tag:blogger.com,1999:blog-2080506270244832638.post6129084446925184285..comments2024-03-18T20:44:42.858-05:00Comments on Clark Street Value: Retail Value Inc: PR Portfolio Sale, Liquidation De-RiskedMDChttp://www.blogger.com/profile/10679835609782815537noreply@blogger.comBlogger45125tag:blogger.com,1999:blog-2080506270244832638.post-56772405092112922872022-08-02T13:07:12.792-05:002022-08-02T13:07:12.792-05:00market just bumped it up, unsure of holdbacks/sitc...market just bumped it up, unsure of holdbacks/sitc mgt fees/liabilities and time frame remaining thoughAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-41734148706023563802022-07-18T14:08:10.530-05:002022-07-18T14:08:10.530-05:00What do people see as the remaining stub value aft...What do people see as the remaining stub value after the $1.16 distribution is paid out July 27? The market seems to be saying somewhere between 10 and 15 cents. George S.https://www.blogger.com/profile/14006447095123318692noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-73649955757835020832022-02-03T14:57:12.010-06:002022-02-03T14:57:12.010-06:00Hi, have you updated your analysis after the sales...Hi, have you updated your analysis after the sales. Crossroads generates $6.5m of annual rent, but it looks like crossroads the company "owns" it as a lessee until 2033 (renewable at market prices (?) for another 25 years). Not clear what is the expense associated with that lease. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-60356775551327780032021-11-17T12:59:08.871-06:002021-11-17T12:59:08.871-06:00Thanks RAV, I appreciate your updates on the situa...Thanks RAV, I appreciate your updates on the situation.MDChttps://www.blogger.com/profile/10679835609782815537noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-42882330011833738072021-11-17T11:09:20.602-06:002021-11-17T11:09:20.602-06:00With Willowbrook now under contract, NAV of the st...With Willowbrook now under contract, NAV of the stub is getting more clear and is continuing to triangulate in on the estimates in these comments.<br /><br />Green Ridge and Willowbrook: $60.4m - based on occupancy / ABR @ Q3 I estimate a 9.6% cap on NOI of $5.8m and $100 PSF<br />Cash: $47.9m after repaying pref and dividend (from 10-Q)<br />Crossroads Center: I est. $39.6m - this is a 12% cap on est. NOI of $4.8m and $72 PSF. Crossroads is ground-leased with 22 years remaining (25 year option) - rent is $205k from Nov 2021 and rises 5% annually. Its decently well-occupied (>90%) but tenant line-up doesn't inspire confidence.<br />Wind-down costs: $13m - top end of estimate range provided in 10-Q of $7m - $13m<br />Sale costs for assets U/C and Crossroads: $2m - at 2% of value, 100 bps of which is disposal fee to SITC<br />Other balance sheet assets / liabilities: $0.4<br /><br />$60.4m + $47.9m + $39.6m - $13m - $2m - $0.4m = NAV of ~$132m or ~$6.30 per share. I don't have high confidence in the value of Crossroads given the ground lease + tertiary market + retail anchored by cinema and 2nd tier big box retailers but the other pieces are largely fixed.<br /><br />At just under $6 / share today this is a ~5% discount to NAV. If it were to trade down to the $5.70 range, that would start to look like an attractive (but not risk free) spread to the likely liquidation value.RAVhttps://www.blogger.com/profile/16017979503195445169noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-36655245407643865792021-11-11T14:22:01.041-06:002021-11-11T14:22:01.041-06:00Thanks, I think this is directionally right, the t...Thanks, I think this is directionally right, the two remaining strip centers also have movie theaters as their primary tenant. Might be some upside left, but I've also sold and reallocated to other ideas.MDChttps://www.blogger.com/profile/10679835609782815537noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-50895720970129522412021-11-11T12:01:58.413-06:002021-11-11T12:01:58.413-06:00Have been following for the last several months an...Have been following for the last several months and really appreciate your work! My day job is running a commercial real estate investment firm, so this thesis especially drew my interest. <br /> I agreed w/ the original thesis and took the plunge in July and have continued to hold my position. Looking at the remaining stub, had a few thoughts:<br /><br />Currently trading at ~$130M market cap / valuation<br />Q3 '21 annualized NOI for the remaining 3 assets is ~$10.7M (imperfect, but a rough estimate)<br />Equates to an ~8% cap, and ~$115 psf<br />Feels quite rich for these 3 assets<br /><br />Green Ridge is selling for $23.3M, $108psf<br /><br />Backing into the remaining 2 property stub...