaps be a hidden area of safety. Anchor tenant rolloff. Historically, right, your anchor has been the draw and everything else kind of flows through that. However I dont really think that is the case anymore, and if anything its probably the opposite. People tend to come for "everything else"(whatever that entails...ie restaurants, entertainment etc), not because of the large box anchors. Nevertheless, they've got these deadbeat, hanging on by a thread, anchor stores priced at like $5/sf and representing a negligible total percentage of revenues. Thesis kind of jumps off the Seritage page, but are these things going away really a headwind? I think it could be a tailwind. Replace them with a hotel, flex office, or residential, and boom, in those locations, you're probably getting a 10x increase in revenues. Heck, you can even take a page from Righteous Gemstones and open a mega church!

Greg, Agree with most of what you're saying. I just think time may or may not be your friend and I think I can buy it cheaper when the economy hits the skids. That's literally my playbook. So interesting situation, just not tomorrow. Agree on recession and its probably the main thing I am concerned with.This will get a lot cheaper if we hit the skids. A few dominos fall and yea it'll get cheaper, probably a decent bit. But isn't that what folks like us do? Buy cheap and then, often, a bunch cheaper lol I'm certainly going to be early but I figure the $5-6 Corona discount(sadly not a beer special) is at least a reasonable starting point for a position. I just get excited about real estate like this and the contrarian nature of the investment. Say "malls" to people and look at the reactions. But malls dont have to be malls forever. And its rare to have the chance to buy companies and assets of this caliber at these kind of prices. It often takes an exceptional situation, and what is happening to malls and retail is certainly quite exceptional, even historic. So its a pain trade Im willing to make. Hopefully, Ive got a few decades.

Im leaning to buy a little more if we get closer to $55. The issue IMO is that theres zero real urgency to buy a stock like this. Its a good but not great biz. Cheap but not super cheap. Out of favor sector. It'll do fine if the financial engineering aspect plays out and is done in a prudent manner. So thats what counts. But its not something I see anyone excited about buying. Time is your friend here, just not tomorrow.

No worries Bill, we love unsolicited a-hole opinions. Disruptive music in the echo chamber is always appreciated. A few points/comments. As a real estate junkie, I would challenge anyone to thoroughly scroll through the Simon portfolio. It is stunning and just a truly spectacular collection of premier assets in largely prime location. Something to admire and certain not anything that would fall into the category of "I wouldn't own it at any price"...so theres that. Balance sheet is robust. Name another RE company capable of raising cash at 2.6%? There are major differences between Simon and others that came before it. There is also the fact that so many others have come before it and these guys are best in the biz management; surely they have taken note and learned from the Sears and the Macys of the world. But, for comparisons sake.. Sears/Seritage- Simon has better locations, better management, better balance sheet. Profitability is not in question. They also dont have to worry about running a retail business. As for redevelopment? Let me again say, 2.6%/ 15 years. Buffett and many others like Seritage, but for the life of me I can not find an argument to like SRG and not like Simon better. Macy's- Same arguments as above. Simon doesnt have to worry about running retail. They dont have to worry about winding down and eliminating thousands of jobs. All the locations(generally speaking) with Simon are good, not so for Macy's. Howard Hughes- HHC is definitely better positioned than the above two, but again, whats their cost of capital? Regarding specific types of redevelopment? I think this is overblown. If Seritage can reposition old Sears stores into residential than so can Simon, but with more attractive locations and cheaper capital. Howard Hughes will have some reliance on retail, so if retail is a goner, it will hurt them too. They have better layout for office, but who says you cant take a prime location mall and add office? I am also probably more bearish on office than I am retail. Hughes IMO has an edge with residential. But you cant make the argument(after scouring the SPG portfolio) that you couldn't take most of those locations and sell 1/2/3 br condos. Almost all of Simons locations would support high end residential. Stuff like this is truly exciting: For example, at Northgate Mall in Seattle, Washington, we are re-imagining this 60-year-old center to include NHL Seattle’s Corporate Headquarters and practice facility, one million square feet of Class A office, over 1,000 residential units and approximately 375 hotel rooms, all served by a new mass transit solution. This current retail-only shopping mall will be completely transformed upon our completion. Nobody has better dirt than Simon, nobody has better overall locations, nobody has higher quality tenants and nobody is better managed. Thats the pitch. I mean look, even Brookfield, who has tried to build another Simon, basically ended up only buying Simons junk. Even if, as noted, tenant quality goes down, cash is still cash. Yes, in a market assigning multiples, you'll suffer short term in terms of how you're rated if the tenant quality dampens, but at the same time, you're getting paid(and paid exceptionally well) to wait and the mix of short term or less than 12m leases is like 2-3% of total revenue. Easy come, easy go.

