merkhet Posted October 28, 2014 Share Posted October 28, 2014 Not to be the ex-lawyer in the room, but you guys need to hammer this out a little better. For instance, you guys need to agree on a number inclusive of value distributed -- otherwise, assume SHLD dividends out a stake in Sears Real Estate, Inc. worth $50 per share of SHLD, but then goes bankrupt. Would both Picasso & Luke claim victory? And how would you settle it? Etc. Link to comment Share on other sites More sharing options...
Luke 532 Posted October 28, 2014 Share Posted October 28, 2014 Not to be the ex-lawyer in the room, but you guys need to hammer this out a little better. For instance, you guys need to agree on a number inclusive of value distributed -- otherwise, assume SHLD dividends out a stake in Sears Real Estate, Inc. worth $50 per share of SHLD, but then goes bankrupt. Would both Picasso & Luke claim victory? And how would you settle it? Etc. There's no bet with Picasso, only Vish. And for just $500 I don't think we need to hammer out a legal agreement :-) The language of "any future spinoffs" (or whatever term I used) is fine enough for me. Truth be told, if I like Vish's charity I'll likely donate $500 anyway. Link to comment Share on other sites More sharing options...
Vish_ram Posted October 28, 2014 Share Posted October 28, 2014 Not to be the ex-lawyer in the room, but you guys need to hammer this out a little better. For instance, you guys need to agree on a number inclusive of value distributed -- otherwise, assume SHLD dividends out a stake in Sears Real Estate, Inc. worth $50 per share of SHLD, but then goes bankrupt. Would both Picasso & Luke claim victory? And how would you settle it? Etc. What I look for is, if a person bought the shares at $28 on the day I originally typed it and subsequently participated in all warrants, rights etc, What is the price 5 years from now of all securities (spin offs etc) held by the common shareholder? Any prices paid for exercising the warrants, rights will be added to the $28. Link to comment Share on other sites More sharing options...
wisdom Posted October 28, 2014 Share Posted October 28, 2014 http://finance.yahoo.com/news/nordstrom-rack-expands-store-presence-150000329.html Link to comment Share on other sites More sharing options...
CanadianMunger Posted October 28, 2014 Share Posted October 28, 2014 Not to be the ex-lawyer in the room, but you guys need to hammer this out a little better. For instance, you guys need to agree on a number inclusive of value distributed -- otherwise, assume SHLD dividends out a stake in Sears Real Estate, Inc. worth $50 per share of SHLD, but then goes bankrupt. Would both Picasso & Luke claim victory? And how would you settle it? Etc. We could always bring in an arbitrator in case of a dispute. Kraven, please leave some time open in your calendar approximately September 2019. -CM Link to comment Share on other sites More sharing options...
Kraven Posted October 28, 2014 Share Posted October 28, 2014 Not to be the ex-lawyer in the room, but you guys need to hammer this out a little better. For instance, you guys need to agree on a number inclusive of value distributed -- otherwise, assume SHLD dividends out a stake in Sears Real Estate, Inc. worth $50 per share of SHLD, but then goes bankrupt. Would both Picasso & Luke claim victory? And how would you settle it? Etc. We could always bring in an arbitrator in case of a dispute. Kraven, please leave some time open in your calendar approximately September 2019. -CM Done. I will make myself available then. Please note my decision will be final, binding and unappealable. The parties should be aware that in the event no final decision can be made that the winner will be determined by the one with the best Sears joke. Link to comment Share on other sites More sharing options...
smj Posted October 29, 2014 Share Posted October 29, 2014 interesting color on SHLD/Primark and potential future sublease or anchor sales deals in SPG & GGP conference calls http://seekingalpha.com/article/2586245-simon-property-groups-spg-ceo-david-simon-on-q3-2014-results-earnings-call-transcript?page=4&p=qanda&l=last http://seekingalpha.com/article/2607595-general-growth-properties-incs-ggp-ceo-sandeep-mathrani-on-q3-2014-results-earnings-call-transcript Link to comment Share on other sites More sharing options...
