BG2008

Some biz are just tough. It's just one tough event after another. Some biz are just better. We got some storm damages? Yeah, you're gonna need more rocks and sand. Again, not making light of the situation. This is just life. Choose your players wisely.

Greg, So happy to hear that your family is safe and well. Media sensationalizing events, who would've guessed? Saw some stuff online about that CAT 5 storm facing a lot of wind shear as it approach landfall and downgraded it to CAT 3. I'm not a weather scientist, but I guess that typically happens. Someone online was literally talking about 14% of MAA and CPT's NOI going away bc of this storm. I'm like if those buildings have been there for 20-30 years, it's probably not gonna happen. Bought some more MAA and CPT recently, probably do 15% IRR all in over 3-4 years with like 20% LTV. They're taking leverage up to build more MF units to a 6.5% cap. The way MAA and CPT are playing offense right now is exactly how you want a low leverage public REIT to allocate capital.

You have to ask yourself "Is the orange worth the squeeze?" (Even my 7 yr old son is rolling his eyes at this dad joke)

Anyone aware of any meaningful damages caused by Milton so far and the impacts to companies we own? I know that Alico's oranges will be damaged. Obviously anything in the Tampa area will be affected. Let's hive mind this. Thanks in advance. @Gregmal @thepupil In times like this, I prefer to own rock pits as the damages likely result in spikes in demand for rocks and sand to rebuild damaged buildings, houses, etc. FRPH's tagline should be "Hurricanes destroys oranges, but it can't do jack shit to rock pits" All kidding aside, I hope for minimal life and property damage to people in the SE. There's been enough drama lately for them.

The just sold The Hamilton and 20% of the adjacent assemblage, see the AIV thread for updates

Instead buying when there is blood on the street, it's buying when there is a hurricane barreling down Florida

Spek, You're a great guy. Hope to get a few drinks in the near future! I've come to appreciate your "cut to the chase" comments. Yes, investing is hard and yes that was a participation trophy for me.

I bought a few shares, but I am not the one that pushes it into the $30s, my buy is in the $29.70 range.

Bought more FRPH in one of my portfolio that had lower weighting As I was sharing a lot of the analysis, I realized that the valuation is actually the most attractive in 3 years and we are going into a rate cutting environment. I decided that I need to add the weighting to one of my portfolios.

Spek, I love you and your direct talk. But man, that was a gut punch! LOL Is this your way of showing brotherly love? FYI, you're like the Asian dad/mom who says it like it is!

Kind of funny that I knew about Duan like 15 years ago

I will inject a little nuance into this conversation. If the investor only invest in nanocaps, no. Absolutely no. I don't want to call out any one. But there are a few investors with very impressive long term track records. Some of them even write a paid substack. A lot of those companies are cigar butts. I suspect a lot of the performances come from writing them up and getting the readers to buy it. Categorically, I don't think the nanocap stuff should be followed. I talk about mostly subscale RE companies. Come to think of it By contrast here are the illiquid RE names and what happened to them 1) Blackstone bought FRPH's warehouse portfolio for $359mm, original EV was sub $300mm when the thread was created. But FRPH kept another $300-350mm of assets. 2) GRIF/INDT was bought out at $67 per share plus divvies along the way 3) Laaco was bought out at a stupide price 4) Preferred apartments was bought out at a huge premium by Blackstone again thank you @Gregmal 5) Blackstone is rumored to be buying ROIC, that's a pretty good one. Probably make 15-20% IRR over 3 years just on its own even at today's price. If it gets bought out, I think it gets done at over $20 very $15.50 today. By my own admission, I think MAYS fits into that cigar butt category for me. I talked about it and in hindsight, the mgt was total crap. I think someone like Ian Cassel and Jason Hirschman are doing great work. Yes, they invest in nanocaps. But they are specifically looking for nanocaps that has the potential to grow into $500mm to even over $1 billion businesses. They are not looking for an one time rerate. I have a lot of respect for them. Chris Hohn is really good. He did sell out of Univar which I bought at about $12 and then it got bought out by Apollo for $36 IIRC all 1 or 2 years. I'll always have that story to tell. But he's really really good.

