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Posted

off topic, but Kiewitt Plaza is for sale for around $20 million.  Berkshire has a very long term lease, but I wonder if they end up purchasing the building.  On a side note, Omaha real estate appears not too pricey

Posted

I suspect real estate returns are lower than equity, AAPL or even BRK repurchase at today's prices likely yield higher returns. Guessing they won't be using their capital on this.

 

If they don't purchase it, it will not be for ROE reasons. $20 million is a drop in the bucket, and the purchase would be more for sentimental reasons kind of like the local newspapers. Having said that I am sure $20 m overvalues the building. Having Berkshire as a tenant means people might be willing to pay up for it.

Posted

I suspect real estate returns are lower than equity, AAPL or even BRK repurchase at today's prices likely yield higher returns. Guessing they won't be using their capital on this.

 

If they don't purchase it, it will not be for ROE reasons. $20 million is a drop in the bucket, and the purchase would be more for sentimental reasons kind of like the local newspapers. Having said that I am sure $20 m overvalues the building. Having Berkshire as a tenant means people might be willing to pay up for it.

 

You know, that's a good point - if people are willing to pay $3M to have lunch with Warren, why not buy the building, you might

get to have lunch with him a lot more often!

Posted

I suspect real estate returns are lower than equity, AAPL or even BRK repurchase at today's prices likely yield higher returns. Guessing they won't be using their capital on this.

 

If they don't purchase it, it will not be for ROE reasons. $20 million is a drop in the bucket, and the purchase would be more for sentimental reasons kind of like the local newspapers. Having said that I am sure $20 m overvalues the building. Having Berkshire as a tenant means people might be willing to pay up for it.

 

You know, that's a good point - if people are willing to pay $3M to have lunch with Warren, why not buy the building, you might

get to have lunch with him a lot more often!

 

Buy the building and install listening devices? Haha

Posted

Interesting to see Berkshire melting up towards an all time high with a major hurricane heading towards North Carolina.  Maybe we should start a Hurricane Florence thread...

Posted

He always says he loves the management and assets.  So that leaves valuation.  But, then again, Warren tends to keep his critical thoughts to himself - at least for a while.  If I had to guess, I would guess valuation.  Or maybe he wants to be below 5% for some other reason and will stand pat here.

Posted

Some of their assets might be cyclicals at peak earnings. I haven't followed this closely, but their 50% interest in wood river is a big heavy oil refinery in Illinois. It is making money on the spread between canadian heavy (WCS) and WTI. That spread has been at historical highs due to pipeline and rail constraints.

 

While transmountain may or may not get built, the line 3 expansion probably will, and rail is ramping up. A lower differential will lower their profits at wood river.

 

I'm not sure how big a piece of their business refining is anymore, but thought I'd mention that.

  • 3 weeks later...
Guest longinvestor
Posted

It could also mean that BNSF doesn’t need a replacement for Matt Rose’s post. Carl Ice can work with Greg Abel on strategic initiatives. BNSF needs for capital are modest relative to BHE. Anyone want $5 Billion annually?😀

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