tag:blogger.com,1999:blog-2080506270244832638.post6450765389938716217..comments2024-03-27T17:05:53.544-05:00Comments on Clark Street Value: Bluerock Residential Growth REIT: Messy Balance Sheet, Possibly Pursuing a SaleMDChttp://www.blogger.com/profile/10679835609782815537noreply@blogger.comBlogger21125tag:blogger.com,1999:blog-2080506270244832638.post-4918963888877281832022-10-05T07:31:40.473-05:002022-10-05T07:31:40.473-05:00Curious what latest thoughts are on BRG spin BHMCurious what latest thoughts are on BRG spin BHMAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-49226742722635424362022-06-06T11:29:14.755-05:002022-06-06T11:29:14.755-05:00Glad to know it's not just me. I was thinking...Glad to know it's not just me. I was thinking about going through the BRG 10-k to see what the single family properties look like; if I understand the filings right, all SFRs are going to BHM. At least that gives something to start with. Ultimately, I think this trade depends on what BHM trades at out of the gates after the spinoff.Tim Zanghinoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-43216931770389705132022-06-06T08:40:37.459-05:002022-06-06T08:40:37.459-05:00I was thinking about this one over the weekend as ...I was thinking about this one over the weekend as well, also looking for a more complete Form 10-12. I'm not quite smart enough to figure out what the BHM common shares will actually own based on the current drafts.MDChttps://www.blogger.com/profile/10679835609782815537noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-65653429321831226852022-06-05T14:50:29.669-05:002022-06-05T14:50:29.669-05:00Is there any update on when the SFR spinoff is occ...Is there any update on when the SFR spinoff is occurring? Latest updates say Q2 2022, but we are running out of time, and I don't even think they've published a complete prospectus (unless I'm just missing it).Tim Zanghinoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-1920904758398066732022-04-24T15:42:58.351-05:002022-04-24T15:42:58.351-05:00I do also like Lennar spin setup, excited to read ...I do also like Lennar spin setup, excited to read the Form 10 when it comes out.MDChttps://www.blogger.com/profile/10679835609782815537noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-72577211876882524712022-04-23T08:19:54.151-05:002022-04-23T08:19:54.151-05:00I think it's pretty interesting. Most SFR Reit...I think it's pretty interesting. Most SFR Reits are trading at a huge premium to book (although book may be understated significantly because prices have jumped significantly). <br /><br />I think the Lennar spin-off is worth a look. Spinning off $5 billion in assets including their Single family and multifamily build and holds as well as all of their tech investments and financing division. Market isn't giving them much if any credit for those investments. <br /><br />On the other hand there's a decent chance the fed and or inflation eventually slows the economy. How big of a dip in housing will occur? Hard to say. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-37886094762969453102022-04-22T12:04:34.808-05:002022-04-22T12:04:34.808-05:00Sure, but it's already trading like that, sub-...Sure, but it's already trading like that, sub-50% discount to NAV. And NAV might be understated for the incentives reasons, that's the mark management is using to roll their stake. It's hard to have the view that these are bad actors and think that NAV is overstated (aside from changing market conditions).MDChttps://www.blogger.com/profile/10679835609782815537noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-33247525549902550582022-04-22T11:19:17.273-05:002022-04-22T11:19:17.273-05:00Yea the incentives look pretty good with the stake...Yea the incentives look pretty good with the stake rolling. And agree it also looks cheap. Do you think it tanks on the spin itself? I never know how to answer that with stubs, but I just wonder on this who is going to be able to own this post-spin, it is so small.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-61341326082860681642022-04-22T08:55:23.967-05:002022-04-22T08:55:23.967-05:00I'm still following and agree it is attractive...I'm still following and agree it is attractive, just takes a lot of capital for me to put it on in enough size. I like the incentives here, management is the most knowledgeable in the room on what BHM is worth, they're rolling their stake into it, don't think you can just assume they'll treat BHM as badly as they did BRG. They had a minimal stake in BRG before the internalization, much different setup here. Also think that rising mortgage rates helps SFR, might push some first time home buyers on the margin into SFR that would have stretched for a mortgage at 3% but not 5%.MDChttps://www.blogger.com/profile/10679835609782815537noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-11491263351399845722022-04-22T08:35:12.905-05:002022-04-22T08:35:12.905-05:00I put on a position as merger arb, given the SFR a...I put on a position as merger arb, given the SFR assets were 29mm in 2020 then 318mm in 2021 into a rising housing market I figure the new BHM vehicle's asset market value shouldn't be far from book and as a minority shareholder on this structure a ~40% of NAV discount is where it starts to get attractive to me. Hopefully the 65% insider ownership dampens the ugliest of their self dealing. Creating it at under 40% of NAV seems attractive although who knows how badly it will trade post spin. I didn't attend the meeting but thought it was odd the stock did a mini dive that afternoon.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-62341818274331402002022-04-22T07:53:52.515-05:002022-04-22T07:53:52.515-05:00Hey are you still following this one? Curious wha...Hey are you still following this one? Curious what you think about the spinco at implied $2.25/sh here? Cheap? Unownable given size and mgmt team? Possibly its own M&A target?