Greg, Extremely kind of you to call us out on this. Seems like the large cap MF REITs also worked this time around. Although, I have not been as vocal about MAA and CPT on COB during this time. But I do remember us talking and just felt that it was a obvious 15-20% IRR over 4 years. I want to mention @realassetsvalue who has also contributed a ton to real estate/hard asset research. I love comparing notes with him. Any name in his portfolio is worth my attention. I can be a bit autistic with my deep dives. I don't do it on every company, just don't have that kind of bandwidth. But when I do find a name, I can get really autistic with my DD. For shits and giggles this is what I know about some of the RE names that I've talked about JW Mays - This is a life insurance policy on the CEO, he likes horses and is rarely in the company. They don't give a rats ass about shareholders. I made a lot of money on it, but they don't give a F. Objectively, I was right about the asset value, but I was totally wrong about the people. That's probably why the real estate god decided that I was not going to make much money in Laaco. GRIF/INDT - Great capital allocator, great operator in the CEO Michael Gamzon, that was a big delta in info. Every capital allocation decision by him has been a homerun. Selling land in CT to 1031 into Lehigh in 2009, what a genius move. I spoke with Mario Gabelli at Liberty Investor day one time and he's not happy with them. Mario just wants more buybacks. This is the best example of when letting a competent CEO build warehouses and 1031 the land into new markets is a home run. Gamzon even asked his father-in-law to step down and put Gordon Dugan on as Chairman. What a legendary CEO that did the right thing for shareholders. I spoke with Gordon and he's a special cat. He can command attention from institutional allocators with a snap of a finger. That's the kind of halo you build when you 6 bagger returns for shareholders. MNPP - the board is a mess, the board meetings is hilarious and the amount of tension and infighting is crazy FRPH - Just solid people with the best hard assets that you can own. They will return capital to shareholders one day. That aggregate biz is awesome. No they don't need share buyback for this to work. Stop asking me. If you are so inclined, join the earnings call and ask them for a buyback or a dividend. I would prefer a dividend. CPT - Probably the most rational large cap MF management team. I always get incredible insights talking with them at NAREIT every year CLPR - Universally unliked by REIT mafia types, leverage too high etc. David is well known as tough. There are some real haters out there. But they were smart to lock in 10 year fixed rate mortgages, not collateralized. We'll see what rates are in 2-3 years when they have to refi. But they did not get blown up unlike a lot of RE GPs doing value add deals in the Sunbelt. I think JJ, the son and CFO, is really smart and competent. They have also changed their business model to do ground up development in Brooklyn. The 2 recent projects have been homeruns expected to stabilized to 7% cap rate. If they can keep doing that I will keep owning the stock. Also, the Griffin family used to own 20% of Altria IIRC but a playwright uncle thought they were way too diversified and told them to sell the stake. They used to own one of the brand that was sold in a stock deal and wind up with that large position in the company. There was a 300 page book on Amazon that I read and actually a decent history of the cigar biz vs tobacco. It is incredible how different the long term (decades) return of cigars vs cigs. Cigars are celebratory and cigs are daily doses that you need. They winded up with all that land in CT because they used to grow Connecticut shade tobacco on it and I've been up there with my pregnant wife at the time to see the old leaf drying barns. OMG, I am so autistic as I type this out. Anyway, I was tracking Gamzon's track record and I noticed that every time they build a warehouse and leased it up, they were getting crazy returns in the equity deployed. It works like this. Buy land for $3mm (200ks sqft @ $15) in LeHigh, build for $12mm ($60/sqft) and lease up and the property became worth $120/sqft or $24. All the cost was financed with construction loans or maybe just 10% equity. Equity pre construction is either $1.5 mm or $0. Post stabilization, equity is worth $9mm. It was kind of insane in 2019 when Blackstone was buying up portfolios everywhere and were seeing deals getting done at $100 almost every month. Yet, $GRIF was trading at 60% of that. It was pretty crazy. Ahh, the good old days. Rant over. Anyway, I keep pounding the table. $FRPH is really cheap right now and you have the Fed cutting rates which will act as a boost. The Verge and Chelsea warehouse will be near term catalyst as they add $7mm of pro-forma NOI to the company in the next 1-3 quarters. They have not really talked about Fort Myers and Brooksville. Part of the reason is because the current CFO was at the trucking business so they weren't showing comps. Now that he's back and they are starting to price out the infrastructure for Fort Myers, it will get talked about on the calls. All a sudden something that was not in their $38 bullish NAV model will be talked about and you heard here, I think it's worth about $5.5 dollar in NPVs that was not in their model at all. P.S. My best real estate ideas are usually the ones where I've owned it for 4 years, by which I am fairly exhausted and most COB members are probably thinking "here we go again, BG2008 is again talking about this RE idea that isn't working" That's usually when the spring is loaded and the best returns will be coming from. Come to think of it, this was the case for Laaco (the one that got away), GRIF was around 3-4 years, CLPR did well, then got down to mid $3 (I bought in 2020), so there comes an exhaustion point where I'm tired of owning a name and the COB members are probably tired of hearing me talk about a name, that's a pretty good entry point FWIW, I bought FRPH in 2020 at about $20 per share, great performance in the 21, but 22, 23, and 24 have been relatively flat. Again that 4 year mark and little bit frustrated. But there's usually when the discount between NAV and price widens out and it's great entry point. Basically, "My pain and exhaustion is your pleasure" Have fun with it ladies and gents.

