Seritage Growth Properties (SRG): 5 FORCES Analysis [Nov-2025 Updated]

You're analyzing Seritage Growth Properties (SRG) right now, but forget the playbook for a growing real estate investment trust; we're looking at a mandated wind-down, which is a totally different beast. As a seasoned analyst, I can tell you this liquidation status means the traditional competitive battle is over, replaced by a high-stakes asset auction where buyer power is king-especially with only $\mathbf{\$70 \text{ million}}$ left on the main loan. Honestly, this forced-sale dynamic warps every single one of Porter's Five Forces, turning tenant rivalry into a competition among sellers for the best price. Keep reading to see precisely how the threat of new entrants becomes the very buyers we are seeking, and why the power of customers is now at its absolute peak for Seritage Growth Properties.

Seritage Growth Properties (SRG) - Porter's Five Forces: Bargaining power of suppliers

When you look at Seritage Growth Properties (SRG) right now, the power of its primary financial suppliers has dropped dramatically, which is a huge positive shift in its capital structure. Honestly, the focus has entirely pivoted to asset monetization, which changes the leverage dynamic with lenders.

Financial Capital Suppliers: Near-Total Deleveraging

The main supplier power here was the holder of the senior secured term loan, originally a massive facility of $1.6 billion provided by Berkshire Hathaway Life Insurance Company of Nebraska. As of late November 2025, following a recent $130 million voluntary prepayment funded by property sales like the one in Aventura, Florida for $131 million, the outstanding balance is just $70 million. This means that since December 2021, Seritage Growth Properties has repaid a cumulative $1.53 billion of that debt. This near-elimination of the primary liability significantly limits the supplier power of the lender, as the risk profile has been drastically reduced, and the focus shifts to the final asset sales.

This debt reduction has immediate financial benefits, too. The latest $130 million prepayment alone will slash Seritage Growth Properties' total annual interest expense related to that loan by approximately $9.2 million. Cumulatively, the repayments since December 2021 have reduced the total annual interest expense by about $108.6 million. The remaining financial obligation is the preferred shares, which have a liquidation preference of $70 million.

General Contractors and Redevelopment Suppliers

The power of general contractors is inherently low because Seritage Growth Properties is executing a Plan of Sale, not embarking on major new development projects. The company's capital investment in its consolidated properties was only $3.8 million in the third quarter of 2025, mostly for tenant leasing costs. While there are ongoing redevelopment efforts, the overall reliance on large-scale construction contracts is minimal compared to its peak years. The remaining portfolio as of September 30, 2025, consisted of interests in 13 properties.

Property Management and Maintenance Vendors

Vendors providing property management and routine maintenance services hold a moderate level of power. You still need to keep the lights on and the properties presentable while they are under contract or awaiting sale. Seritage Growth Properties is managing the wind-down of its portfolio, which as of Q3 2025, still included six assets not yet under contract or in Purchase and Sale Agreement (PSA) discussions, with sales anticipated in 2026 and beyond.

Here's a quick look at the remaining physical footprint:

• Total properties with interests held: 13
• Consolidated properties: 8 (approx. 0.8 million sq. ft.)
• Unconsolidated entities: 5 (approx. 0.5 million sq. ft.)

This ongoing need to maintain the physical assets until they are sold keeps the power of these operational vendors from falling to a low level; they are necessary for maximizing final sale prices.

Suppliers of Future Asset Sale Proceeds

The suppliers of future liquidity-the potential buyers of the remaining real estate-wield significant influence over the final outcome, though they are not traditional suppliers in the cost-of-goods sense. Seritage Growth Properties had four assets under contract as of Q3 2025, expecting gross proceeds of $240.8 million. Furthermore, 94% of the remaining assets were under contract or in PSA discussions, with projected gross proceeds estimated at $220-$310 million for the remaining portfolio. The terms and timing of these sales directly impact the final cash available for distribution, effectively setting the price for the company's final exit.

Seritage Growth Properties (SRG) - Porter's Five Forces: Bargaining power of customers

Real estate asset buyers have very high power due to Seritage Growth Properties' mandated Plan of Sale and the extended liquidation timeline. The maturity date for the $200 million outstanding principal balance on the Term Loan Facility was extended to July 31, 2026, which signals that the timeline for final asset monetization is not immediate, giving buyers more leverage.

Buyers can negotiate aggressively, knowing Seritage Growth Properties must sell its remaining six unsold assets by 2026 and beyond. This mandatory disposition schedule, even with the debt extension, creates a known endpoint for Seritage Growth Properties, which translates directly into negotiating strength for potential acquirers of the remaining properties.

