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Gramercy Capital Corp. Message Board

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  • john325695 john325695 May 13, 2009 6:01 PM Flag

    Dont be fooled by the $19 book value, fair value is proberbly zero.

    You're not short, you just sound like someone bashing the stock so you can get it cheap.

    If you think the "fair value" now is $0, why would you pay $1.50 for it? Are there really no stocks out there with a positive "fair value" that you can buy?

    "I think your car is complete junk! Not even worth a cent! But I'll buy it from you for half price..."

    Sounds like a bad pawn shop trying to milk the customer for a better profit.

    If we get the crash many people are expecting, you might get your chance to get in at $1.50. Will you still be trumpeting your "fair value = $0" line then or will you change into one of those overly enthusiastic longs with rose-colored glasses?

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    • The fair value represents current value if GKK was to liquidade, so I would pay $1.50 for it because I belive GKK wont liquidade any time soon. In the long term the real estate prices will come back up.

      $1.50 is a good entry point, I would not go all in though...

      Why do you think a lot of people bought this at $0.60? That is dam close to zero...

      So far I havent heard any good arguments regarding what GKK can do to offset real estate declines, anyone?

      • 3 Replies to mario_luis_gomes
      • The value of the buildings is determined from the value of the underlying long term leases. The portfolio is not newly unoccupied buildings. The core portfolio is about 95% leased, so the value is on the projected cash flows of the leases.

        A house, unless rented, does not generate income, so its value is only what it can bring at a sale. When you rent the house, the house's value to a potential purchaser, becomes the present value of the future cash flow from the lease payments.

        You are comparing apples to oranges.

        The risk for GKK is a lack of sufficient monies to pay the substantial debt maturities in 2011 to Goldman. Management has already addressed the potential problems with the loan portfolio (purchased AFR to get lease cash flow and substantially increased loan loss reserves), and, has paid down its short term debt (repos and credit facilities). They can't do everything at once, so patience is required.

        IMO the price of GKK is greatly affected by the financial indexes in which it is included. When they are going up, it seems to go up, and when they go down, it seems to go down.

      • If any real estate company were forced to liquidate right now, they would not get anywhere close to market price. Even companies already in BK like GPP will not be liquidating all their holdings.

        What can a real estate company do to offset declines in real estate prices? Get out of the real estate business? Not sure what kind of answer you were hoping for.