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.
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.