« Rec Center Studies Continue | Main | Holocaust Educator »

February 24, 2014



No real meat on the Ranchers Reserve bone so to speak, the magic is made with leverage. The more debt you use, the greater the tax deductibility of interest payments and the less you have to put in as an equity investment. Very similar with the mortgage on a house: you deduct interest payments (assume interest only mortgage), only put 20% down as equity, real estate goes up by 20%, you just made 100% return on your equity. The difference is that Cerberus is likely to take dividends out of Safeway with its stable cash flow, further juicing their near term return and lowering the risk of their initial investment.

Also companies that use leverage have less left over to spend on capital improvements so in that sense, it is good that the Burlingame store got renovated when it did.


Thanks, Locavore. I was thinking you might have some salsa to add to this guacamole. Are they under-levered now or is this just a convenient time to throw on unneeded sour cream?

Definitely glad the store got finished before the financial knife comes out. Will those juicy Just4U discounts on the website dry up?


Safeway is big, but it could be bigger.

Grocery is a relatively low margin business, and with more economies of scale comes higher margins and stock value.

Safeway is well run and provides a good value to the customer. A Cerberus type of buy out shop is likely to raise prices, and leverage their stronger locations and their relative price inelasticity, like Burlingame.

Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Your comment could not be posted. Error type:
Your comment has been posted. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.


Post a comment

Your Information

(Name and email address are required. Email address will not be displayed with the comment.)

About the Voice

  • The Burlingame Voice is dedicated to informing and empowering the Burlingame community. Our blog is a public forum for the discussion of issues that relate to Burlingame, California. On it you can read and comment on important city issues.

    Note: Opinions posted on the Burlingame Voice Blog are those of the poster and not necessarily the opinion of the editorial board of the Burlingame Voice. See Terms of Use

Contributing to the Voice

  • If you would like to create new items on the Burlingame Voice, send an email to editor@burlingamevoice.com and tell us a little about yourself. We may set you up as an author on the blog.

    Authors may login here.

    For help posting to the Voice, see our tutorial.