SHLDQ - Sears Holdings Corp

[ni-co]

And what would be the point of setting up a Non Guarantor Subsidiary and have it owned by the Guarantor Subsidiary?

 

That you can spin it off to shareholders (like ESL himself) at any time. Then you are going to own a "bad Sears" with a large debt load that might be worth 0 and a "good Sears" that might be worth a lot more than $39/share.

 

In the past, ESL was a belt and suspenders guy. What makes some people in this thread think that he somehow turned into a complete bozo burning assets (and his own net worth!) he accumulated over years in the far hope of turning around a hopeless retailer? He surely tries to turn Sears around, but he won't burn all the furniture. He is not completely stupid. Management counts a lot when you value a stock. At Sears, the fact that the manager is one of the world's best capital allocators (in a time when capital allocation means everything to this business) and the stock is a significant part of his net worth, seems to be worth nothing. Mr Market, at least, is valuing it with 0 or less.

 

I certainly don't. Does this make me a hopeless ESL fanboy? No, because there also is some asset value, there are spin-offs – there are 5 classic Greenblatt situations all in one stock. I simply trust in him so far as he doesn't mess it up completely. And so does BB.

 

Recently re-watched this interview: http://www.bing.com/videos/watch/video/eddie-lampert-on-rainwaters-legacy/3xlrwn2f – Sears is a classic Richard Rainwater story. Also reminds you of the fact that ESL knows exactly of the dangers of trying to turn SHLD around. 

[ERICOPOLY]

in the far hope of turning around a hopeless retailer?

 

Are you ignoring his statement that he expected it to turn around in 2013?  Eddie said that.

[ERICOPOLY]

I'm looking at it with interest in Eddie's psychology.  He recently said he expected the retail business to turn around in 2013.  He also recently blogged about how true innovators aren't recognized as such until afterwards, and everyone doubts them, etc.. etc..  Actually, he just blogged about an article on leadership which said those things (so he said them by proxy). 

 

So he sees himself as a trailblazer/innovator that is going to turn the retail around.

 

He might.  I'm just pointing out to you that yes, he really is intending to turn around a "hopeless retailer".  So just accept it and get used to it.

[ni-co]

I'm just pointing out to you that yes, he really is intending to turn around a "hopeless retailer".  So just accept it and get used to it.

 

As I said, I'm certainly aware of the fact that he tries to turn Sears around. What matters to me, however, is how he attempts it.

 

He is very careful not to waste any assets. In fact, he is the very opposite of a Ron Johnson turnaround Rambo. And the media hate him for this. All you get to see from it are pictures of empty Sears shelves. JCP shelves look great now, but look how quickly Johnson burned through nearly all of JCP's assets – and there were a lot. As an investor, I side with Bruce Berkowitz: Apart from buying back stock at – in hindsight – too high a price, I don't think that ESL has committed large errors so far.

[bmichaud]

Eric is dead on. SHLD is Berkshire Hathaway when WEB bought it at 50% of net working capital. WEB said it himself - the intrinsic value was far less than book value due to the lack of commensurate earning power. So to realize BV, he had to either liquidate BRK or convert the assets from old inventory and machinery to assets with earning power - hence the insurance cos he grafted onto BRK....

 

I would argue there is a huge difference between SHLD and BRK. SHLD's book value is made up of highly valuable real estate that is in high demand, which will grow over time with economic growth and inflation - while yes they do not earn their keep at the moment, the moment of truth with Lampert and his retail experiment is near at hand, and these RE assets can be liquidated at or above $150/SF virtually over night given their scarcity and earning power in the hands of the right operator. Now compare this to...

 

BRK with a dying textile mill making up most of the book value. Huge advantage for SHLD with such a valuable asset - all that's needed is for Lampert to not monetize the core re for the benefit of "integrated retail".

[DCG]

 

Bruce/Eddie is not seeing that SHLD is losing $10 per year on all future years. Sears made money the first few years and now lost money the last few years, but the gist is that it should make $$$ per year with retail if they liquidate/right size the stores to be profitable.

