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Banking Buffett's stake in Seritage spurs landlord's shares to climb

Buffett’s stake in Seritage spurs landlord’s shares to climb

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NEW YORK – Seritage Growth Properties, the real estate investment trust spun off from retailer Sears Holdings Corp., soared as much as 17 percent after billionaire Warren Buffett disclosed an investment in the company.

Buffett reported a passive holding of 2 million shares, representing an 8 percent stake, according to a regulatory filing on Thursday. Seritage began trading this year after Sears created the business to capitalize on its real estate holdings. The REIT owns about 250 properties, which it leases back to Sears to be operated as department stores.

Sears raised $2.7 billion by creating the REIT as part of hedge-fund manager Edward Lampert’s effort to turn around the struggling retailer. The new company is partnering with mall operators including Simon Property Group Inc. and Macerich Co. as it seeks to monetize its real estate. Seritage appears to be taking its time to ensure the best outcome, said Alexander Goldfarb, an analyst at Sandler O’Neill & Partners in New York.

“They are taking a thoughtful approach,” Goldfarb said. “They are trying to make sure the market isn’t flooded with a lot of inventory which could depress values.”

Seritage climbed as high as $41.18 on Thursday, its biggest intraday gain since the stock’s debut in July.

The billionaire didn’t return a request for comment sent to an assistant at Omaha, Nebraska-based Berkshire. The filing listed only Buffett as the holder of the shares and didn’t mention Berkshire.

It’s not the first time that Buffett has taken a major stake in a REIT. In 2000, he disclosed a 5.1 percent holding in Aegis Realty Inc., which at the time owned shopping centers and other property in 15 states. Buffett bought the stake for his personal holdings, rather than for Berkshire, the sprawling conglomerate he’s been building for the past five decades.

Aegis later agreed to a $203 million deal to buy a Dallas- based strip-mall developer. Then, on a 2001 conference call, Buffett criticized the terms of the transaction. Aegis ultimately canceled the acquisition, citing shareholder opposition.

Buhayar reported from Seattle.

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