ALI cant sell the 100+ facilities that it has on the market because they paid inflated prices for the facilites when they acquired them from outisders or their devco JVs or others they refinanced with inflated appraisals based on their previous foolish purchases. SNZ is selling these facilities at somewhat inflated prices based on the inflated prices everyone has paid for these facilities with so much "potential" for profitability.
I really don't see anything new here - ALI built most of those facilities, sold them to JV's then obtained the financing to buy them back - ALI made money building, made money selling, made money financing, made money manageing - they have not make money operating.
It is a big shell game - and the more transactions the company involves itself in the more profitable it becomes/appears - the losses never make the books, the gains do - what else could you want.
Per the ML report -
"o Sunrise uses off-balance sheet structures in two principal ways. First, for properties being developed by Sunrise, the company has increasingly utilized minority interest joint ventures. Under these structures, Sunrise does not have to consolidate the results of newly opened facilities, which are not yet profitable as they are still in the process of filling up. This accounting treatment boosts near-term reported earnings.
o Second, Sunrise has a sale/manageback program where it sells assets to joint ventures in which Sunrise typically holds a 20-25% interest. Under terms of these structures, the investment return to the majority interest partner (holding the 75-80% interest) is typically guaranteed and is senior to Sunrise's claims. The structure is analogous to Sunrise issuing a high coupon participating cumulative preferred security in exchange for an up-front cash payment."
If SRZ can - keep selling them great they are a good construction company.
If SRZ can manage - great they are a great management company (like Marriot).
good luck - I am not saying SRZ can't but - right now the stock is going to see pressure.
You say "I still don't see where SRZ selling off assets and slowing down its development is ever going to make any more money than it does right now."
I say, "Ever hear of Europe? Canada?" SRZ has homes operating throughout Canada, around London, and other projects coming out of the ground, as well as in due diligence throughout the U.K. and Germany.
ALI can't even begin to get into that arena. There is no comparison, except for the industry, between these two companies. Fiscally or culturally.