 

 

Eddie hasn't been able to do that at all over the last 9 years. What makes anyone thing that he'll suddenly figure this thing out?

[Kraven]

Person "A" pays $1 NAV for an asset that returns 7% a year, and he has $1.07 a year from now.

Person "B" pays $1 NAV for an asset that loses 7% a year, and he has 93 cents a year from now.

Person "C" pays $1 NAV for an asset that breaks even, and he has $1.00 a year from now.

 

So, which guy(s) made the mistake?

 

That's why Sears Holdings isn't worth NAV if it's assets don't produce any return -- in fact, especially if they produce a loss.

 

And without knowing details of Guarantor v/s Non Guarantor everything you said is meaningless.

Person "B" pays $1 NAV for Sears Shares which consist of $1 of Real Estate. This Real Estate goes up in value with Inflation irrespective of whether it produces returns or not. The retail could lose money for the next 100 years but if the Real Estate is in a good location and is bankruptcy remote from the retail explain how Person "B" will lose money?

 

 

Let's take a long term view... let's say, last 5 years.

 

What has the return been on the NAV over the past 5 years?  Has this "bankruptcy remote" thing been there all along the past 5 years?

 

Its been there since the merger I think but no one knows the details. If the Real Estate is not bankruptcy remote your version of $1 becoming $.93 is correct. If it is bankruptcy remote then NAV has gone up with Real Estate values over the past 5 years.  The thing is we don't know and Eddie Lampert is extremely secretive.

 

Imagine a completely hypothetical scenario where at Berkshire(SHLD) if Mid American (Sears) and BNSF (Kmart) started making losses and there is no way they will get back to making profits. That would in no way affect the value of Berkshires stock portfolio (Sears real Estate/Brands) which is held by the insurance subsidiary(SearsRe, Sears Brands). This portfolio would keep going up in value.

 

I could cry right now if I was the kind of guy that cried over these kinds of things.  Being bankruptcy remote has nothing to do with anything you discussed.  It is not some kind of sheltering mechanism to ensure gains stay with the parent.  Actually, I'm not sure exactly what your point is, but from what I can discern from your post bankruptcy remoteness has nothing to do with any of this.

 

Edit:  Just to comment further on the second point re the "hypothetical scenario".  I am not sure I understand it either, but there seems to be an analogy being made between BRK wholly owned subs and Sears' real estate and brands.  The point is made that if Mid American or BNSF didn't make a profit it wouldn't affect the value of BRK's "stock portfolio" which I assume means KO, WFC, etc.  I would agree with that.  However, if the point is that if Mid American or BNSF don't make money it has no bearing on BRK, that is not true at all.  It would have an impact although I don't know exactly how much.  Likewise with Sears, if their brands, real estate, etc regardless of how they are held don't make money or are sold at losses, etc that would most definitely have an impact on Sears Holding, the ultimate parent.

[racemize]

I could cry right now if I was the kind of guy that cried over these kinds of things.  Being bankruptcy remote has nothing to do with anything you discussed.  It is not some kind of sheltering mechanism to ensure gains stay with the parent.  Actually, I'm not sure exactly what your point is, but from what I can discern from your post bankruptcy remoteness has nothing to do with any of this.

 

I would join you, in a similar fashion.

[Kraven]

 

The bankruptcy remote subs are owned by the guarantors. So in effect, if shit hits the fan, they would go to the creditors.

 

And what would be the point of setting up a Non Guarantor Subsidiary and have it owned by the Guarantor Subsidiary?

 

Don't know, but that's how it's set up.

 

EDIT: Actually Kraven explained it earlier:

 

In terms of being bankruptcy remote I would say that has nothing to do with whether they are going to be spun off or not. It has to do primarily with the ability to issue obligations in ways where the credit and rating of the obligation is tied to the assets backing the obligation as opposed to the credit of the issuing entity. That is its typically a way for an issuer to get a higher rating on its obligations than it could get if it issued the obligations directly. There are a number of others reasons for doing it as well, this is just one.  By being bankruptcy remote it limits the concern that a bankruptcy of the SPE will draw the assets backing the obligations into the bk estate.

