Dive Brief:

• Investment magnate Warren Buffett Thursday disclosed that he bought 2 million shares of Seritage Growth Properties, the real estate investment trust established earlier this year with a spin-off of properties once owned by Sears.

• The move gives Buffett an 8% stake in the company and makes him the trust’s second-largest shareholder. Seritage shares rose 18% on the news. The investment was a personal one and not on behalf of Buffet’s company, Berkshire Hathaway, where Buffett is chairman of the board, president, and CEO.

• Seritage owns 262 retail locations, most of them are Sears and Kmart (which lease back the properties the Sears Holdings Corp. once owned) but many are other retail outlets.

Dive Insight:

This is one of the biggest blessings upon Sears CEO Eddie Lampert’s move to leverage Sears’ significant property holdings into a REIT. But, while Buffett’s investment has already paid off for him to the tune of $12 million, it’s not necessarily a good sign for Sears and Kmart as retailers. 

While Buffett reportedly likes dividends, and Seritage will be paying its investors more than most because of the quirky rules of a REIT, that’s not necessarily the only reason for his move.

There’s also the fact, notes Bloomberg columnist Gillian Tan, that Seritage has the right to lease the properties to better-heeled, higher paying tenants. 

So it could be a bet on Buffett’s part that more Sears and/or Kmart locations will be exiting those properties in coming months and years, and yielding them to healthier retailers paying higher rents.