Warren Buffett Should Sell This REIT After Another Earnings Wipeout

Nearly six years ago, Sears Holdings spun off most of its real estate as a new REIT: Seritage Growth Properties (NYSE: SRG). Seritage's strategy was simple: It would use the cash flow from leasing most of its real estate to Sears and Kmart to gradually redevelop its properties for higher-paying tenants, driving strong long-term growth.

Seritage's overarching strategy was compelling enough to attract a number of high-profile investors, headlined by Warren Buffett. In late 2015, Buffett bought 2 million shares of the retail REIT with his own money. However, the rapid downfall of Sears and Kmart over the past five years and the COVID-19 pandemic have combined to decimate Seritage's business.

The REIT's latest earnings report provided yet more evidence that Seritage Growth Properties is fundamentally broken. It's time for Warren Buffett -- and other shareholders -- to sell and move on to better opportunities.

Source Fool.com