 

I can't recall the exact family structure off the top of my head, but yes a non guarantor could be owned by a guarantor.  People have to remember that while in financials and such these are consolidated entities they are in reality separate and distinct companies.  Their equity is owned by their parent, but it doesn't mean they aren't separate companies with different obligations and contractual agreements. 

[enoch01]

Person "A" pays $1 NAV for an asset that returns 7% a year, and he has $1.07 a year from now.

Person "B" pays $1 NAV for an asset that loses 7% a year, and he has 93 cents a year from now.

Person "C" pays $1 NAV for an asset that breaks even, and he has $1.00 a year from now.

 

So, which guy(s) made the mistake?

 

That's why Sears Holdings isn't worth NAV if it's assets don't produce any return -- in fact, especially if they produce a loss.

 

And without knowing details of Guarantor v/s Non Guarantor everything you said is meaningless.

Person "B" pays $1 NAV for Sears Shares which consist of $1 of Real Estate. This Real Estate goes up in value with Inflation irrespective of whether it produces returns or not. The retail could lose money for the next 100 years but if the Real Estate is in a good location and is bankruptcy remote from the retail explain how Person "B" will lose money?

 

 

Let's take a long term view... let's say, last 5 years.

 

What has the return been on the NAV over the past 5 years?  Has this "bankruptcy remote" thing been there all along the past 5 years?

 

Its been there since the merger I think but no one knows the details. If the Real Estate is not bankruptcy remote your version of $1 becoming $.93 is correct. If it is bankruptcy remote then NAV has gone up with Real Estate values over the past 5 years.  The thing is we don't know and Eddie Lampert is extremely secretive.

 

Imagine a completely hypothetical scenario where at Berkshire(SHLD) if Mid American (Sears) and BNSF (Kmart) started making losses and there is no way they will get back to making profits. That would in no way affect the value of Berkshires stock portfolio (Sears real Estate/Brands) which is held by the insurance subsidiary(SearsRe, Sears Brands). This portfolio would keep going up in value.

 

I could cry right now if I was the kind of guy that cried over these kinds of things.  Being bankruptcy remote has nothing to do with anything you discussed.  It is not some kind of sheltering mechanism to ensure gains stay with the parent.  Actually, I'm not sure exactly what your point is, but from what I can discern from your post bankruptcy remoteness has nothing to do with any of this.

 

Edit:  Just to comment further on the second point re the "hypothetical scenario".  I am not sure I understand it either, but there seems to be an analogy being made between BRK wholly owned subs and Sears' real estate and brands.  The point is made that if Mid American or BNSF didn't make a profit it wouldn't affect the value of BRK's "stock portfolio" which I assume means KO, WFC, etc.  I would agree with that.  However, if the point is that if Mid American or BNSF don't make money it has no bearing on BRK, that is not true at all.  It would have an impact although I don't know exactly how much.  Likewise with Sears, if their brands, real estate, etc regardless of how they are held don't make money or are sold at losses, etc that would most definitely have an impact on Sears Holding, the ultimate parent.

 

Sometimes this discussion reminds me of Jerry and Kramer talking about "write-offs":

 

 

T/E

[ni-co]

People have to remember that while in financials and such these are consolidated entities they are in reality separate and distinct companies.  Their equity is owned by their parent, but it doesn't mean they aren't separate companies with different obligations and contractual agreements.

 

That's exactly right. "Bankruptcy remote" only means that this is a separate legal entity. It does not mean "bankruptcy immune". It's also true, as mentioned here many times, that there is no advantage in having bankruptcy remote subsidiaries in case of bankruptcy of the holding company. Corporations are structured this way to shield the holding company's assets from its subsidiaries' creditors in case of bankruptcy of a sub.