<br /><br />Implied market cap / value of ~$110M, on 940k SF, ~$116psf<br />Feels quite rich, given asset quality/location/tenant roster/ground lease of remaining 2 assets<br />Hard to back into a cap rate, since we don't know how much NOI Green Ridge is generating<br />But lets make a rough assumption it traded at a 10% cap, which would be $2.3M of NOI<br />That would leave ~$8.4M of NOI for the remaining 2 assets.<br />On a $109M implied market cap, that's a ~7.75% cap. Again, feels rich.<br /><br />The last nuance is how much cash they have on their books that could be distributed.<br /><br />At end of Q3 they had $461M. They sold the continental portfolio for $264M gross. Lets call it ~$250M net proceeds. That would give them ~$710M cash pre-dividends. They paid ~$655M in total in dividends in October. That would leave ~$55M of cash for wind-up/distribution. Assuming that any TIs/LC's for the remaining 2 properties can be covered by operating cash flow. <br /><br />Coming full circle, lets say the remaining properties are closer to 10% caps on estimated remaining NOI of ~$8.4M. ~$84M of value. Tack on $55M of cash, that's ~$140M valuation + cash. Subtract out closing costs and liquidation costs, lets say 10% to be conservative, that's ~$125M net proceeds vs. today's market cap of ~$130-130M. Roughly a wash. You could use an 9% cap, or even an 8% cap, and assume liquidation costs are less, but its not overly material. <br /><br />Granted this is a really rough back of the envelope analysis. But I think its directionally correct. In my opinion for there to be materially higher proceeds (say ~$150M within the next 6 months, or ~$160-170M within the next 12 months), 1) the remaining two assets would need sell for a sub-8% cap rate; and/or 2) Green Ridge's NOI is way less than anticipated and it traded at a very low cap rate, meaning the remaining 2 assets have much higher NOI than anticipated; and/or 3) the liquidation/wind-up costs are significantly lower than expected. <br /><br />Exited the position today to reallocate to other opportunities. Enjoyed the ride and the nice short-term pop! Great original write-up, thanks again!<br /><br />Also would love to hear any thoughts on the above analysis and any holes in it. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-58346322778662650892021-10-29T10:53:31.628-05:002021-10-29T10:53:31.628-05:00Seems a little rich to me since we don't know ...Seems a little rich to me since we don't know the timing for the remaining sales/distributions, wild trading if you were able to sell pre-market at even higher numbers. Maybe RAV will chime in, they have a better sense of the stub than me.MDChttps://www.blogger.com/profile/10679835609782815537noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-24544306051363098072021-10-29T10:45:46.570-05:002021-10-29T10:45:46.570-05:00Thoughts for the stub, trading this morning at $6....Thoughts for the stub, trading this morning at $6.32?Ted Grahamhttps://www.blogger.com/profile/06477707495675681426noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-38858587405189775702021-10-05T10:25:35.655-05:002021-10-05T10:25:35.655-05:00I think your rough math is about right, I believe ...I think your rough math is about right, I believe that management have indicated that they are going to reserve 3% of sale proceeds for liquidation costs. Not all will necessarily be spent but probably some will.<br /><br />I sold the little bit I owned at ~$26.35 - I am concerned around the quality of the last couple of assets - ground leases, cinema anchors, tertiary markets (except for Houston) - there is a good chance they could get a lot less than this recent sale for what they have left.