Shares of real estate investment trust (REIT) Seritage Growth Properties (NYSE: SRG) rose as much as 24% in the first hour of trading on Aug. 10. That's a welcome relief for investors, since the stock is off by around two-thirds so far in 2020, including the big daily jump. That's a painful decline, but it makes sense when you look at the bigger picture. So does the day's outsized gain, when you consider the industry news that came out today.
First the background. Seritage was spun off from Sears Holdings about five years ago. Sears Holdings basically owned a portfolio filled with troubled Sears and Kmart stores. From day one, the goal was to shift away from these dying retail concepts by redeveloping and repurposing the properties it owned so it could find new tenants. Things were going as well as could be expected until Sears went bankrupt. And then the COVID-19 pandemic completely upended the retail landscape. Investors jumped ship, expecting, not unreasonably, that Seritage's ability to find new tenants was no longer as feasible as Wall Street once believed.
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