 

And this is where the beloved "guarantor" status comes in: If one subsidiary guarantees for another sub and this sub goes into bankruptcy, the guarantor sub is also liable (as far as this guaranty goes). If a guarantor sub guarantees for liabilities of the holding company the only meaning is that it cannot be spun off to shareholders without creditors' (i.e. bondholders') consent.

[Kraven]

People have to remember that while in financials and such these are consolidated entities they are in reality separate and distinct companies.  Their equity is owned by their parent, but it doesn't mean they aren't separate companies with different obligations and contractual agreements.

 

That's exactly right. "Bankruptcy remote" only means that this is a separate legal entity. It does not mean "bankruptcy immune". It's also true, as mentioned here many times, that there is no advantage in having bankruptcy remote subsidiaries in case of bankruptcy of the holding company. Corporations are structured this way to shield the holding company's assets from its subsidiaries' creditors in case of bankruptcy of a sub.

 

And this is where the beloved "guarantor" status comes in: If one subsidiary guarantees for another sub and this sub goes into bankruptcy, the guarantor sub is also liable (as far as this guaranty goes). If a guarantor sub guarantees for liabilities of the holding company the only meaning is that it cannot be spun off to shareholders without creditors' (i.e. bondholders') consent.

 

This kind of thing can suck someone (me) in.  Just to clarify, you are mixing up non consolidation issues with bankruptcy remoteness.  Having a bankruptcy remote sub in this context isn't done to protect a hold co's assets, but as a means of raising funds more cheaply than they could be if issued at the parent level.  By issuing securities backed primarily by the cash flow derived from certain specified assets out of a bkr remote vehicle the securities are divorced from the credit of the parent. 

 

In terms of guarantees of other subs vs a hold co, I would say I don't agree with the points made.

[merkhet]

I suspect that the problem resides in the term "bankruptcy remote." It's like when you point to the color pink and say the word "blue." There's a bit of cognitive dissonance because of pre-made connections.

 

The wording itself leads to confusion for most people.

[Kraven]

I suspect that the problem resides in the term "bankruptcy remote." It's like when you point to the color pink and say the word "blue." There's a bit of cognitive dissonance because of pre-made connections.

 

The wording itself leads to confusion for most people.

 

Yes.  It's a term that has meaning, it's not a made up descriptive phrase.  It's not like saying "that guy has beaucoup bucks" or something where you're left wondering exactly how much money is beaucoup bucks.

[T-bone1]

in the far hope of turning around a hopeless retailer?

 

Are you ignoring his statement that he expected it to turn around in 2013?  Eddie said that.

 

Buffett thought the same thing about the textile operations a few times fwiw:

 

http://seekingalpha.com/article/1712152-has-sears-holdings-reached-the-tipping-point

[ni-co]

Having a bankruptcy remote sub in this context isn't done to protect a hold co's assets, but as a means of raising funds more cheaply than they could be if issued at the parent level.  By issuing securities backed primarily by the cash flow derived from certain specified assets out of a bkr remote vehicle the securities are divorced from the credit of the parent. 

 

Yes, true, I got the purpose wrong. I'm no specialist in US bankruptcy law. However, as far as I can tell there is no way of "divorcing" a subsidiary's cash flow from the credit of the parent, at least in case of bk. If the hold co goes into bk, its creditors get their hands on the subs' cash flows. I think that was the problem in GGP's bk. You cannot shield subsidiary assets from hold co creditors, unless you spin these companies off to the shareholders (way in advance of hold co's bk). That's not to say that "bk remote" entities might not have been conceptualized this way.

 

In terms of guarantees of other subs vs a hold co, I would say I don't agree with the points made.

Okay, then what is the benefit of having subsidies guaranteeing the hold co's debt?

 

I really enjoy this message board! I've learned so much from this thread, already. Thanks guys!

[BTShine]

http://en.m.wikipedia.org/wiki/Bankruptcy_remote

 

Worth a quick read?  Assuming Wikipedia is right.

