Berkshire Hathaway Buys 9.8% Stake in Store Capital -- Update

By Imani Moise Features Dow Jones Newswires

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.

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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.

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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)