This REIT is accelerating its efforts
Many investors don't really know what to make of Seritage Growth Properties (NYSE: SRG). It's a REIT, but it doesn't pay a dividend, the majority of its portfolio is unoccupied, and it's losing money at a rapid pace.
However, Seritage recently had a leadership shake-up that could kick the company's efforts into overdrive. Specifically, new CEO Andrea Olshan recently revealed plans to pare down the portfolio significantly by selling 40 to 50 noncore properties. The goal is to raise capital to redevelop the rest of the portfolio into premier income-producing assets.
Given how hot the real estate market is right now and that most of Seritage's properties are in desirable retail locations, now is a great time to have an extra few dozen properties to sell. If Seritage completes its asset sales and puts the money to good use, it could become cash-flow positive within a couple of years.
The current share price represents a valuation of about $30 per square foot for Seritage's portfolio. Meanwhile, some of its already-redeveloped properties rent for several times that amount. In short, this is a bargain-basement REIT with tons of potential just waiting to be unlocked.
The second half of 2021 could be great for this REIT
As a final idea, it's tough to make the case that any real estate stock could benefit more from the reopening than EPR Properties (NYSE: EPR). EPR Properties is the only publicly traded REIT focused on building a diversified portfolio of experiential properties. For example, TopGolf is a major tenant of EPR's, and so is Vail Resorts (NYSE: MTN).
For the duration of the pandemic, EPR's biggest flaw has been its high concentration of movie theater properties, which account for nearly half of the company's contractual rental income. However, the recent "meme stock" craze has changed this dramatically. Now, top tenant AMC Entertainment (NYSE: AMC) can not only avoid bankruptcy but has also raised about $2 billion and is arguably in better shape now than it was before the pandemic.
Despite the surge in demand we've seen recently for in-person experiences and the greatly improved fundamentals of its largest tenant, EPR still trades for about 25% less than it did at the start of 2020. And I don't think it deserves to.
The Millionacres bottom line
All three of these real estate stocks look like excellent opportunities going into the second half, but I wouldn't exactly call any of them "low-risk" investments. So, while I think all could be excellent investments for the long term, be prepared to ride out some ups and downs along the way.