Remaining tenants hold significant power due to Seritage Growth Properties' minimal focus on new leasing as the disposition process dominates strategy. As of September 30, 2025, the total occupancy for Multi-Tenant retail properties stood at 92%. More critically, the Premier portfolio leased Gross Leasable Area (GLA) at share fell to 69.7% in Q3 2025. Furthermore, there was approximately 168 thousand square feet available for lease (with 115 thousand square feet at share) as of September 30, 2025.

Buyers of the final assets can afford to wait for market conditions to improve, especially concerning the $220 million to $310 million in projected gross proceeds expected from the last six assets not yet under contract. This waiting game is possible because the sales are now anticipated to occur in 2026 and beyond.

Here is a look at the asset sale pipeline visibility as of mid-November 2025, which dictates the urgency for buyers:

The power of the customer base is further illustrated by the cash flow situation, which dictates the need for sales proceeds:

• Cash on hand as of November 13, 2025: $65.0 million.
• Term Loan Facility outstanding principal: $200 million.
• Quarterly cash burn (estimated): Over $10 million per quarter.
• Quarterly preferred dividends and term loan interest: Around $4.9 million.

Seritage Growth Properties (SRG) - Porter's Five Forces: Competitive rivalry

You're looking at Seritage Growth Properties (SRG) right now, and the competitive rivalry dynamic is unique because the company is executing a Plan of Sale, not a growth strategy. This fundamentally shifts the nature of the competition you see in the market.

Direct rivalry for tenants is low as Seritage Growth Properties is not actively building a long-term portfolio. The focus is on disposition, not occupancy growth, though leasing activity still occurs to maximize sale value. For instance, as of June 30, 2025, the company had 83.5% leased square footage across its multi-tenant retail properties. The team is still advancing leasing at key projects, such as the 216 thousand square feet of office and retail leasing at the Aventura, FL project.

Rivalry is primarily with other commercial real estate sellers for the best price, especially for premier assets. This is a competition against the clock to maximize proceeds before debt maturities, like the Term Loan Facility maturity originally set for July 2025, which the company extended. The pace of sales is critical; Seritage Growth Properties completed the sale of three properties in Q2 2025 for approximately $31 million in gross proceeds.

Competition from other REITs and developers for acquiring Seritage Growth Properties' properties is high, driving up sale prices for desirable assets. You see this reflected in the realized pricing. A premier property sale in Q2 2025 was at $130.82 PSF (per square foot). For context, a vacant/non-income producing asset sale in Q4 2024 was at $92.87 PSF.

The company competes with a large pool of sellers in a real estate market with shifting valuations. This pressure is evident in the financial results, which reflect the ongoing write-downs associated with the wind-down strategy. For the year ended December 31, 2024, Seritage Growth Properties reported a net loss attributable to common shareholders of $(158.4) million, or ($2.82) per share. Furthermore, the company recognized an impairment charge of $18.0 million on its consolidated properties during the six months ended June 30, 2025.

Here's a quick look at how the portfolio has shrunk as the Plan of Sale progresses, which is the direct result of this competitive selling environment:

The intensity of the disposition process is high, as the company needs to convert assets to cash to service obligations. As of Q3 2025, Seritage Growth Properties had four assets under contract expecting gross proceeds of $240.8 million. This aggressive pace is necessary to manage the balance sheet, which included a $240.0 million Term Loan Facility balance as of December 31, 2024, after prior repayments.

You should track the status of the remaining assets closely, as the final sales dictate the residual value for common shareholders. As of mid-August 2025, the pipeline looked like this:

• Completed sales in Q2 2025: 3 properties.
• Assets under contract (as of Aug 2025): 3 assets for $109.8 million gross proceeds.
• Assets in negotiations (as of Aug 2025): 5 assets.
• Remaining assets without negotiations (as of Aug 2025): 7 assets.

The competition isn't just about the highest bid; it's about finding a buyer willing to meet the required closing terms for complex development sites, which can involve long-dated closings contingent on master plan amendments, as seen with one premier asset negotiation.

Seritage Growth Properties (SRG) - Porter's Five Forces: Threat of substitutes

You're looking at Seritage Growth Properties (SRG) as a liquidation play, but you need to see how many other options buyers have for its assets. The threat of substitutes here is high because the sheer volume of available, similar real estate is substantial. As of September 30, 2025, Seritage's portfolio represented interests in 13 properties, totaling approximately 1.3 million square feet of gross leasable area (GLA), plus 198 acres of land. Buyers looking for large-format, repositionable retail or mixed-use sites have plenty of alternatives to consider instead of Seritage Growth Properties' remaining holdings.

