There may be no more dangerous sentence in investing than “this time is different.” Seritage Growth Properties (NYSE: SRG) deserves that skepticism more than most.
Seritage has looked cheap for years. In 2022, when shareholders approved a plan to sell the company’s assets and liquidate, management estimated eventual shareholder distributions of $18.50 to $29 per share. Almost four years later, SRG trades at $1.82 and shareholders are still waiting.
Anyone looking at Seritage today should start there. This has been a value trap. Asset values fell, sales took longer than expected, carrying costs continued, and an apparently enormous discount to estimated net asset value did not protect shareholders.
And yet the situation at $1.82 is materially different from the one investors were underwriting at $10, $15 or $20. Seritage is no longer trying to monetize a sprawling portfolio of development projects. It is down to eight properties, most of the old debt has been eliminated, and we can increasingly calculate what has to happen for today’s price to work.
The result is intriguing. Our base case is about $4.30 per share. More importantly, Seritage does not have to achieve our base case for the stock to double, and the remaining real estate would have to disappoint substantially before our model produces less than today’s $1.82 price.
A Value Trap Until Proven Otherwise
The history matters because it tells us how much confidence to put in a spreadsheet.
When Seritage proposed its Plan of Sale in 2022, the company estimated total shareholder distributions of $18.50 to $29 per share. Even before the shareholder vote, worsening commercial real estate conditions caused the company to warn that the upper portion of that range was becoming unlikely.
The subsequent years were worse than early liquidation investors hoped. Higher interest rates reduced what buyers could finance and pay for development properties. Asset sales generated less value than bullish net-asset-value calculations assumed, while corporate expenses, property costs, interest and preferred dividends continued to consume cash.
Seritage’s own filings repeatedly warned that lower property prices and delays could reduce both the amount and timing of shareholder distributions. Those warnings proved important.
The original liquidation estimate is available in the company’s 2022 proxy materials.
So the argument for SRG at $1.82 cannot be that investors should finally trust an optimistic NAV estimate. The argument has to be that the price has fallen far enough, and the remaining asset pool has become small enough, that a considerable amount can still go wrong without destroying the investment case.
The Math at $1.82
Seritage has approximately 56.3 million common shares outstanding. At $1.82, the market is valuing the common equity at roughly $102.5 million.
| Outcome | Common Equity Value | Value Per Share |
|---|---|---|
| Today’s price | About $102.5 million | $1.82 |
| Double from today’s price | About $205 million | $3.64 |
| Our base case | About $242 million | About $4.30 |
A double therefore requires about $205 million to survive for common shareholders after debt, preferred stock, other liabilities and the remaining cost of liquidation.
That is a much lower hurdle than the old Seritage thesis required.
What Is Left to Sell?
Seritage had interests in nine properties at June 30 and subsequently sold another small property. The current portfolio is concentrated in eight assets.
These are our working estimates of Seritage’s interests. They are valuation assumptions, not appraisals or guidance from the company.
| Property | Our Estimated Value |
|---|---|
| San Diego / Westfield UTC | $115 million |
| Redmond | $60 million |
| Dallas | $50.8 million |
| Santa Monica | $40 million |
| Alexandria / Landmark | $30 million |
| King of Prussia | $27.5 million |
| Altamonte Springs | $12 million |
| Austin / Tech Ridge | $7 million |
| Total | About $342 million |
These estimates are rough and are subject to wide variation based on market, interest rates, and a myriad of other factors. Most do not have firm sale contracts behind them, several involve joint ventures, and Seritage has already recorded impairments when actual market interest failed to support carrying values.
Dallas is different because we have an actual price. A buyer has an option to purchase Seritage’s Dallas property for $50.76 million, with non-refundable option payments paid in addition to the purchase price while the agreement remains alive.
That is useful evidence for our $50.8 million estimate. It is not cash in the bank: the buyer can still fail to exercise the option.
Our Base Case Gets to About $4.30
| Item | Base Case |
|---|---|
| Estimated remaining property value | $342.3 million |
| Cash reported August 14 | + $48.6 million |
| Funded debt | – $30 million |
| Preferred liquidation preference | – $70 million |
| Other liabilities | – $12 million |
| Future corporate, carrying and wind-down costs | – $37 million |
| Estimated value for common | About $242 million |
That produces approximately $4.30 per common share, or roughly 136% above $1.82.
There is plenty to challenge in the calculation. Of the $48.6 million of cash reported in August, $32.7 million was restricted. Our $37 million estimate for future costs can also prove too low if the liquidation extends well beyond our expectations.
Seritage used $7.3 million of cash in operating activities during the first half of 2026. The preferred stock also costs approximately $4.9 million a year in dividends until it is redeemed.
The latest financial statements are available in Seritage’s June 2026 Form 10-Q.
What Has to Happen for the Stock to Double?
At $3.64 per share, the common equity would be worth about $205 million. Holding the other assumptions above constant, the remaining real estate would need to produce roughly $305 million.
Our estimate is $342 million. The properties could therefore realize about 11% less than our estimates and still produce a nominal double.
The math also tolerates more cash burn than we expect. If our property values prove accurate but future liquidation costs reach $60 million instead of $37 million, estimated common value would still be roughly $3.89 per share.
