The value of Sears' (SHLD) real estate could be far less than the bullish views of Baker Street (don't forget Bruce Berkowitz), writes Jacqueline Doherty. What's more, the company is selling some of its most profitable locations to raise cash to cover its massive losses - "burning the furniture to stay warm," says ISI's Matt McGInley, whose price target on the stock is just $25.
Relying on a price-per-square-foot analysis by Cushman & Wakefield - which got its comps from J.C. Penney sale prices - Credit Suisse has a price target of $20.
Part of the bullish real estate case relies on redeveloping certain stores, but that's easier said than done. Sears' Seritage Realty Trust has subleased "a number" of stores to other retailers, according to a spokesman, but Ubiquity Critical Environments - set up to convert locations into data centers - hasn't launched a fully operating one yet.
Barron's also takes a jab at Baker Street Capital - whose bullish report was the impetus in Sears' moonshot last month. The small operation - whose stock and options positions in Sears had been well under water - won't give detail on exactly which real estate experts led to such an outlier of an estimate on the value of the real estate holdings.
Sears gave back 14% of its big August/September gains last week. Monday morning might see even more selling.