FUR

[txlaw]

Ackman's latest letter describes the Stuyvesant town deal in a bit more detail:

 

http://www.scribd.com/doc/36474286/Pershing-Square-Q2-10-Investor-Letter

[bargainman]

Thanks for the link.

 

I think we have the right Jockey for this segment.

 

I struggle a bit with this.  Everyone keeps saying that Ashner is great, but what about the Concord CDO investment?  They seem to have owned up to it as a mistake, but I wonder why they got into it in the first place.  Is anyone else bothered by this?

[dcollon]

txlaw,

 

Thanks for posting the letter. 

[Myth465]

Not me.

 

I think Ashner wrote Concord down to zero to get everyone off his back. I view it as a free option. It seemed like a good idea, but they were too early. I believe they think it still has value but dont want it weighing down on the stock. I cant value it and consider it a free option, but doubt its worth zero. I also think it helped them get a leg up on the loan transactions and NY realty asset. They bought a few performing loans from Concord at a pretty good rate.

 

I also dont really like the earlier Partnership investments. They consume a good chunk of capital but throw off very little cash.

 

FUR was cheap at $8 - $9 when I bought it, and I like the loan transactions they have been doing. First REITs, then Senior Securities, and now Loans (performing and non performing).  I plan to monitor them and will sell if things go South. They were mostly right. They raised cash and were waiting for a crash and are now putting capital to work in interesting ways and with smart people.

[Myth465]

http://www.marketwatch.com/story/winthrop-realty-trust-announces-public-offering-of-3000000-common-shares-2010-09-21?reflink=MW_news_stmp

 

This confirms my thoughts that FUR was fairly priced at $14 or so. I lightened up a bit last Friday but should have sold a bit more. Management wouldnt issue shares at a significant discount. I dont mind it too much because I figure they must have a good place for the money. The loan transactions look like they will be extremely profitable.

[Packer16]

In addition they are purchasing shares themselves.

[Myth465]

 

I think FUR is still a good deal for an owner manager company. I think its close to fairly priced but you get Ashner's ability in a depressed RE market as a free kicker. When it was undervalued they did a rights offering, I think they are selling shares now because its closer to fair value. I think they are buying shares because they already know what they want to do with the cash. The return will likely make the shares look cheap. The only thing I wonder about though, is why they dont do a private placement with Bruce B. I figured at some point they would sell him a significant amount of shares for him to up his stake. Right now FUR is a rounding error in his portfolio.

 

I think they want to use the cash to purchase more loan assets or may have something to do with Sty Town (but I doubt it). I like the loans because they get cash flow, and if the loans arent repayed they get the buildings on the cheap. Its a win win and beats dealing with a building war on distressed realty.

 

---- Update

 

Acquisition Pipeline

 

    We have a network of long-standing relationships with real estate professionals, individual and institutional real estate owners and national and regional lenders. We believe our network of relationships provides us access to an ongoing pipeline of attractive acquisition opportunities. We are currently in discussions regarding a number of acquisition opportunities that have come to our attention through our network of relationships.

 

    As of September 20, 2010, we were tracking and evaluating acquisition opportunities that include 17 loan asset opportunities with respect to loans with a face amount of approximately $165,000,000 and two direct property acquisitions for an aggregate purchase price, before financing, of $52,000,000. Although we are continuing to engage in discussions and preliminary negotiations with sellers and have commenced the process of conducting diligence on some of these assets or have submitted non-binding indications of interest, we have not agreed upon terms relating to, or entered into binding commitments with respect to, any of these potential acquisition opportunities. As such, there can be no assurance that we will complete any of the potential acquisitions we are currently evaluating.

 

[biaggio]

Thanks for the update.

 

I am hopeful they have something interesting to do with the proceeds. I like what they have done buying various securities at a discount, with good yields, and possibilty of taking over the underlying real estate if they default.

 

It has to be a good time to be loaning money (?), and not a good time to be borrower of money. Maybe that is why they have gone to market.

 

I am disappointed that they are issuing shares- though management buying their share of it is reassuring me a bit. I hope it is not wishful thinking.

[Guest]

Why do you guys like this company?

 

I've read through the tread and I'm still not clear. You guys mentioned a guy name Asner, but since he took over in 12/03, it doesn't look like he's outperformed the index. I don't see huge ownership. It looks like he was doing pretty well when the market was going gangbusters, but over the longer term, he hasn't done much.

[Myth465]

Search the board. I posted a write up and valuation awhile back. Basically Ashner appears to be very smart and owns alot of stock. His specialty is commercial Re and everyone thinks it is crashing. We are betting that the Jockey can take advantage of it. Ashner raised money and has been spending it on loans and other busted assets.

 

Him and Berkowitz own a turn of stock and we are betting that he will make us money through the downturn. Bet, and collect the div while he works.

 

The Div may be cut though with this transaction.

[Guest]

Search the board. I posted a write up and valuation awhile back. Basically Ashner appears to be very smart and owns alot of stock. His specialty is commercial Re and everyone thinks it is crashing. We are betting that the Jockey can take advantage of it. Ashner raised money and has been spending it on loans and other busted assets.

 

Him and Berkowitz own a turn of stock and we are betting that he will make us money through the downturn. Bet, and collect the div while he works.

 

The Div may be cut though with this transaction.

