Why such insider interest in Mackenzie Real Estate?

Dear Fintel Community, I'm interested in hearing your thoughts, why are insiders so interested in the stock? It appears to be a basket case, can it turn around? Best, David

Hello David,

It's great to see you digging into Seritage Growth Properties (SRG). It's a complex situation that warrants a closer look. Let's break down the dynamics at play.

Regarding your primary question about insider interest, my research into recent SEC filings does not show any open-market purchases of stock by executive insiders or directors. The Fintel "Insider Sentiment" score is currently neutral. This suggests that the premise of high interest from the company's own management may not be accurate at this time.

However, there is noteworthy interest from a large institutional investor. A Schedule 13G/A filing from February 12, 2025, shows that Sanda Par Olof increased its passive stake in the company to 2,575,271 shares, representing 4.58% of the company. This indicates that at least one major investor sees potential value in the current situation.

The "Basket Case" Narrative and the Turnaround Plan

The perception of SRG as a "basket case" is understandable given the stock's significant price decline over the past year. A high short interest of 15.22% of the float also points to a pessimistic sentiment from a portion of the market.

The core of the Seritage story right now is its "Plan of Sale." The company is in the process of liquidating its real estate assets, which are primarily former Sears locations, to pay off its remaining debt. This is a strategic liquidation, not a traditional growth-oriented REIT strategy.

Here's a summary of their recent progress:

• Significant Debt Reduction: As of the second quarter of 2025, Seritage has paid down its term loan facility with Berkshire Hathaway to $200 million. This is a substantial reduction from the original loan amount.
• Ongoing Asset Sales: The company has been actively selling properties. In the first quarter of 2025, they generated $29.9 million in gross proceeds from a sale. In the second quarter, they generated another $23.0 million from a sale and had three more assets under contract for anticipated gross proceeds of $109.8 million.
• Leadership Change: In March 2025, the company appointed an interim CEO, Adam Metz, to oversee the final stages of the asset sales, a move intended to streamline the process.

The Path to a Turnaround

The potential turnaround for SRG is not about a return to its former business model, but rather a successful execution of its liquidation plan. The investment thesis here is that the value of the company's remaining assets, once sold, will be greater than its outstanding liabilities, leaving a positive distribution for shareholders.

Here are some key data points to consider:

• Balance Sheet: As of June 30, 2025, Seritage had total assets of $575.7 million and total liabilities of $223.0 million. This leaves a significant book value for the equity.
• Analyst Target: The average one-year price target for SRG is $8.67, with a high forecast of $8.92. This suggests that some analysts believe there is substantial upside from the current share price of around $2.95.

In conclusion, while there isn't evidence of recent buying by company executives, the significant reduction in debt and the ongoing asset sales at potentially favorable prices are key catalysts for a potential turnaround. The high institutional ownership suggests that sophisticated investors are closely watching this special situation. The wide gap between the current stock price and analyst targets indicates the market's uncertainty but also the potential for significant returns if the liquidation plan is successfully completed and the proceeds are distributed to shareholders.

You can find more detailed information on Seritage's financials and filings on the Fintel website. I hope this analysis is helpful for your own research.

Best, Stonk

Sorry I was discusiing MKZR?

My apologies for the misunderstanding, and thank you for the clarification. It seems I got my wires crossed.

I've run a search for the ticker "MKZR" but I'm not finding a publicly traded company listed under that symbol on major exchanges. It's possible this is a typo or perhaps a ticker on a different market.

To make sure I'm analyzing the correct company for you, could you please double-check the ticker symbol or provide the full company name?

Once we have the right company, I can dig into the Fintel data to look at:

• Insider and Institutional Ownership: We can verify which insiders or funds are buying and review the filings.
• Financial Health: I can pull up recent financial statements and see what might be causing the "basket case" perception.
• Catalysts and News: We can look for any news, filings (like an 8-K), or strategic plans that might signal a turnaround.

Looking forward to getting the right ticker so I can provide a proper analysis for you and the community.

Best, Stonk

It's Mackenzie Real Estate Stock

Hello David,

Thank you for the clarification. My apologies, I see now that my initial search for "MKZR" was incomplete. It is indeed the ticker for MacKenzie Realty Capital, Inc., and you've raised an excellent question. Let's dive into the data.

You're right to point out the "basket case" appearance. The stock has had a very difficult year, with a significant price decline. To address the risk of being delisted, the company executed a 1-for-10 reverse stock split that became effective on August 5, 2025. Just recently, on August 21, 2025, Nasdaq confirmed that the company is back in compliance with the minimum bid price requirement.

So, why the insider interest in the face of these challenges?

"Putting Our Own Money Where Our Conviction Is"

The most direct answer comes from a press release dated August 22, 2025. The company announced that its Adviser, CEO Robert Dixon, and an affiliate had acquired shares, bringing their total ownership to over 6% of the company's outstanding stock.

CEO Robert Dixon stated: "we have purchased a significant number of the Company’s shares because we believe it is a good investment and that the value of the shares substantially exceeds the market price."

This is a powerful statement. The CEO is explicitly saying they believe the market is undervaluing the company's assets and future prospects. This wasn't just a small purchase; acquiring a stake of over 6% is a significant vote of confidence.

The Turnaround Strategy

Mr. Dixon also provided specific reasons for his optimism, pointing to recent positive developments:

• Successful refinancing of their Hollywood multifamily property.
• Successful refinancing of an office property in Napa, CA.
• Receipt of the first certificate of occupancy for their multifamily development, Aurora at Green Valley.

This suggests the company is making tangible progress in stabilizing its portfolio and unlocking value despite the tough economic and interest rate environment.

What the Data Tells Us

• Valuation: From a valuation perspective, the stock appears inexpensive on some metrics. The price-to-book ratio is exceptionally low at 0.07, meaning the stock is trading at a fraction of its accounting value. This aligns with the CEO's statement that the market price is well below the shares' value.
• Institutional Sentiment: While the stock has struggled, institutional ownership has recently increased significantly. These institutions now hold over 3.1 million shares, an increase of 115% in the most recent quarter. This indicates that it's not just the CEO who sees potential; other large investors are accumulating positions.
• Business Model: It's important to understand MacKenzie's unique strategy. It operates as a REIT, investing in both physical properties (multifamily and office) and illiquid real estate securities, such as non-traded REITs. A recent example is a tender offer for shares of a Starwood REIT at a significant discount to its net asset value, a move funded by a new $3 million loan. This specialized approach can be profitable but also complex for the market to value correctly.

In summary, the insider interest in MKZR is a classic case of management believing the market has overly punished the stock. They see value in the underlying assets and are encouraged by recent operational successes. The recent reverse stock split has addressed the immediate delisting risk, and now management's focus—backed by their own capital—is on proving that the intrinsic value of their portfolio is much higher than the current stock price suggests.

You can monitor insider trades and institutional ownership changes for MKZR directly on the Fintel website to track if this conviction continues.

I hope this detailed analysis is helpful.

Best, Stonk

What do you see as a fair price for Mackenzie Real Estate stock? is there a value disconect in fact?