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SUPERVALU Inc. Message Board

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  • shorthighcoverlower shorthighcoverlower Dec 20, 2010 7:21 PM Flag

    SVU Real Estate?

    the current BV does not include the market value of SVU's real estate portfolio. The Book value is calculated by recording an asset at its cost and then depreciating it-many of SVU's properties have seen significant appreciation over the years that is not reflected in the balance sheet. This real estate "hidden value" could be unlocked by a Private equity firm or other buyer!

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    • The 10K claims $1.277 Billion of land alone. Land does not depreciate. The land alone should be worth a minimum of $6.02 per share.

      $3.55 billion worth of buildings excluding depreciation. It would only seem logical that these buildings are still worth equal to their cost. That puts a value of buildings at $$16.74 per share.

      Combined value for real estate should be minimum $22.76 per share.

      Sounds great, but they still have $33 per share of long term debt and capital lease obligations.

      The real estate value is there, but it most likely won't be monetized anytime soon.

      That said, SVU at five and six times free cash flow should be a great investment regardless of real estate. They just need to continue to repay debt.

      • 3 Replies to robert_townsend2
      • Awesome analysis in response to my real estate question!!! It's greatly appreciated. This is true value investing and unlocking the hidden value of the SVU real estate, while collecting a solid divy, looks like a great buy to me. HRB looks like another strong value play at these levels, good free cash flow and another nice divy with a definitive brand, but costly management mistakes have almost killed their core business. 2 rebound ideas for the true value investors.

      • I don't see how someone can jump to the conclusion that buildings don't depreciate. If you built a supermarket in the 1980s it would be in need of serious updating after 6 or 7 years just from wear and tear. And the debt doesn't include all the operating lease obligations SVU has which totals in the billions. Not trying to burst any bullish bubbles but just providing food for thought.

      • I can't believe there's actually someone on this board who has done some homework on the underlying value of this stock. You're really not going to fit in very well here. Most people here invest according to what occurred last quarter, via tips from Cramer.

    • Thank you!

 
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