This is the strongest part of the current Seritage thesis. A double no longer requires the kind of asset values embedded in the original 2022 liquidation story.
What Would Have to Happen for an Investor at $1.82 to Lose Money?
Using our base assumptions for cash, debt, preferred stock, other liabilities and future costs, property proceeds would have to fall to roughly $203 million before estimated common value drops below the current $102.5 million market capitalization.
That is about 41% below our $342 million property estimate.
A loss does not require a literal 41% decline in every property. A combination of weaker sale prices and a longer liquidation can produce the same result. Consider this stress case:
| Stress Case | Amount |
|---|---|
| Remaining property proceeds | $220 million |
| Cash | + $48.6 million |
| Debt | – $30 million |
| Preferred stock | – $70 million |
| Other liabilities | – $12 million |
| Future costs | – $60 million |
| Value left for common | About $96.6 million |
| Value per share | About $1.72 |
That scenario produces a loss from today’s price. It assumes both property proceeds roughly 36% below our estimate and significantly more cash leakage than our base case.
Those assumptions are unpleasant, but after Seritage’s history they are not absurd. That is precisely why treating $4.30 as a promised payout would be a mistake.
How Long Could Investors Be Waiting?
This may be the most underappreciated risk in the trade. A stock can be worth $4 eventually and still be a mediocre investment at $1.82 if “eventually” takes long enough and the asset base keeps paying the bills while shareholders wait.
The optimistic path is fairly quick. Seritage has said that many of its remaining assets have been marketed, and management continues to explore a strategic transaction for the simplified portfolio. One or two large sales, or a transaction involving the remaining company, could establish much of the remaining value during the next several quarters.
The pessimistic timetable extends well into 2028. The Dallas agreement alone permits closing as late as January 31, 2028. Other large development or joint-venture assets can also require patient buyers, financing and entitlements.
I would therefore distinguish between price recognition and final liquidation. SRG does not have to complete its liquidation for the shares to appreciate. A major sale near our estimates could cause the market to narrow the discount well before shareholders receive final cash.
But an investor should be prepared for the possibility that complete realization takes another 18 to 30 months, and perhaps longer. If that prospect makes the apparent upside much less attractive, it belongs in the valuation today.
What Would Tell Us the Thesis Is Working?
The most useful evidence now will come from transactions, not management estimates.
- Dallas closes near $50.8 million. That converts one of the largest assumptions in our model into cash.
- A major remaining asset sells near our estimated value. San Diego, Redmond, Santa Monica or Alexandria would provide a much more meaningful test than another small property sale.
- Debt declines rather than rises. Asset proceeds should increasingly simplify the capital structure rather than fund ongoing losses.
- Corporate cash burn keeps shrinking. With only eight properties left, expenses should decline with the portfolio.
- The preferred stock gets redeemed. Removing the $70 million claim and its annual dividend would materially simplify the common-equity calculation.
Any one of those would make the $4.30 estimate more credible. Several occurring together could make the market’s current discount difficult to sustain.
What Would Make Us Change Our Mind?
The thesis should not survive simply because the stock gets cheaper. Seritage’s history is a warning against repeatedly lowering a price target while insisting the assets are still worth more.
The first warning sign would be a major asset sale substantially below our estimate. Small-property noise matters less; a weak price for San Diego, Redmond, Santa Monica or Alexandria would tell us that the assumptions supporting a large portion of the $342 million total are wrong.
Dallas failing is another important warning. The option structure already makes the timing uncertain. If the buyer terminates, seeks a materially lower price or otherwise demonstrates that $50.76 million is not achievable, we would reduce the model rather than simply assume another buyer will eventually pay the same amount.
Cash burn is the third test. Continued borrowing or persistent operating losses despite the shrinking portfolio would undermine the idea that Seritage can preserve value while it waits for better sale prices. Every extra year also means more preferred dividends and corporate expense.
Finally, time itself can break the thesis. If another year passes without meaningful monetization of the large properties, we would need to raise our future-cost assumptions and discount distant proceeds more aggressively even if our nominal property values had not changed.
Is Seritage a Likely Double?
I am not ready to call a double likely with the confidence that word implies. Seritage has spent too long punishing investors who mistook estimated asset value for realizable value.
But at $1.82, the proposition has changed. A double requires approximately $305 million of property proceeds under our assumptions, versus our estimate of about $342 million. Breaking even requires closer to $203 million unless the liquidation consumes considerably more cash than we expect.
That creates a margin for error that did not exist when investors were paying many times today’s price for a much larger, more complicated portfolio.
The attractive part of SRG today is not the $4.30 base-case number. It is that the common stock can potentially work even if that number is too high.
The skeptical case is equally straightforward. Seritage has already demonstrated that delays, carrying costs and lower sale prices can eat through an impressive-looking NAV. If the remaining large assets disappoint or the liquidation drifts deep into 2028 without substantial progress, today’s apparent bargain can become the latest chapter in the same value trap.
At this point, I would watch transactions rather than promises. The next major property sale should tell us whether Seritage has finally become cheap enough to overcome its history.
Disclosure:The author owns shares of Seritage