Did some repositioning. Finished exiting GM stock and transferred into slightly larger share equivalent $30 calls. Closed my GM puts as well. Its either gonna go or its not. My stop loss built in with the strike, and after about a half decade, if it doesnt perk up Im fine having been wrong and calling it a day here. Exited 30% of BX and replaced it with BRK.B and SPG. Reduced some margin in the process.

I've leased maybe a half dozen offices in varying locations from NYC to the suburbs of it, over the past decade. Never have I shared space and cant imagine how for some businesses, this type of layout isn't a complete nonstarter from the get go. But, I do think it is indicative of some companies last ditch efforts to attract the millennial crowd and herd them into an office. But it will likely be short lived. Which leads me to my conclusion, that in the world of RE investment, certain things are safe, and certain ones arent(duh). Residential to me cant be virtualized(again, duh). Retail as we've discussed ad naseum, is being forced to change and can be very much at risk. Industrial, I think is the second safest space after residential. But IMO, what is most at risk, way more so than even retail, is office space. Theres just no need for it on a lot of levels and when you combine this with the future generations and their "lets explore bc I have ADD" mentality, companies will continue to shift out of traditional office. Much like with retail, sure you will still have some big trophy office campuses. But the days of just throwing up cubicles and guiding thousands of employees, like cattle, into an office, is not the way of the future. WeWorks "idea" wasn't revolutionary, it was reactionary.

I dont think its worth drawing ANY conclusions at this point simply because the sample sizes for any of them would be unreliable. But with any early phase experiment, paying attention to these things is important. There may be correlations, there may not be. Some, that are not there today, may eventually show up, and vice versa.

some reasonable insider buying here today

I dont think everything is going to turn into a bowling alley. There is a clear difference between dust bowl locations with 60% occupancy rates and failing anchors, and top tier locations in high traffic corridors centered around bustling communities and work/residential facilities. Mid-high 90's occupancy rates with the type of tenant diversification SPG has speaks for itself. Retailers will not all go online and call it a day. They won't all just go sell on Amazon either. If a physical store makes money, they have little to no reason to shut it down. If anything that approach is counter productive. A lot of retailers still make money, you're just seeing a transition period where the mid tier down to the bottom, who lose money get killed. The rest will adjust and rents will have to rerate. But at the same time, much of this has been taking place for years already. As has been noted on some of the calls, if anything, the push out of B and C creates more demand for prime space in A. Anyone thinking this space is just going to evaporate needs to go check out the new mega mall at the Meadowlands. People love the SRG's and the HHCs of the world, but frankly, IMO SPG has those same type of opportunities available to it, with a better management team, and lower cost of capital. They have plenty of levers to pull, and at the current valuation really dont need much of anything to go wonderfully right. I'd also add, that due to Simons market position and expertise, it is possible for most mall companies to fail and still have this thing standing tall. Not to mention that there has been some activity in the space; COBF favorite Brookfield has been making moves here for a few years now. Which is not to say I wholeheartedly agree with them, but I do think some smart folks see avenues to reposition this space, and the narrative that basically every player here will be wiped out is bogus. Simon is hands down the best, and from these levels, should be A-OK if not better.

Simon Property SPG $141.63 Large cap value hidden in plain sight, buying today at 2012 share prices and a crisis level valuation. Fully liquid shares. Buy it and forget about it. Completely safe and well covered 5.8% current yield with projected growth Indisputable industry leader with a top notch management team capable of not only navigating the waves but staying ahead of the competition and establishing new trends Absurdly low cost of capital, just raised $3,5B of 15+ year notes at 2.6% Diligent manager of the balance sheet with recent refinancing of sr secured notes and active share repurchase program. Total annual capital returned to shareholders approaching 8%. Compelling JV structured to mitigate companies expose to pure development risks Global footprint and in house operations/relationship managers streamline much of the process and creates cost savings relative to peers with piece meal real estate operations. Malls, Malls, Malls, is valid, just not here. Simon boasts a 95% occupancy rate and is known for the quality of its locations. Baby has largely been thrown out with the bathwater. Simon could lose ALL of it’s top 5 anchor tenants AND have 75% of ‘20+’21 leases expire without renewal with little to no impact on its current profile or ability to repurchase stock or pay out the current dividend. Essentially the mall Armageddon thesis is playing out and probably somewhere in the 7th or 8th inning. Simon has not only navigated the crisis but grown. They’ve continued to improve SS NOI and FFO, nearly DOUBLING their dividend per share during the 6 year Mall Apocalypse starting in 2013 without the undertaking of an unhealthy payout ratio. Simon is currently trading at a historically low P/FFO, lower in fact than in did at any point during the GFC Coronavirus is just latest excuse for people to hit the bid. I own shares. This is not investment advice. Yada Yada EDIT: Whoops. Like a lot of threads lately, Sanjeev, you'll need to move this one.

Again perky and behaving like a safe haven asset.

