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American Spectrum Realty, AŞ Message Board

  • vijar1234 vijar1234 Jun 5, 2008 11:40 AM Flag

    AQQ Liquidation Valuation $60- $70 per share

    Here is a back of the envelope valuation for AQQ assuming the assets were sold:

    1) assets are worth $300 million based on 21MM stabilized net operating income ($19 million Net operating income for 2007).
    2) NOI cap rate of 7%
    3) Selling expenses of 1.5%
    4) subtract $187 million in debt
    5) 1.6 million fully diluted shares outstanding assuming Operating Units Conversion to common stock.
    6) Value is $67.80 per common share

    Value subject to increase if there is greater than expected rental rate increases and/or occupancy increases in Houston portfolio over next 3 years as bulk of leases are expiring.

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    • Wow! Not really sure where to begin. There were so many inaccuracies in what you wrote that I'm at a loss. First of all, NOI was only $16.6M even if you exclude the SG&A. Include the SG&A and it is only $13.1M. Secondly, for warehouse space you'd never use a cap rate of 7%. 9% is a more accurate number. Net debt is $199M, not $187. At least you got the shares right. Let's assume just .6M in SG&A and an 8% cap rate and see the valuation we get for this POS.

      Valuation is $16M/9% - $199M in debt = $1M valuation. Divide by the shares outstanding and AQQ is worth a whopping $.625 a share.

      Don't try to manipulate the numbers to put lipstic on this pig.


      • 2 Replies to hedgie_mark
      • Hedgie, I think you should spend more than 2 minutes analyzing the company. I have been an investor in AQQ for 3 years and previously held LP interests in their predecessor company Sierra Pacific.

        first, read the 3/31/08 10Q and see that 1st quarter NOI is $4.736 million and annualized that is $18.95 million.

        second, rents are increasing at a fast pace in Houston metro area --- not as fast at AQQ properties as in downtown CBD Class A properties --- but still rising more than 20% in past year.

        Thus my guesstimate of stabilized NOI as 21 million (in a 2 year time frame) based on rental increases (and not assuming increases in occupancy).

        3) mortgage debt as 3/31/08 was $186.7 million.

        4) the bulk of their space is office or flex office/warehouse and not true industrial warehouse. The 7% cap rate is a good number based on the current rental market. 9% is ridiculous ---- I dare you to provide 2008 comps showing 9% cap rates for houston office sales.

        5) the above analysis does not take into account G&A as I assumed a liquidation not does it include possible capital gains/depreciation recapture taxes. It also does not take into account the 2008 2401 fountainview acquisition.

      • hedgie_mark

        I think there's more going on here....insiders are buying like crazy. A year ago the CEO exercised warrants at $54 per share when it was trading sub 20s....why would anyone in their right mind do that unless they think its worth a lot more!!! I'm buying I think their properties in Texas are going through the roof!!!