Matson125 Posted October 29, 2014 Share Posted October 29, 2014 http://www.nbcbayarea.com/news/local/Sand-Hill-Property-Co-Buys-Macys-JC-Penney-Sears-at-Vallco-Mall-2-Stores-Set-to-Close-280770972.html Sears owns the property. Tax records show the value of to be $29,071,525 Assessor's Parcel Number (APN): 316-20-080 Link to comment Share on other sites More sharing options...
Luke 532 Posted October 29, 2014 Share Posted October 29, 2014 interesting color on SHLD/Primark and potential future sublease or anchor sales deals in SPG & GGP conference calls http://seekingalpha.com/article/2586245-simon-property-groups-spg-ceo-david-simon-on-q3-2014-results-earnings-call-transcript?page=4&p=qanda&l=last http://seekingalpha.com/article/2607595-general-growth-properties-incs-ggp-ceo-sandeep-mathrani-on-q3-2014-results-earnings-call-transcript David Simon: “In fact, it’s very interesting when I see Sears as a online retailer, depending on which study you look at. I mean, they’re anywhere from — they’re clearly in the top 10. They may be as high as #5. And I would argue it’s because of their physical presence that allows them to be so important in the online presence. And you’ve heard it from retailers that the synergy between having the physical and the online presence and now the move toward mobile, and how its all been integrated. So — and clearly, we’ve seen a number of pure online retailers going to physical stores. So the — it’s got to be in the equation for a retailer to have a physical presence. I don’t think there’s any question in that.” Link to comment Share on other sites More sharing options...
krazeenyc Posted October 29, 2014 Share Posted October 29, 2014 http://www.nbcbayarea.com/news/local/Sand-Hill-Property-Co-Buys-Macys-JC-Penney-Sears-at-Vallco-Mall-2-Stores-Set-to-Close-280770972.html Sears owns the property. Tax records show the value of to be $29,071,525 Assessor's Parcel Number (APN): 316-20-080 That also means they probably lose the rent from the gym. Link to comment Share on other sites More sharing options...
Guest longinvestor Posted October 29, 2014 Share Posted October 29, 2014 http://www.nbcbayarea.com/news/local/Sand-Hill-Property-Co-Buys-Macys-JC-Penney-Sears-at-Vallco-Mall-2-Stores-Set-to-Close-280770972.html Sears owns the property. Tax records show the value of to be $29,071,525 Assessor's Parcel Number (APN): 316-20-080 So what is/will be the Sears' real estate value realized from the sale back to Sandhill property? A very similar story is playing out in our neighborhood mall owned by Simon. JC Penney and Circuit City closed over the past few years and the space they occupied were vacant for a very long time (at least 3 years). Sears has the biggest footprint in the mall and they are sandwiched between them. And this Sears location looks more dead with each passing day. Inside the same mall, Kohl's occupies about half the space and the store and their side of the parking lot is always full. During the busy season, we park on the Sears side to enter the mall because convenient space is always available there! The RE value that Sears supposedly has and investors baking that into their thesis is perhaps on paper only. Across the street, Walmart / Sams are busy as ever. Their parking lot is always full and it even gets resurfaced more frequently. Link to comment Share on other sites More sharing options...
merkhet Posted October 29, 2014 Share Posted October 29, 2014 http://www.nbcbayarea.com/news/local/Sand-Hill-Property-Co-Buys-Macys-JC-Penney-Sears-at-Vallco-Mall-2-Stores-Set-to-Close-280770972.html Sears owns the property. Tax records show the value of to be $29,071,525 Assessor's Parcel Number (APN): 316-20-080 So what is/will be the Sears' real estate value realized from the sale back to Sandhill property? A very similar story is playing out in our neighborhood mall owned by Simon. JC Penney and Circuit City closed over the past few years and the space they occupied were vacant for a very long time (at least 3 years). Sears has the biggest footprint in the mall and they are sandwiched between them. And this Sears location looks more dead with each passing day. Inside the same mall, Kohl's occupies about half the space and the store and their side of the parking lot is always full. During the busy season, we park on the Sears side to enter the mall because convenient space is always available there! The RE value that Sears supposedly has and investors baking that into their thesis is perhaps on paper only. Across the street, Walmart / Sams are busy as ever. Their parking lot is always full and it even gets resurfaced more frequently. Odd that you would say that. If all the stores around this empty Sears are full, then that implies that the real estate is incredibly valuable given all the traffic. Link to comment Share on other sites More sharing options...