Basically, theres a huge concentration of subs with Comcast and Altice/Optimum. Both of which have potential renewal issues. Much has been discussed on the MSGN thread previously, and now on top of that, you have the fact that the company was just willing to repurchase 25% of the shares at 16.75 and still have a sizable buyback in place, plus the resources to do much more. My investment confidence however still doesnt really involve sub counts or decline rates, although admittedly, that will drive this thing short term. But on an absolutely basis, the rights to televise Knicks and Ranger games is worth something, and theres no way its worth less than what the Cincinnati Reds or whomever else are worth. To someone like Amazon the acquisition is a rounding error but could be reasonably impactful to certain of their own ventures. Or, it can be reacquired by the MSG stub which is was spun out from. A lot of ways to win. In the meantime all the FCF will go toward repurchases and debt reduction.

bought back some msgn

Id start by looking in the Baupost portfolio. Theres been no more prominent an underperforming bitch and moaner over the last half decade than Klarman.

Yup, go to the 10K and control F "peer group".

Another thing I think worth pointing out is that people seem to severely overrate the difficulty of finding “multibaggers”. Assuming you are able to establish certain “quality control” criteria, I think folks would be surprised by frequency that their holdings did 2x or more over the course of a 5-10 year holding period, should you just leave them the heck alone; especially if can time your purchases with some sort of macro based pullback.

It’s not really anything more sophisticated than a “throw a wide net, catch a lot of different stuff” approach with some salesmanship incorporated. Criteria for selection all fit the same pattern. Large TAM, high growth rate, large short interest, fairly new approach to tackling some “need”. A lot of picks and shovel plays too. It’s not hard to understand or screen your own “rule breakers”. For every Netflix there are a half dozen Westport innovations. For every Sierra Wireless, someone with half a brain, on their own can find an Inseego or Skyworks.

Anecdotal perhaps, but Ive been told Discover has hands down the best, and most convenient balance transfer system. The cards I typically use send you bank checks every so often or offer temporary promos. Discover just has a continuous and rolling balance transfer option where you just click whether you want 12 months no interest with a 3% fee or 18 months @5% with no transfer fee. You can then just electronically enter the pay off account number or even send it to your bank account, effectively borrowing cash at those rates.

They are apparently building a 1000 bed hospital from scratch in 6 days. I found that to be impressive. Any chance those guys will come work for any of my real estate development ventures?

Great interview, I love Dimon. But I was appalled that they talked so much about politics. Sanjeev! Another thread needs to be moved.

Trimmed some more BX. These things are unstoppable right now it seems. EDIT, sold a small sliver of my GOOG shares too. Felt dirty doing so...which may indicate an emotional attachment to them(not a good thing), but am almost certainly convinced that there will be points to rebuy them lower and since its paying down margin, a better safe than sorry decision.

I wouldn't say "never see those prices again"....only because, and the beauty, if you are a long term investor in names like this, is the panic selling scenarios in illiquid names and the overreaction, even if just for a few seconds/minutes/days sometimes, where you can grab shares at ridiculous prices and then see quick snap backs and big profits(granted on smallish sums of capital). Griffin's trading reminds me a lot of FRP; a stock notorious for the occasional fat finger order. This is where having liquidity available is important and margining out if need be is not really all that risky. But generally speaking, yea...all of the above is occurring, and part of investing is pattern recognition and a whole bunch of mumbo jumbo that relates little to fundamentals. When you see this stuff occurring, there should be a tendencies to start leaning a little bit more in anticipating of going where that pattern typically takes one. When you get confirmation, much like when taking a lead in baseball, being able to start running before others react is important. There are no shares left under $40 from the old Griffin story, and the new GRIF shareholders, and future shareholders, will likely continue to eat away at the legacy ones. How quickly, remains to be seen.

Yea I think there are tons of misconceptions and false narrative around margin. For instance if I had 120% of the portfolio in BRK(or substitute any name of your liking) and then further margining that position bought a mixture of put options and hedges I have zero risk of being wiped out. Now take the same example and just diversify out, or engage positions that have little to no correlation or even behave inversely. Its quite simple while at the same time a little bit complex. But at the end of the day if you are a good shooter the objective should be to take as many uncontested shots as possible. Just make sure you dont get caught up chasing around your ball when you miss.

Anyone stalking shitty biotech companies that are temporarily soaring on the coronavirus news? Here's a few I'm watching. NVAX, BCRX, INO, NNVC and NBRV. I am in no way condoning shorting these(although I probably will myself). There are many dynamics both fundamental in particularly technical that could make them horrible shorts if you time it wrong....but theres definitely sucker money flooding these things, many of them have already rung the register and done an offering on the first sign of an uptick, and there will certainly be a retreat back to where they were prior. Curious if anyone is playing this temporary "theme" and how?

Why buy Buffett imposters at a 40% premium to NAV when you can buy Buffett at a 25-30% premium to conservative book?