I am sure if this has been posted before but when GFA turned down the Sam Zell's offer Sam Zell turned around and a month later he acquired stake in GRUPO THA a 117 year old family construction company. That means he has some confidence in the Brazil real estate market and his first choice was GFA.
Last night I looked at the latest balance sheet of GFA again. I am wondering about the worst case scenario... I read that real estate prices started to go down in Rio area and forecasted to drop as much as 30% this year. They are used apartments though. So I looked at the inventory of BRL 3.5 billion at hand for GFA. Only a small portion is finished housing, the majority is land which I would say is sellable even in bad times for a nice discount but what do you do with work in progress, semi finished projects ? Who would buy them at fire sale prices ? So if we assign a 30% haircut to the $1.7billion inventory we end up with $500mill impaired inventory and there you go the stock price is now almost at book value...(credit inventory, debit P/L -> retained earnings -> book value.
I hope to think the market already priced this in so I have a hard time to imagine much lower prices than this.
On a macro level, today is the last day of bond sales scheduled for the US and Europe that I can find through next Friday. That will leave more liquidity available to snap up risk assets beginning tomorrow.
Hopefully the move into June will also improve investor sentiment.