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-46743989068303972972021-12-27T16:22:17.345-06:002021-12-27T16:22:17.345-06:00Ha, yes, they figured out a creative way to keep t...Ha, yes, they figured out a creative way to keep their jobs. I'm working on a couple other similar ideas, think this go-private apartment REIT trend isn't over yet.MDChttps://www.blogger.com/profile/10679835609782815537noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-30061671564749013502021-12-23T10:07:02.550-06:002021-12-23T10:07:02.550-06:00Great call and glad I reconsidered my original POV...Great call and glad I reconsidered my original POV and came around to your view on this situation, playing it through call options. I hadn't considered a second life through the single-family portfolio but makes total sense - new vehicle in even hotter sector, provides the ability to roll out the same playbook that will generate tons of fees for management and related parties.RAVhttps://www.blogger.com/profile/16017979503195445169noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-64626023592934091382021-12-20T08:06:22.955-06:002021-12-20T08:06:22.955-06:00plus SF spin off ,with nav of 5.60!plus SF spin off ,with nav of 5.60!Anonymoushttps://www.blogger.com/profile/15356879757190647155noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-68901740008807163962021-12-20T08:03:17.882-06:002021-12-20T08:03:17.882-06:00Oh wow, Merry Christmas, that's some good news...Oh wow, Merry Christmas, that's some good news and a bit surprising they actually sold. Thank you Blackstone, that's a couple now they've bought.MDChttps://www.blogger.com/profile/10679835609782815537noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-91564737689018691412021-12-20T07:42:23.675-06:002021-12-20T07:42:23.675-06:0024.25, 2nd qtr close, nice outcome24.25, 2nd qtr close, nice outcomeAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-59226095619026598562021-10-18T18:04:58.173-05:002021-10-18T18:04:58.173-05:00One other thing, might not be completely binary, m...One other thing, might not be completely binary, maybe they did just leak it to get the price up and convert the Bs. Then they could get into the REIT index, might improve the multiple a bit, not the big upside scenario but still could get an acceptable result.MDChttps://www.blogger.com/profile/10679835609782815537noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-27004095432306213832021-10-18T17:50:15.214-05:002021-10-18T17:50:15.214-05:00That's a good synopsis of the situation, I agr...That's a good synopsis of the situation, I agree with just about all of that. But that said *if* they do sell, could be for a big premium, thus I think call options are interesting trade, limit the downside and use less capital while getting the upside. I tend to think they leaked this for the reasons you mention, but who knows.MDChttps://www.blogger.com/profile/10679835609782815537noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-89934468484613555022021-10-18T17:26:04.111-05:002021-10-18T17:26:04.111-05:00As you've laid out, the value of the assets pr...As you've laid out, the value of the assets pretty clearly exceed what they are are trading for and the key question is whether management do the right thing by shareholders here after years of not doing that.<br /><br />What they say is that their ~30% interest in the common, worth ~$150m, aligns them with shareholders and that is why they'd be looking to maximize value to the common equity holders.<br /><br />However, when we think through what they are getting from BRG in its current form, it's hard not to question that alignment. For example, they look to receive $20 - $35 in preferred issuance fees in 2021 alone, there's the cost-sharing agreement, lots of units issued through the LTIP, common dividends that are not covered by cash flow and strong hints that related parties get stakes in the deals, the terms of which I have not seen disclosed.<br /><br />So putting my tinfoil hat on, my latest thesis is that since the Series B stopped being issued in December 2019 and all of which will be redeemable into common shares by the end of the year, management is leaking the strategic review rumor, which along with the red hot private market for their assets, will allow them to convert as much of the Series B as possible into common in Q4 2021 through Q1 2022, thereby providing headroom to issue more Series T and make those sweet fees. My bet is that while there will likely be some rearrangement of the capital stack or a JV announced, there will be no sale of the business such that it falls out of management control.<br /><br />Let's see if any clues come in Q3 earnings in a couple weeks.<br />RAVhttps://www.blogger.com/profile/16017979503195445169noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-67084807238640632812021-10-15T10:32:55.816-05:002021-10-15T10:32:55.816-05:00Thanks - Yeah almost feel sheepish putting that ca...Thanks - Yeah almost feel sheepish putting that cap rate on the assets, seems like there's a big delta between the public and private value here, just a matter of if the management team will actually sell? After what happened at CMCT, I'm a little gunshy.MDChttps://www.blogger.com/profile/10679835609782815537noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-2260508220352668362021-10-15T10:00:10.909-05:002021-10-15T10:00:10.909-05:00For what it's worth, these assets would trade ...For what it's worth, these assets would trade in the mid-3% cap rate range on a standalone basis in the private market. That's how crazy it is right now for value add assets in these types of locationsAnonymousnoreply@blogger.com