oddballstocks Posted October 29, 2014 Share Posted October 29, 2014 http://www.nbcbayarea.com/news/local/Sand-Hill-Property-Co-Buys-Macys-JC-Penney-Sears-at-Vallco-Mall-2-Stores-Set-to-Close-280770972.html Sears owns the property. Tax records show the value of to be $29,071,525 Assessor's Parcel Number (APN): 316-20-080 So what is/will be the Sears' real estate value realized from the sale back to Sandhill property? A very similar story is playing out in our neighborhood mall owned by Simon. JC Penney and Circuit City closed over the past few years and the space they occupied were vacant for a very long time (at least 3 years). Sears has the biggest footprint in the mall and they are sandwiched between them. And this Sears location looks more dead with each passing day. Inside the same mall, Kohl's occupies about half the space and the store and their side of the parking lot is always full. During the busy season, we park on the Sears side to enter the mall because convenient space is always available there! The RE value that Sears supposedly has and investors baking that into their thesis is perhaps on paper only. Across the street, Walmart / Sams are busy as ever. Their parking lot is always full and it even gets resurfaced more frequently. Odd that you would say that. If all the stores around this empty Sears are full, then that implies that the real estate is incredibly valuable given all the traffic. I think the point if I'm understanding correctly is that even though this is a high traffic area they haven't been able to rent the JC Penny and Circuit City that have been empty for three years. So while it's busy there is a lot of empty space that's available with no takers. And if Sears were to close there as well they'd just be adding to the empty space. Sears missed the boat in our mall a few years back. Nordstrom and a number of high end stores wanted in very badly. No one would give up their anchor position so Nordstrom built their own wing up maybe six stores from Sears. The new wing essentially split off the Sears section of the mall and it's now empty there. Sears should have closed the store and leased the space to Nordstrom. With the renovations for other high end stores that store would have become a lot more valuable. Link to comment Share on other sites More sharing options...
BTShine Posted October 29, 2014 Share Posted October 29, 2014 There will always be locations that span both ends of the spectrum. Sears Al Moana supposedly sold for $200+ Million. Other Sears locations are clearly worth a lot. Also, as pointed out there are some Sears locations that aren't very valuable. Are they worth $0...or $500k...or $5 million? I'm not sure, but in general the law of averages might apply and much of the real estate is probably between the two extremes. Link to comment Share on other sites More sharing options...
merkhet Posted October 29, 2014 Share Posted October 29, 2014 Ah, I see. I was unclear as to whether the JCP and Circuit City remain empty at this point. Link to comment Share on other sites More sharing options...
Guest longinvestor Posted October 29, 2014 Share Posted October 29, 2014 http://www.nbcbayarea.com/news/local/Sand-Hill-Property-Co-Buys-Macys-JC-Penney-Sears-at-Vallco-Mall-2-Stores-Set-to-Close-280770972.html Sears owns the property. Tax records show the value of to be $29,071,525 Assessor's Parcel Number (APN): 316-20-080 So what is/will be the Sears' real estate value realized from the sale back to Sandhill property? A very similar story is playing out in our neighborhood mall owned by Simon. JC Penney and Circuit City closed over the past few years and the space they occupied were vacant for a very long time (at least 3 years). Sears has the biggest footprint in the mall and they are sandwiched between them. And this Sears location looks more dead with each passing day. Inside the same mall, Kohl's occupies about half the space and the store and their side of the parking lot is always full. During the busy season, we park on the Sears side to enter the mall because convenient space is always available there! The RE value that Sears supposedly has and investors baking that into their thesis is perhaps on paper only. Across the street, Walmart / Sams are busy as ever. Their parking lot is always full and it even gets resurfaced more frequently. Odd that you would say that. If all the stores around this empty Sears are full, then that implies that the real estate is incredibly valuable given all the traffic. The new occupants Macy's and Shopper's Stop have not been in business for that long yet. Yes they have occupied the bldg., but are they full? Too early to tell. I was trying to make the opposite point to "real estate being incredibly valuable". It is hardly so. My point is it took 3+ years for them to occupy this space. Sears' eventual shutting down (I will give this less than 3 years to happen) will likely leave them in a compromised position with regards to extracting RE value. Besides, with the very large 200k Sq Ft it is arguably less marketable property. Only someone with a "Grand" store design is likely to be interested. Kohl's is two large box stores removed from Sears in this mall. They have always been a busy place, not just in the last 3 years. They appear to have something that Sears never had and that is to bring in customers thru their doors. Sears has always been less than busy. Their dead appearance has been going on for 5 years or so. Link to comment Share on other sites More sharing options...
