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Ruby Tuesday, Inc. Message Board

  • imd85 imd85 Jan 10, 2014 3:30 PM Flag

    Real estate

    In the earnings call they mentioned the real estate was probably worth between 500-600 million. Which is about five dollars a share if you back out debt. The Goldman put and the JJ buy at 5.88 are the support with some promise of operational improvement but losses will still be incurred so I would really like to buy this closer to five but we might have to wait for a market pullback. I want more safety then six, might start closer to 5.5 if it presents itself.

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    • I don't remember hearing about a discussion of real estate value (and I wasn't on the whole call either), but if $500-$600mm is the figure they quoted, they must have been referring to sites where they own the building and the ground lease (321 of these). In the last 2 years, they have been doing sale-leasebacks on less than 20 properties, and in each case, they sold the property and the ground lease for over $2 mm/site. Apply this to all 321, and the RE value for these properties is close to $650 mm.

      RT has another 265 sites where they own the building but not the ground lease, and in these cases, the value if probably $1 to $1.25 mm/site. Combine these two property types, and you get about $925mm in current RE value. Add the 125 or so sites where there are only leases, which still have some value, and you can get close to about $1 b in RE value...back out $500 mm in liabilities, over 64 million fully diluted shares, it's roughly $8/share in RE value, very conservatively, and that doesn't include any value of the Ruby Tuesday operations.

      I can get to $1.1 b in RE value pretty easily, which gets us close to $10/share in RE value. That means you are paying nothing for the RT operations, and are getting a 30%+ discount to underlying breakup value.

      The question is...when do you pull the plug on the RT concept and just liquidate the real estate? Tough to say, so at $5.50, you are getting a ton of value to wait and see if they can't turn this concept around.

      My 2 cents: make it like a Seasons 52 type restaurant, but less formal dining. Consumers want lower calorie, flavorful, locally sourced food. Why can't RT totally remake itself and pursue this strategy? Nothing to lose.


      Sentiment: Buy

    • To me, the becker drapkin sale overshadows the CEOs buy.
      This CEO is going to parachute out very rich even if they end up selling out in a few years for as low as $2-3.

      So his buy is chump change compared to his contracts value, Heck, he'd get rich if they fired him and they aren't going to do that.

      I don't know what you mean about the goldman put and I haven't read the conference call transcript yet.

      But, I sold out when BD did. Id imagine the best case is another year of losses & by tax time next year it will be in the $4 range.

      Unless they show serious same store sales increases within a year.

      These guys are going on TV just to keep their sales up. TV is like a drug for eateries. The more you spend, the more you need to continue to spend or your sales fall off a cliff.

      That happened with Cooker way back when.

      Im afraid RT is headed down that same path.

      They cant just sell all the real estate because rents would make their business even less viable.

      If they cant make money with no rent, how are they going to make money with rent if they sell & leaseback all their properties ?

      I see continued struggling with an eventual merger or takeover by a private equity firm at a lowball price.

      If the stock falls to $3 on continued poor results, maybe they get a slight premium & sell it ?

      That means a couple of bucks in downside.

      Unless you think they can & will get back in & remain in the black fairly soon and I don't see how.

      If this thing could be sold for $7-8, BD would have pushed for that rather than selling out cheap.

      So I don't see much upside from current prices. I mean, maybe $6.50 in a best case scenario but only after the stock falls to $5 first. But, I don't see anyone offering that much with no hint of operational improvements & sales increases.

      Maybe I will review the transcript tomorrow since the markets closed.

      I have most posters on ignore here for being proven idiots like stockomotrist.

      • 1 Reply to smaycs4
      • I agree on BD, he triggered the first sell off. The debt downgrade last week after the Friday close appears to have triggered more selling.

        The Goldman put I refer to is this rumor: According to Debtwire, Ruby Tuesday is working with Goldman Sachs (GS) to explore strategic alternatives -- code for putting a “For Sale” sign on the $420 million restaurant chain.

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