[Luke 532]

http://en.m.wikipedia.org/wiki/Bankruptcy_remote

 

Worth a quick read?  Assuming Wikipedia is right.

 

Not knocking the Wikipedia reference, BTShine, but it just brought to mind one of my favorite The Office clips...

[Kraven]

Having a bankruptcy remote sub in this context isn't done to protect a hold co's assets, but as a means of raising funds more cheaply than they could be if issued at the parent level.  By issuing securities backed primarily by the cash flow derived from certain specified assets out of a bkr remote vehicle the securities are divorced from the credit of the parent. 

 

Yes, true, I got the purpose wrong. I'm no specialist in US bankruptcy law. However, as far as I can tell there is no way of "divorcing" a subsidiary's cash flow from the credit of the parent, at least in case of bk. If the hold co goes into bk, its creditors get their hands on the subs' cash flows. I think that was the problem in GGP's bk. You cannot shield subsidiary assets from hold co creditors, unless you spin these companies off to the shareholders (way in advance of hold co's bk). That's not to say that "bk remote" entities might not have been conceptualized this way.

 

In terms of guarantees of other subs vs a hold co, I would say I don't agree with the points made.

Okay, then what is the benefit of having subsidies guaranteeing the hold co's debt?

 

I really enjoy this message board! I've learned so much from this thread, already. Thanks guys!

 

It's the cash flow of the subsidiary per se, but the cash flow derived from a pool of financial assets which is divorced from the parent.  So say a company has any kind of financial asset (i.e. mortgage loans, credit card receivables, etc.).  They can drop those assets into a special purpose bankruptcy remote vehicle in which the cash flow on those assets will back payments on securities issued by the SPE.  Compare this to the parent issuing securities itself and pledging those same financial assets as collateral.  In the securitization model the securities are "divorced" from the credit of the parent, while in the latter case they are not.  In terms of shielding assets of a sub from a parent in bkr it all depends on how things are set up.  Ideally they can be shielded if done properly, but it's never a given.  One never knows what a bkr court will decide.  They have the ability to decide both as a matter of law and as a matter of equity (sort of "fairness" doctrine).

 

In terms of the second question, why have subs guarantee a hold co's debt?  It's because subs are structurally subordinate to the parent.  A parent only owns the equity in the sub and relies on dividend payments to get any money out of it.  Those div payments can only be made after the sub's own creditors are satisfied.  So a creditor of the parent is what is called structurally subordinate to the sub.  It's kind of counter intuitive in a way.  One thinks oh, a sub is "subordinate" to the parent, but in reality the sub's creditors get paid first.  By having a guarantee it puts payments to the parent (via the guarantee) on a higher level than dividend payments and ideally in a similar place as the subs own debt obligations.  There are limitations.

 

Hope this helps.

[ni-co]

Yes. Thanks!

 

The only thing I don't get then is this: Why is Berkowitz hinting at this as a structural advantage? Is it only to point to the parts of SHLD that have "stable" cash flows?

[JSArbitrage]

SHLD's book value is made up of highly valuable real estate that is in high demand, which will grow over time with economic growth and inflation - while yes they do not earn their keep at the moment, the moment of truth with Lampert and his retail experiment is near at hand, and these RE assets can be liquidated at or above $150/SF virtually over night given their scarcity and earning power in the hands of the right operator. Now compare this to...

 

Look - if ESL could get $150/sq for SHLD entire portfolio, he would have been selling this stuff hand over fist for the last decade.  I think it's more likely there are some diamonds in the portfolio and a whole bunch of practically bidless wastes.  Otherwise, Eddie wouldn't have been throwing spaghetti against the walls and seeing what sticks.  Data centers or $150/sq foot right now when you need liquidity? Tough decision there.

 

Real estate is not in high demand.  Real estate is in a glut.  Big box stores are reducing their footprints.  You can't hold the contradictory view that (a) ESL is right that online retail is the future and traditional big boxes have over-invested and (b) the underlying real estate will continue to increase in value in the future because everyone wants big box locations. 