<br /><br />Agree with MDC however that the stub might get interesting again ex special dividend as there may be a rush to the exit... But I am happier to have no current exposure but the option to be opportunistic if the price is right. <br /><br />Now that I have said all this, I am sure an announcement is coming on the sale of the last couple assets at a great price!RAVhttps://www.blogger.com/profile/16017979503195445169noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-45337312802397776582021-10-04T22:46:36.097-05:002021-10-04T22:46:36.097-05:00Roughly my target price yes, might get interesting...Roughly my target price yes, might get interesting once the special dividend goes ex, still haven't quite figured out if I'm going to lean into this one or not. But with the $22.04/share dividend, the IRR is still pretty attractive.MDChttps://www.blogger.com/profile/10679835609782815537noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-14261465640821231772021-10-03T09:58:38.765-05:002021-10-03T09:58:38.765-05:00Looks like they're selling these 5 US assets f...Looks like they're selling these 5 US assets for ~$100/SF gross, on the net proceeds its $92/SF net and an 11.4% cap rate. Using those numbers for the last three US properties, I'm seeing about $100 million in assets left, not sure I see that the remaining three should be valued any differently (based on rent roll, tenant exposure, asset quality). <br /><br />My rough math, paying off all liabilities, I get to roughly $1.5/share in net cash, but gaining the $22.04/share in common dividends, and $4.9/share in value left on the last 3 properties, roughly $28.50/share, maybe 8% above Friday's close, probably leaving out some liquidation leakage.<br /><br />That roughly sum up to your read, MDC?<br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-64928051526627115682021-10-02T18:22:18.988-05:002021-10-02T18:22:18.988-05:00Did you guys see the 22 dollar div announcement af...Did you guys see the 22 dollar div announcement afterhours on Friday? Also some news on property sales as well. Its on the website.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-6641220933670006552021-09-22T13:02:32.163-05:002021-09-22T13:02:32.163-05:00Okay I understand now. Appreciate the response!Okay I understand now. Appreciate the response!ECKnoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-21345251017519097342021-09-22T12:48:05.320-05:002021-09-22T12:48:05.320-05:00Thanks for the kind words. The one screenshot tri...Thanks for the kind words. The one screenshot tries to lay it out, although some comments have pointed out a few adjustments/flaws that I made, but the goal was to get to what the market is valuing the remaining assets at ($281MM in my screenshot) and what the NOI estimate is for those remaining assets. We've since had asset sales, so the math is probably both wrong and now stale.MDChttps://www.blogger.com/profile/10679835609782815537noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-66537897144296109332021-09-22T11:47:54.621-05:002021-09-22T11:47:54.621-05:00I recently discovered your blog and love the infor...I recently discovered your blog and love the information you share. I'm newer to investing and the posts I've read from you have helped my learning process a lot so far.<br /><br />Just curious, how did you come up with the implied cap rate of 13.3%? I understand what a cap rate is and where you found the NOI Estimate. While trying to work through your numbers I don't understand how you triangulated the 13.3%. What numbers did you use or what document did you reference to calculate that number? Perhaps its my ignorance but I enjoy learning from your process and want to make sure I'm fully understanding.ECKnoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-38842396928965078472021-09-22T08:27:13.347-05:002021-09-22T08:27:13.347-05:00Thanks, I missed that, maybe this is a little less...Thanks, I missed that, maybe this is a little less disappointing than I thought.MDChttps://www.blogger.com/profile/10679835609782815537noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-11757973492533423662021-09-21T20:17:45.024-05:002021-09-21T20:17:45.024-05:00I realize I'm a month late here, but it seems ...I realize I'm a month late here, but it seems as if you gents have picked this over pretty well. One thing I'd like to point out: it looks like the mandatory dividend on the preferred stock will be $190m and not $200m. Two dispositions counted in the messages above were prior to 7/1/18 and so aren't part of the calculation. That means gross divestitures of $1,554.5m including PR plus another $264 from the five US assets announced 8/20/21. To hit the $2B target, they will have to receive $182m for the three remaining centers or $157/psf. Since they received only $101/psf for the 5 centers announced 8/20/21, it is hard to believe they will hit $2B gross dispositions. So...that's another $0.47 per share.Cormorantnoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-33499896902012091812021-08-31T08:38:11.905-05:002021-08-31T08:38:11.905-05:00Based on the PR portfolio closing announcement and...Based on the PR portfolio closing announcement and assuming net proceeds of $539m are before the STIC disposition fee (1% of price), total sale costs more like $20m vs. my $30m estimate, which adds about $0.50 to NAV estimate.