Guest longinvestor Posted October 29, 2014 Share Posted October 29, 2014 http://www.nbcbayarea.com/news/local/Sand-Hill-Property-Co-Buys-Macys-JC-Penney-Sears-at-Vallco-Mall-2-Stores-Set-to-Close-280770972.html Sears owns the property. Tax records show the value of to be $29,071,525 Assessor's Parcel Number (APN): 316-20-080 So what is/will be the Sears' real estate value realized from the sale back to Sandhill property? A very similar story is playing out in our neighborhood mall owned by Simon. JC Penney and Circuit City closed over the past few years and the space they occupied were vacant for a very long time (at least 3 years). Sears has the biggest footprint in the mall and they are sandwiched between them. And this Sears location looks more dead with each passing day. Inside the same mall, Kohl's occupies about half the space and the store and their side of the parking lot is always full. During the busy season, we park on the Sears side to enter the mall because convenient space is always available there! The RE value that Sears supposedly has and investors baking that into their thesis is perhaps on paper only. Across the street, Walmart / Sams are busy as ever. Their parking lot is always full and it even gets resurfaced more frequently. Odd that you would say that. If all the stores around this empty Sears are full, then that implies that the real estate is incredibly valuable given all the traffic. I think the point if I'm understanding correctly is that even though this is a high traffic area they haven't been able to rent the JC Penny and Circuit City that have been empty for three years. So while it's busy there is a lot of empty space that's available with no takers. And if Sears were to close there as well they'd just be adding to the empty space. Sears missed the boat in our mall a few years back. Nordstrom and a number of high end stores wanted in very badly. No one would give up their anchor position so Nordstrom built their own wing up maybe six stores from Sears. The new wing essentially split off the Sears section of the mall and it's now empty there. Sears should have closed the store and leased the space to Nordstrom. With the renovations for other high end stores that store would have become a lot more valuable. Exactly my point. I'm just trying to bring my view of ground reality about Sears. Link to comment Share on other sites More sharing options...