Love it when Spekulatius speaks the truth

You probably have better luck asking a few real estate GPs for detailed MF breakdowns They are always looking for capital A lot of them are on Twitter

Still controlled by Brookfield?

@Gregmal what are those 5-6 names? I know JOE is obviously one, but I haven't been stalking you like I used to.

This is what I like today Grocerry Anchored Shopping Centers $ROIC $REG $IVT $WSR RE Holdcos SOTP with capital return - $AIV Set it and forget it - $FRPH Opportunistic - $CLPR and most levered to rate cuts Back $HHH for a hot minute now that the "headaches" have been spun off

A lot has happened recently to the REIT space. Large cap MF REITs like $MAA and $CPT have rerated higher. REITs in general have benefitted from lower rates, or anticipation of lower rates. What are your favorite REIT, real estate holdco, pipeline, and other hard asset names that own real assets and/or pay dividends? Tagging @realassetsvalue @thepupil @Gregmal @Spekulatius

This is very impressive. Very happy to see this.

FWIW 21% position in a new REIT (name withheld for now) 10-11% position in AIV that grew to 13-14% or so (scale back a little bc we're in the middle of hurricane season) 5% in Vitalhub (small healthcare SaaS rollup with a long runway already with 29% EBITDA margin) Retention dollar over 100% 4-5% in AppLovin (70% EBITDA margin adtech biz expected to grow 20-30%/yr per their earnings call) 5% position in another REIT at over 10% cap rate (name withheld for now) Huge new positions in MF REITs since mid 2023 (15% between MAA CPT and NXRT) Other smaller REIT positions that aggregate to another 5% This is the most fully invested I have been. Historically ran about 80% gross exposure for the past decade, but now over 120% gross which is very unsual for me. Had to sell some Fairfax, interest rates going lower going forward (I know it's not popular on this board) Limbach was sized way too small, but would've love to get in on that one in the $20 range. But I was stuck thumb sucking. Had starter positions in BABA, Viatris, Dollar General, etc but after a while just feel like I didn't really have any edge. Sold out and largely broke even. As the unofficial FRPH drum beater, I think FRPH is really good value here. The large REITs have moved higher. MF RET cap rates have come down from 7% to high 5%. FRP Holdings have largely stayed flat. I'm an old dog that learned a few new tricks this past year. I learned to get comfortable buying when a stock reaches new highs as long as the valuation is still very cheap. Price action should be ignored. I also learned to find and analyze and DCF growth companies. No idea why I never bothered. But I think paying 10x EBITDA for something like AppLoving with 70% EBITDA margin and growing 20-30%/year is cheaper than paying 5x EBITDA for a mid teens EBITDA specialty chemical business. Hmm, I need to ask hard questions.

Love to see it

I remember walking on the beach and calling @gregmal and saying "dude, I don't know when this investment work, but you're buying large cap, low leverage MF REITs at a 7% cap or 6.7% or whatever it was, and you're gonna make money" Blue Horseshoe likes MAA and CPT, JK. I'm just some small fry who enjoys shooting the shit with you guys! Spek, I do agree that MAA and CPT have more juice. I also see more sellside starting to agree that 2H of 25 to 28 will be a period of good rent growth.

ROIC is a surprisingly large position for you. Any specific reason? @thepupil

Something weird about the photo. In some, he looks legit CHADish from the front. But from the side with his whole neck on display, he looks like a skinny guy with a pencil neck. And yes, anyone who compares themselves to Buffett raises red flag for me. There are very competent CEOs like Rick Hermann of $HQI that continues to build value but doesn't ever gets mentioned or compared to as Buffett @wabuffo