Warren Buffett is making big bets on retail

Oracle of Omaha bought a major stake in REIT Store Capital

Jun.June 27, 2017 07:30 AM

Warren Buffett

Warren Buffett’s Berkshire Hathaway was revealed Monday as one of the largest shareholders in the real estate investment trust Store Capital Corp., the second big bet the investor made on commercial real estate in as many weeks.

Store Capital, which focuses on single-tenant properties like restaurants, veterinary offices and fitness centers, revealed that Berkshire paid $377 million for a 9.8 percent stake in the company, the Wall Street Journal reported. That makes Berkshire its third-largest investor.

The move is a bet that some sectors of the retail market can buck the broader headwinds the industry faces, according to the Journal.

Just a few days earlier, Berkshire invested about $302 million in the struggling Canadian mortgage lender Home Capital Group Inc.

Store Capital’s real estate portfolio spans 1,750 locations in 48 states, and is valued at $5.5 billion.

“We’re devoted to doing service-sector investments…where you can’t buy these services through the internet,” company CEO Christopher Volk said. Berkshire “saw an opportunity to invest at an attractive price, and they believe in us.”

Berkshire, which held $96.5 billion in cash as of March 31, is actively seeking new investments for its growing war chest.

Locally, the company is looking to establish itself as a major force in New York City residential real estate after opening its first Manhattan office earlier this year. [WSJ] Rich Bockmann

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