krazeenyc Posted October 29, 2014 Share Posted October 29, 2014 http://www.nbcbayarea.com/news/local/Sand-Hill-Property-Co-Buys-Macys-JC-Penney-Sears-at-Vallco-Mall-2-Stores-Set-to-Close-280770972.html Sears owns the property. Tax records show the value of to be $29,071,525 Assessor's Parcel Number (APN): 316-20-080 So what is/will be the Sears' real estate value realized from the sale back to Sandhill property? A very similar story is playing out in our neighborhood mall owned by Simon. JC Penney and Circuit City closed over the past few years and the space they occupied were vacant for a very long time (at least 3 years). Sears has the biggest footprint in the mall and they are sandwiched between them. And this Sears location looks more dead with each passing day. Inside the same mall, Kohl's occupies about half the space and the store and their side of the parking lot is always full. During the busy season, we park on the Sears side to enter the mall because convenient space is always available there! The RE value that Sears supposedly has and investors baking that into their thesis is perhaps on paper only. Across the street, Walmart / Sams are busy as ever. Their parking lot is always full and it even gets resurfaced more frequently. Odd that you would say that. If all the stores around this empty Sears are full, then that implies that the real estate is incredibly valuable given all the traffic. I think the point if I'm understanding correctly is that even though this is a high traffic area they haven't been able to rent the JC Penny and Circuit City that have been empty for three years. So while it's busy there is a lot of empty space that's available with no takers. And if Sears were to close there as well they'd just be adding to the empty space. Sears missed the boat in our mall a few years back. Nordstrom and a number of high end stores wanted in very badly. No one would give up their anchor position so Nordstrom built their own wing up maybe six stores from Sears. The new wing essentially split off the Sears section of the mall and it's now empty there. Sears should have closed the store and leased the space to Nordstrom. With the renovations for other high end stores that store would have become a lot more valuable. The properties of course have to be evaluated on a case by case basis. But we can make a couple of generalizations. The first is that "A" mall real estate values are at an all time high. The second is the "C" properties and worse are not worth very much -- perhaps you can salvage some value if the mall is somehow getting redeveloped (even in an alternate use scenario). If real estate is in a good location (busy, prospering, etc.) and there are empty spaces -- this does not mean that the real estate is not valuable and expensive -- it simply means that the seller (landlord) and buyer (tenant) can't agree on a price yet. From the commercial brokers I've spoken to around the country and articles I've read -- Sears tends to value their real estate very highly (whether they are right or wrong I'm not sure). I personally know of a handful of situations where another retailer wanted to buy Sears real estate -- but Sears would only sell, as the brokers put it "for an absurd assload" of money. If your mall is doing well -- Sears' poor performance is unlikely to impact the price they get for their property (or lease). I don't know the demographics of your area -- but if they cut up the Sears location and put a Nordstrom Rack and a Whole Foods in its place, I'm pretty sure that side of mall would generate plenty of traffic. Link to comment Share on other sites More sharing options...
oddballstocks Posted October 29, 2014 Share Posted October 29, 2014 If your mall is doing well -- Sears' poor performance is unlikely to impact the price they get for their property (or lease). I don't know the demographics of your area -- but if they cut up the Sears location and put a Nordstrom Rack and a Whole Foods in its place, I'm pretty sure that side of mall would generate plenty of traffic. Good points, although those stores are opening new locations right down the street. So it's unlikely they'd build a second location so close. There is an old empty ValueCity that's be redeveloped, and an empty lot that's being turned into a walk/shop type of place. All of the new retail is the outdoor mall type and seems to be bypassing the traditional mall. I live in the North Hills of Pittsburgh. It's a nice area, a bit further north (outer northern suburbs) is more wealth but everyone shops at the same mall. There are four malls in Pittsburgh, one in each direction. Link to comment Share on other sites More sharing options...
Luke 532 Posted October 29, 2014 Share Posted October 29, 2014 Somebody sent me this today and I found it interesting (posted with permission, emphasis added by me): The debt has interest of $50M/year, and given that their current EBITDA does not support that, it either means Eddie has lost his marbles, or he seems something big in the near future that is basically as close to a 100% chance of happening as possible which will boost their EBITDA at least enough to pay off that interest. Personally, I don't think that will come from the transformation though because the retail is too unpredictable to make a bet like this with debt and assume you'll have the $50M starting next year to pay the interest. I have a feeling it may come from something bigger like much larger bulk-lease deals in the pipeline right now. It's also likely the reason that the other SHLD bonds rallied today. Generally, existing bonds tend to sell off when new debt is issued, since it's just made the company's capital structure more risky. With Sears today, the opposite happened since Eddie bought unsecured debt (although it was senior). A few RE deals announced in the past 10 days since the above comments were sent to me: Primark, Sand Hill, Nordstrom confirming Rack. Food for thought. Link to comment Share on other sites More sharing options...