<br /><br />Thinking through Q3 2021 retained cash flow, a reasonable estimate looks like $15m (Q2 2021 FFO was $20m, less one month of PR NOI at 2021 guidance midpoint of $51.5m for the year) or ~$0.70 per share.<br /><br />That would put my liquidation proceeds estimate somewhere around $27.50 per share so ballpark 10% upside from the share price today. Cash per share pro forma for the close of the US portfolio transaction would be ~$24 by my estimates, so that's probably a reasonable estimate of the downside (~3%).RAVhttps://www.blogger.com/profile/16017979503195445169noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-51606351876441663002021-08-23T07:37:53.329-05:002021-08-23T07:37:53.329-05:00Makes sense. Thank you for expanding.Makes sense. Thank you for expanding.EJLnoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-58023084703596640832021-08-23T07:16:48.448-05:002021-08-23T07:16:48.448-05:00Had to look up etiology - nice vocab usage - but t...Had to look up etiology - nice vocab usage - but the delta between my estimate and yours is effectively frictional costs along with the other assets / liabilities on the BS at Q2 2021.<br /><br />PR sale - I assume 1% disposal fee to STIC, 4% of other sale costs and $2m of hurricane resoration expense - total of ~$30m or ~$1.40 per share.<br /><br />Other net assets / liabilities of negative ~$20m on the BS or ~0.90 per share.<br /><br />Then I estimate the remaining portfolio is worth $100m and 2% sale costs (half of which is disposal fee to SITC) and 3% wind-down dissolution reserve and costs which is a ~$10m delta or ~$0.50 per share.<br /><br />If frictional costs are less than my (what I hope are) conservative estimates, the outturn could get closer to your estimate. In my experience, however, these costs always end up being fairly significant...RAVhttps://www.blogger.com/profile/16017979503195445169noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-13635547955912150852021-08-22T21:50:56.494-05:002021-08-22T21:50:56.494-05:00that was EJL again...that was EJL again...Anonymoushttps://www.blogger.com/profile/03897068178158144508noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-36083358759068737582021-08-22T21:50:05.979-05:002021-08-22T21:50:05.979-05:00Assets
Cash 67
Restricted 59
PR 5...Assets<br />Cash 67<br />Restricted 59<br />PR 550<br />8 US 246 (lower end)<br />3 US 105 (my estimate)<br /><br />Debt<br />Secured 214.5<br />Prefs 200<br /><br />Net 610.5<br />Share Out 2.11m<br /><br />Per share: $28.91<br /><br />This excludes continued rent collection, including as noted in 10Q, post hoc ability to collect previously deferred rents.<br /><br />Also there are a couple items on the b/s that aren't negligible (accts rec and "other assets", currently too tired to figure out what the latter represents). Conservatism I excluded these as well.<br /><br />Any idea as to the etiology of my overshoot c/w both of your estimates?Anonymoushttps://www.blogger.com/profile/03897068178158144508noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-81438576924514618382021-08-21T13:07:19.813-05:002021-08-21T13:07:19.813-05:00Returned to mention that, after digging more into ...Returned to mention that, after digging more into the quarterly, I found the "U", or unowned. As you say, looks like a lot of their anchors own their portion of the strip. ThanksEJLnoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-67048376517037926722021-08-21T12:58:23.087-05:002021-08-21T12:58:23.087-05:00Thanks for the thoughtful comment, that Crossroads...Thanks for the thoughtful comment, that Crossroads in Gulfport also has a Cinemark, so 2 of the remaining 3 strip centers are anchored by a movie theater.MDChttps://www.blogger.com/profile/10679835609782815537noreply@blogger.com