We recently published an article titled Why These 15 Real Estate Stocks Are Plunging In 2025. In this article, we are going to take a look at where Seritage Growth Properties (NYSE:SRG) against the other real estate stocks.
The real estate market has been hit by a lot of bad news in the first three months of this year, and it looks like it will only get worse in the coming months. Mortgage rates have remained elevated and are a pain for buyers. The Federal Reserve holding higher for longer with very slowly moderating inflation is not going to solve that problem anytime soon.
Lawrence Yun, chief economist at NAR, noted that consumers are gradually adapting to a new normal of mortgage rates between 6% and 7%.
There’s a lot of uncertainty about where this market could go. Prices are still high, and the Trump administration may still force the Fed to push rates lower. On the other hand, the trade wars combined with an AI slowdown could knock the entire market down, and the real estate market could fall significantly in such a scenario.
Some real estate stocks have already started falling, and there’s a good chance that some of them are already below their intrinsic value.
Methodology
For this article, I screened the worst-performing real estate stocks year-to-date.
I will also mention the number of hedge fund investors in these stocks. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A sunrise over a skyline filled with mixed-use destinations.
Seritage Growth Properties (NYSE:SRG)
Number of Hedge Fund Holders In Q4 2024: 22
Seritage Growth Properties (NYSE:SRG) is a REIT that focuses on retail and mixed-use properties.
The stock is down significantly so far in 2025 due to Seritage amending its Senior Secured Term Loan Agreement with Berkshire Hathaway Life Insurance Company of Nebraska late last year.
This will allow the company to extend the maturity date by one year from the end of July 2025 to the end of July 2026. This will require a 2% fee on the outstanding principal amount at the original maturity date, so investors are spooked about earnings.
Furthermore, the company has been selling off properties as part of its Plan of Sale. This is expected to reduce debt, but it will also diminish future revenue-generating assets.
For example, the company posted $33.7 million in gross proceeds from two vacant property sales in 2024. However, investors are concerned about the shrinking portfolio and whether or not these sales are enough to cover debt and make sense long-term.
Seritage Growth Properties (NYSE:SRG) stock is down 16.50% year-to-date.
Overall SRG ranks 5th on our list of the real estate stocks that are plunging in 2025. While we acknowledge the potential of SRG as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SRG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires
Disclosure: None. This article is originally published at Insider Monkey.