The stock of Seritage Growth Properties (NYSE:SRG) is up an impressive 50% today after the real estate company encouraged shareholders to vote in favor of a sale proposal.
The real estate investment trust (REIT) that has more than 160 wholly-owned properties said in a proxy statement for an upcoming shareholder meeting that it plans to sell its assets following a recent strategic review. The prospect of a sale apparently has investors excited and buying SRG stock today.
Before today’s huge jump higher, SRG stock had been down 70% this year and trading right around $5 per share.
In the proxy statement, Seritage recommends that shareholders vote at the upcoming annual meeting to approve a proposal that would see the board of directors sell all of the company’s assets, distribute the proceeds to shareholders, and dissolve the company. Two-thirds of shareholders must vote to approve the sale for it to go through.
“We are confident that implementing the plan of sale will create a more competitive sale process and will best position us to maximize shareholder value as we continue our strategic review,” said Andrea Olshan, Chief Executive Officer and President of Seritage Growth in the proxy statement.
Why It Matters
It is not clear how much money shareholders of SRG stock will get from the sale of the REIT’s assets. The company says it owns 161 retail, residential and mixed-use properties throughout the U.S. It is also not clear when a sales process would be complete. However, Seritage Growth did say that it plans to seek different buyers for its various assets in an effort to maximize the sale proceeds and payments to shareholders.
The company, headquartered in New York City, has been publicly traded since 2015. However, its stock has never really taken off. Since it went public seven years ago, SRG stock has declined 76%. And that’s with today’s leg higher factored into the total share price return. Investors clearly feel that selling the company and returning the proceeds to shareholders is the best move at this point.
What’s Next for SRG Stock
A lot still has to happen before shareholders of SRG stock see any sale proceeds. The immediate next step is to vote in favor of the sale at Seritage Growth Properties annual meeting. After that, the real estate assets will need to be sold off, possibly one at a time, before any proceeds are distributed. While it could still take a while, the fact that the sale process has been put in motion has investors excited.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.