A Nano-Cap Real Estate Company Trading Significantly Below Liquidation Value
Significant upside on a sum-of-the-parts valuation
This is the sixth issue of “Weird OTC Stocks” I find by going A-Z.
The previous issues are here:
The key stats are below:
$21.6 million market cap, with $11.9 million of cash and a $9.7 million enterprise value.
9,061 acres of owned land. 7,632 of these acres are held for investment and the remaining 1,429 acres are held for development.
An owned 18-hole golf course on 203 acres of land.
An 8,800 square foot tavern on a lake.
A lake club which consists of a 175-acre lake, a swimming pool, a tennis court, boat docks and a variety of other buildings.
Three acres of vacant commercial property.
One single family house.
Two sewage treatment facilities.
A members-only fly fishing club
Their own corporate headquarters.
The most interesting part about this company is that it is controlled by a major real estate firm with a $15 billion market cap which owns 59% of the shares outstanding.
On a pure land valuation you are buying the land for around $1,075 per acre and you get the rest for free. The company made two large land transactions, one in 2020 where they sold 284 acres for $8.5 million or $30k per acre and another in 2022 where they sold 344 acres for $4.9 million, or $14k per acre.
They have also been selling off developed lots of land for $60-120k per pop and currently have 350 lots for sale.
Over the course of the company’s history, they have sold off a significant amount of assets including:
A ski resort and mountain
Land leased to Burger King
Hotels
132 resort homes
A shopping center
A commercial property to Walmart
A wildlands conservancy
And a variety of other real estate assets
From these asset sales debt has been paid down and now the company has a large net cash position along with valuable real estate.
Companies like this tend to sit on cash and assets for a long-time. They sit on these assets until they cannot sit on them anymore.
My best guess is the company will continue to sell-off assets and then start returning capital to shareholders.
And if they don’t, there is a large enough margin of safety where your downside is well protected.
In addition, if you run a sum-of-the-parts valuation on the company there is significant upside.
Let’s dig in.