The market offers many substitute properties for redevelopment, particularly former big-box retail sites. While Seritage Growth Properties is actively selling its assets, the broader landscape is seeing significant activity in repurposing older stock. Honestly, building new is expensive and slow, so the focus is on existing structures. The U.S. has over 14 billion square feet of retail space, much of it 30 to 60 years old. Since 2021, approximately 130 million square feet of obsolete retail space has been demolished. Still, investment in larger formats is surging, showing strong appetite for substitutes.

Investors can substitute SRG stock for other liquidation plays or traditional REITs with clearer long-term value. When you look at performance, Seritage Growth Properties underperformed the broader US Market, which returned 9.4% over the past year, while SRG returned only 0.6%. If Seritage Growth Properties wraps up operations by the end of 2027, the estimated value for common shares is $4.00 per share. That potential upside is modest compared to other liquidating entities or stable, dividend-paying REITs that offer more predictable cash flows now.

Alternative financing sources for buyers are readily available, substituting for any seller financing Seritage Growth Properties might offer. Traditional banks are pulling back on CRE lending due to regulatory pressures, but private capital is stepping in. This means buyers have flexible options, though terms can be different. Here's what lenders are expecting in 2025 for these types of deals:

• LTV ratios are tighter, favoring 60-70%, down from 75-80% previously.
• Required Debt-Service Coverage Ratios (DSCR) are typically 1.25x or higher for stabilized assets.
• Bridge loans, mezzanine debt, and preferred equity are actively filling funding gaps.

The availability of these alternative capital sources means a buyer for a Seritage Growth Properties asset isn't solely reliant on a specific deal structure.

Seritage Growth Properties (SRG) - Porter's Five Forces: Threat of new entrants

You're looking at Seritage Growth Properties (SRG) right now, and the concept of new entrants, as Michael Porter defined it, really shifts when you look at a company in full liquidation mode. Honestly, for Seritage Growth Properties, the threat of new entrants into its existing business model is essentially zero because the business model is designed to cease existing.

Shareholders approved the Plan of Sale back in October 2022, which means the entire strategic goal is exiting the market, not defending market share against newcomers. The company's focus is on monetizing its real estate portfolio, not competing for tenants or development opportunities against other property owners. The operational entity is shrinking, evidenced by the General & Administrative (G&A) expense dropping to $4.9 million in Q3 2025 from $6.2 million in Q2 2025, partly due to shrinking corporate space. The threat of new entrants is irrelevant for a liquidating company, as its goal is to exit the market, not defend it.

New entrants, in this specific context, are not competitors trying to steal Seritage Growth Properties' business; rather, new entrants (developers/investors) are the very buyers Seritage is seeking to purchase its assets. These buyers are the mechanism through which Seritage realizes the Net Asset Value (NAV) for its shareholders. The entire competitive dynamic here is a series of one-off transactions, not ongoing industry rivalry.

Buyers of the remaining properties, like the one located in Aventura, FL, become the new market players who will own and operate that real estate going forward. For instance, the purchase and sale agreement entered into for the Aventura, FL property was for approximately $130 million. When that deal closes, the buyer steps into the market as the new owner, effectively replacing Seritage Growth Properties as the relevant entity for that specific asset. This process is what Seritage Growth Properties is trying to complete across its entire portfolio.

Here's a quick look at the asset disposition pipeline as of the Q3 2025 reporting period, which shows who the potential new market entrants are engaging with:

New entrants benefit from acquiring assets at a potential 'liquidation premium' due to the forced-sale nature, though the term is better understood as acquiring assets at a price that reflects the urgency of Seritage Growth Properties to meet its debt obligations. The market's perception of this forced sale creates a discount relative to what a non-distressed seller might achieve. If Seritage Growth Properties wraps up operations by the end of 2026, the estimated value is around $4.50 per share; if it extends to the end of 2027, that value is reduced to approximately $4.00 per share. The buyers, stepping in now, are essentially acquiring assets at a price that factors in the need to clear Seritage Growth Properties' balance sheet, which included $200 million in term loan debt and $70 million in preferred share liquidation preference as of Q3 2025.

The key factors influencing the price these new entrants pay include:

• The urgency to pay off the Term Loan Facility maturity, extended to July 31, 2026.
• The cash position at the end of Q3 2025 was $60 million (including $8.3 million restricted).
• The potential for a 'sizeable' term loan prepayment from near-term closings.
• The fact that Seritage Growth Properties is actively managing down its G&A costs, which were $4.9 million in Q3 2025.

Finance: draft 13-week cash view by Friday.