 

I'll give you two examples from my hometown: there is a Sears near downtown Houston and there was one in Humble, Texas where I grew up.  Both were/are absolutely crapholes.  Vagrants sleep in the windows of the Sears in downtown Houston.  It's next to a train stop, a piece of vacant land, and a Fiesta.  Not exactly Simon (which people keep comparing it too), which, oh BTW, owns the Galleria in Houston around some of the most valuable land in town.

 

Humble, TX.  Sears (actually KMart) was vacant for years next to a vacant Pottery Barn.  It was bulldozed a few years back and now an Academy sits on top.  They were looking for a lessee for a long time; I guess they gave up and just got out of the property as best they could. 

[peridotcapital]

SHLD's book value is made up of highly valuable real estate that is in high demand, which will grow over time with economic growth and inflation - while yes they do not earn their keep at the moment, the moment of truth with Lampert and his retail experiment is near at hand, and these RE assets can be liquidated at or above $150/SF virtually over night given their scarcity and earning power in the hands of the right operator. Now compare this to...

 

Look - if ESL could get $150/sq for SHLD entire portfolio, he would have been selling this stuff hand over fist for the last decade.  I think it's more likely there are some diamonds in the portfolio and a whole bunch of practically bidless wastes.  Otherwise, Eddie wouldn't have been throwing spaghetti against the walls and seeing what sticks.  Data centers or $150/sq foot right now when you need liquidity? Tough decision there.

 

Real estate is not in high demand.  Real estate is in a glut.  Big box stores are reducing their footprints.  You can't hold the contradictory view that (a) ESL is right that online retail is the future and traditional big boxes have over-invested and (b) the underlying real estate will continue to increase in value in the future because everyone wants big box locations. 

 

I'll give you two examples from my hometown: there is a Sears near downtown Houston and there was one in Humble, Texas where I grew up.  Both were/are absolutely crapholes.  Vagrants sleep in the windows of the Sears in downtown Houston.  It's next to a train stop, a piece of vacant land, and a Fiesta.  Not exactly Simon (which people keep comparing it too), which, oh BTW, owns the Galleria in Houston around some of the most valuable land in town.

 

Humble, TX.  Sears (actually KMart) was vacant for years next to a vacant Pottery Barn.  It was bulldozed a few years back and now an Academy sits on top.  They were looking for a lessee for a long time; I guess they gave up and just got out of the property as best they could.

 

I agree. $150/sf for the entire RE portfolio, without tenants, seems unrealistic to me. It is certainly true that they have many locations that would fetch Simon/GGP-like valuations but they are just a fraction of the total. I looked at the 160+ west coast Sears stores as an example and about 20% are Simon or GGP malls. And as Eric has pointed out, a Sears box without a tenant in one of those malls is not worth the same figure (unless 95% of the space is rented, as they are at Simon/GGP).

 

For the mid to lower end malls you might see $100-$150/sf valuations with 95% occupancy (It will be interesting to see if the SPG spin-off fetches a price in this range... I suspect it will), but again the SHLD locations are worth less because they need renovations and tenants. And the 200+ owned Kmarts are worth even less... Kimco is lower end shopping centers and I think they trade around $100/sf. Vacant and/or unkept Kmart boxes are worth far less than that.

 

I think an 80/20 analysis here makes a lot of sense. Try and pinpoint the top 150 or so owned stores (out of 750 or so total between the two brands), where there are likely solid comps out there, and give yourself the rest for free to account for the difficulty and time it will take to generate solid returns from those.

[bmichaud]

SHLD's book value is made up of highly valuable real estate that is in high demand, which will grow over time with economic growth and inflation - while yes they do not earn their keep at the moment, the moment of truth with Lampert and his retail experiment is near at hand, and these RE assets can be liquidated at or above $150/SF virtually over night given their scarcity and earning power in the hands of the right operator. Now compare this to...