T-bone1 Posted October 29, 2014 Share Posted October 29, 2014 http://www.nbcbayarea.com/news/local/Sand-Hill-Property-Co-Buys-Macys-JC-Penney-Sears-at-Vallco-Mall-2-Stores-Set-to-Close-280770972.html Sears owns the property. Tax records show the value of to be $29,071,525 Assessor's Parcel Number (APN): 316-20-080 So what is/will be the Sears' real estate value realized from the sale back to Sandhill property? A very similar story is playing out in our neighborhood mall owned by Simon. JC Penney and Circuit City closed over the past few years and the space they occupied were vacant for a very long time (at least 3 years). Sears has the biggest footprint in the mall and they are sandwiched between them. And this Sears location looks more dead with each passing day. Inside the same mall, Kohl's occupies about half the space and the store and their side of the parking lot is always full. During the busy season, we park on the Sears side to enter the mall because convenient space is always available there! The RE value that Sears supposedly has and investors baking that into their thesis is perhaps on paper only. Across the street, Walmart / Sams are busy as ever. Their parking lot is always full and it even gets resurfaced more frequently. Apparently Sears said this whole time that they had no intention of closing the Cupertino location unless someone paid them $100 million for it. I think this was just shrewd negotiating and I'm told they received $102.5 million in this deal. (Macy's received ~$35 million for their property which was ground-leased only and JCP, which had been trying to sell, got ~$65 for their 200k sqft building) Link to comment Share on other sites More sharing options...
Matson125 Posted October 29, 2014 Share Posted October 29, 2014 http://www.gurufocus.com/news/288257/thoughts-on-sears-holdings-from-frmo-corps-management Talks about the guarantee vs non-guarantee subs, real estate values and lending shares. Link to comment Share on other sites More sharing options...
krazeenyc Posted October 29, 2014 Share Posted October 29, 2014 http://www.nbcbayarea.com/news/local/Sand-Hill-Property-Co-Buys-Macys-JC-Penney-Sears-at-Vallco-Mall-2-Stores-Set-to-Close-280770972.html Sears owns the property. Tax records show the value of to be $29,071,525 Assessor's Parcel Number (APN): 316-20-080 So what is/will be the Sears' real estate value realized from the sale back to Sandhill property? A very similar story is playing out in our neighborhood mall owned by Simon. JC Penney and Circuit City closed over the past few years and the space they occupied were vacant for a very long time (at least 3 years). Sears has the biggest footprint in the mall and they are sandwiched between them. And this Sears location looks more dead with each passing day. Inside the same mall, Kohl's occupies about half the space and the store and their side of the parking lot is always full. During the busy season, we park on the Sears side to enter the mall because convenient space is always available there! The RE value that Sears supposedly has and investors baking that into their thesis is perhaps on paper only. Across the street, Walmart / Sams are busy as ever. Their parking lot is always full and it even gets resurfaced more frequently. Apparently Sears said this whole time that they had no intention of closing the Cupertino location unless someone paid them $100 million for it. I think this was just shrewd negotiating and I'm told they received $102.5 million in this deal. (Macy's received ~$35 million for their property which was ground-leased only and JCP, which had been trying to sell, got ~$65 for their 200k sqft building) This mall has been terrible for years. But there was always speculation that they would receive a ransom for it despite it being a lousy mall -- since it's location has such great potential for redevelopment. Link to comment Share on other sites More sharing options...
Mephistopheles Posted October 29, 2014 Share Posted October 29, 2014 http://www.gurufocus.com/news/288257/thoughts-on-sears-holdings-from-frmo-corps-management Talks about the guarantee vs non-guarantee subs, real estate values and lending shares. Here we go again... :P Link to comment Share on other sites More sharing options...
Luke 532 Posted October 29, 2014 Share Posted October 29, 2014 http://www.nbcbayarea.com/news/local/Sand-Hill-Property-Co-Buys-Macys-JC-Penney-Sears-at-Vallco-Mall-2-Stores-Set-to-Close-280770972.html Sears owns the property. Tax records show the value of to be $29,071,525 Assessor's Parcel Number (APN): 316-20-080 I think this was just shrewd negotiating and I'm told they received $102.5 million in this deal. sale price 3.5x the tax-assessed value (which Berkowitz used as the baseline for his RE thesis) Link to comment Share on other sites More sharing options...
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