Berkshire Hathaway Buys 9.8% Stake in Store Capital -- Update
June 26 2017 - 10:59AM
Dow Jones News
By Imani Moise
Warren Buffett's Berkshire Hathaway Inc. has picked up a 9.8%
stake in real-estate investment trust Store Capital Corp., at a
time when many investors are growing concerned about the health of
the commercial real-estate sector.
Shares of Store Capital, which invests in single-tenant
properties including chain restaurants, supermarkets, drugstores
and other retail locations, shot up 11% to $23 in premarket
trading.
Monday's stock move would help the company's stock regain ground
it lost this past spring after the company reported disappointing
earnings.
As retailers are closing stores at a record pace, Store Capital
said Mr. Buffett's $377 million investment represents a vote of
confidence in its leadership and business model. Store Capital's
real estate portfolio totaled $5.5 billion, representing 1,750
property locations, as of March 31.
Berkshire Hathaway's investment marks the second bold bet in two
weeks, following Mr. Buffett's $1.8 billion bail out and investment
in struggling Canadian mortgage lender Home Capital Group Inc.
Analysts have said that if Canada's real estate bubble bursts,
midsize lenders like Home Capital could be the among the most
vulnerable to losses.
Berkshire has long benefited from Mr. Buffett's reputation as a
skilled judge of businesses who is known for closing deals quickly
without teams of bankers or consultants. Berkshire earned more than
$10 billion on deals Mr. Buffett struck during and after the
financial crisis with blue-chip companies including Goldman Sachs
Group Inc., Dow Chemical Co., General Electric Co. and Bank of
America Corp.
Berkshire Hathaway's investment makes it Store Capital's
third-largest shareholder, behind the Vanguard Group and Fidelity
Management & Research Co., according to data from FactSet.
Write to Imani Moise at imani.moise@wsj.com
(END) Dow Jones Newswires
June 26, 2017 10:44 ET (14:44 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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