 

Look - if ESL could get $150/sq for SHLD entire portfolio, he would have been selling this stuff hand over fist for the last decade.  I think it's more likely there are some diamonds in the portfolio and a whole bunch of practically bidless wastes.  Otherwise, Eddie wouldn't have been throwing spaghetti against the walls and seeing what sticks.  Data centers or $150/sq foot right now when you need liquidity? Tough decision there.

 

Real estate is not in high demand.  Real estate is in a glut.  Big box stores are reducing their footprints.  You can't hold the contradictory view that (a) ESL is right that online retail is the future and traditional big boxes have over-invested and (b) the underlying real estate will continue to increase in value in the future because everyone wants big box locations. 

 

I'll give you two examples from my hometown: there is a Sears near downtown Houston and there was one in Humble, Texas where I grew up.  Both were/are absolutely crapholes.  Vagrants sleep in the windows of the Sears in downtown Houston.  It's next to a train stop, a piece of vacant land, and a Fiesta.  Not exactly Simon (which people keep comparing it too), which, oh BTW, owns the Galleria in Houston around some of the most valuable land in town.

 

Humble, TX.  Sears (actually KMart) was vacant for years next to a vacant Pottery Barn.  It was bulldozed a few years back and now an Academy sits on top.  They were looking for a lessee for a long time; I guess they gave up and just got out of the property as best they could.

 

1. SHLD's profit struggles are actually a relatively recent phenomen. They earned over $9 per share in 2006. Lampert had plenty of reason back then to NOT be selling the most valuable properties hand over fist. He was reducing costs and rationalizing the footprint even while earning $9 per share, because he saw an opportunity for even greater utilization of the core properties, where if you got to the productivity and margin level of its retail comps with a reduced footprint then the upside would have been huge - i.e. EPS of say $15 per share (who knows what he was thinking)...

 

2. Nobody ever said real estate in general is in high demand. What is in high demand is A-quality real estate, of which Sears has a bunch. My guess is the two properties you mentioned are not A-quality. Further, my guess is there is a Sears in the Galleria that Simon owns??? Perhaps Simon would love to have the Sears property back for redevelopment....

[bmichaud]

I agree. $150/sf for the entire RE portfolio, without tenants, seems unrealistic to me.

 

HAHAHAHAH of course it is!!!!!!!!!!!!!! Who is valuing the entire 254 SF portfolio at $150/SF? I certainly am not and never have.

 

This is precisely why there is so much confusion around this stock and why this thread is so fricking long....

 

The bear case is so driven to HATE the company because there are so many disgusting rancid sears and Kmart stores out there that it just extrapolates ONE YEAR of negative EBITDA and a few crappy Sears/Kmart experiences across the entire portfolio and into perpetuity.

 

For goodness sakes it's not rocket science to know that a Sears A-quality property isn't worth the $250/SF that GGP and SPG trade at....hence the $150/SF I keep hammering on for the SIXTY-EIGHT MILLION SQUARE FEET.

[peridotcapital]

I agree. $150/sf for the entire RE portfolio, without tenants, seems unrealistic to me.

 

HAHAHAHAH of course it is!!!!!!!!!!!!!! Who is valuing the entire 254 SF portfolio at $150/SF? I certainly am not and never have.

 

This is precisely why there is so much confusion around this stock and why this thread is so fricking long....

 

The bear case is so driven to HATE the company because there are so many disgusting rancid sears and Kmart stores out there that it just extrapolates ONE YEAR of negative EBITDA and a few crappy Sears/Kmart experiences across the entire portfolio and into perpetuity.

 

For goodness sakes it's not rocket science to know that a Sears A-quality property isn't worth the $250/SF that GGP and SPG trade at....hence the $150/SF I keep hammering on for the SIXTY-EIGHT MILLION SQUARE FEET.

 

I know you are not including leased space. I never mentioned leases. It seems like you are saying that the 550 Sears stores that they own are worth $150/sf (correct me if I'm wrong). That is what we are disagreeing with. Only a fraction of those are in "A" malls and even those, by your own admission, are worth less than the $250/sf figure that GGP/Simon trade at.