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Union Pacific Corporation Message Board

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  • dewduckin dewduckin Mar 26, 2007 5:21 PM Flag

    Cramer: UNP biggest landowner in the Nation

    I can't believe how naive Cramer is re UP as a landholder.

    UP sold off the surplus land they previously used to develop industrial parks about 15 years ago. Most of that land was turned into business, commercial, retail, or office parks which don't generate any rail business for UP. This land was sold off just prior to the real estate boom which also shows how short sighted Davidson and his BOD were.

    UP's real estate is now basically their rr yards and rights of way which they could never sell and continue to operate as a rr. Most of their surplus or lightly used rail properties were also sold off over the last 10 to 15 years which, incidentally, enabled UP to meet quarterly revenue targets and, incidentally, enabled senior management to "earn" their bonuses.

    If you are looking for a real estate play then you should look at some of the timber companies who own vast acreages of land that once logged could be developed, LP, GP, Weyerhauser,and Boise Cascade.

    Another analyst reducing his Q1 estimate for the rails.

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    • dewduckin
      You are only partially right. What you are referring to that UP sold off many years ago was their realty subsidiary, I believe it was called UPLAND corp. This was their real estate company that managed their vast land holdings. It's job was to sell or lease property next to UP's rail lines to companies that wanted to do rail business with UP. From what I remember UP wanted to concentrate solely on the railroad business. This does not mean they sold off all their properties. Looking at UP's 10Q it says they have over $35 billion in road properties. Most of this is ROW and rail yards but not all of it. You are wrong in saying that "they could never sell and continue to operate as a rr". Some of their yards are in prime locations within cities that could fetch a lot of money. Some cities are more than willing to approve a sale of this prime real estate to a developer and make it easy for the railroad to build a new yard on the outskirts of town. This relieves congestion at rail crossing in the cities and makes it easier for the railroad to have faster access to the new yard.

    • "Another analyst reducing his Q1 estimate for the rails."

      Don't forget that UP is the only railroad that has come out and said they will meet their quarterly estimates for this quarter. That is why you see no mention of UP by the analysts.

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