 

I tried searching before I posted, but I didn't have much luck. I'll try to find your post now. Thanks for the insight, Myth. You're helpful as always! :)

[Myth465]

No prob. Also I see what you mean, FUR brings up alot of results, due to further being used in every thread.

 

Here are a link to help you get started.

 

http://cornerofberkshireandfairfax.ca/forum/index.php?topic=1296.0

 

Feel free to ask any other questions you have on FUR.

 

Here are my last few updates, thoughts, and the way I view valuation with regard to FUR. Berkowitz used to sit on the board and I believe it is his way to play commercial realty (outside of General Growth). I would get used to offerings. They will buy loans, sell part of them, collect cash, take over buildings, and repeat. I think they will raise cash when they need to, and thought it would be via private placements to Berkowitz.

 

If loans get repaid they get 15% - 20% returns. If not they get buildings for cheap. Concord and Sty Town are free call options. I like Sty cause it really kicked up the share price. I bought more at $11, sold at $14 and would buy today if I had excess cash. I bought in 2008, when they were doing REITs. When REITs came back they switched to loans, and I guess they are now looking at buildings. My family did mom and pop SFHs and I have always been interested, this is also my way to learn about RE without the headaches.

[Guest]

Thanks very, very much again, Myth! I will check this out!

[dcollon]

BRIEF-Cwcapital reaches agreement with Ackman venture on Stuyvesant Town

 

4:22 PM Eastern Daylight Time Oct 26, 2010

 

Oct 26 (Reuters) - Winthrop Realty Trust <FUR.N>:

 

* Cwcapital, representative of holders of the mortgage on stuyvesant town/peter cooper village says settled its litigation with joint venture between Winthrop Realty Trust <FUR.N> and pershing square capital that holds junior loan

 

* Cwcapital, on behalf of mortgage holders, says acquired junior loan on stuyvesant town/peter cooper village

 

* Cwcapital says also cancelled the foreclosure sale that was scheduled for Friday October 29th

 

* Cwcapital says also cancelled the foreclosure to focus on ensuring a stable transition of the property and maximizing recovery of the $3.7 billion owed to the bondholders of the mortgage

 

 

[dcollon]

PSW Settles Litigation Regarding the Foreclosure of Peter Cooper Village/Stuyve

 

Globe Newswire

5:05 PM Eastern Daylight Time Oct 26, 2010

Winthrop Realty Trust

 

 

  BOSTON, Oct. 26, 2010 (GLOBE NEWSWIRE) -- PSW NYC, LLC, a venture between

Winthrop Realty Trust (NYSE:FUR) and funds managed by Pershing Square Capital

Management, L.P., has settled the outstanding litigation with CWCapital Asset

Management LLC ("CWCAM"), acting as special servicer on behalf of the Trusts

that it represents, relating to PSW's foreclosure on the Peter Cooper

Village/Stuyvesant Town Mezzanine 1-3 loans. The settlement provides, in

part, for the payment to PSW of $45 million and the transfer to CWCAM, on

behalf of the Trusts, the Mezzanine 1-3 loans previously owned by PSW.

Winthrop is entitled to receive $10.125 million of the settlement payment on

account of its 22.5% interest in PSW.

 

 

 

[Myth465]

not bad, looks like the loss was minimized to court fees (did FUR pay full price for the $10 million or was it from Concord?) and Ackman got some more publicity.

[Myth465]

Looks like Bruce has sold about 10% of his holding, which further confirms that FUR is moving closer towards fair value.

[biaggio]

"Looks like Bruce has sold about 10% of his holding, which further confirms that FUR is moving closer towards fair value."

 

Good to see Ashner buying ~200,000 shares around $12.25

 

http://www.gurufocus.com/StockBuy.php?symbol=FUR

 

Selling at ~book value. I am thinking it may have more to run. I am hoping to hold until it is obviously overvalued.

 

[dcollon]

Q3 Results

 

http://files.shareholder.com/downloads/FUR/1056962867x0x415411/B20A5096-9A51-49EC-B06F-ED88CDFB3B4E/Q3_2010_Supplemental_Package.pdf

 

[Myth465]

FUR had a rough quarter and is moving into being un-modelable. I am sure the Analyst will hate that.  Kroger really screwed things up but it doesnt look like its much money from a total exposure perspective. I really like the loan transactions. We get great double digit returns for shuffling paper on the ones which are paid back and get to take over buildings on the cheap from the other ones.

 

If someone buys a building for $100 million, puts down $20 million, and gets a loan for $80 million. Then we buy that loan for $50 - $70 million. Next they default and we get the building. The issue is the building is not leased up and will not generate much cash flow for a while.

 

I like both sides of the coin, and will continue to hold my reduced stack. I may add more after looking at the segment breakout.

[Myth465]

Attached are my updated thoughts.

[dcollon]

Myth,

 

Thank you for sharing your write-up.

 

 

[Myth465]

No prob.

[biaggio]

recent deals

 

http://www.bloomberg.com/news/2011-01-07/paulson-lending-group-said-to-seize-cnl-hotels-from-morgan-stanley-funds.html?cmpid=yhoo

 

http://www.thestreet.com/story/10964312/1/winthrop-realty-trust-announces-acquisition-of-office-building-and-rake-bond.html

 

Appears to be buying at 60% of face value though with risk attached (buildings are half vacant).

[Myth465]

The Paulson deal looks very interesting. The other deal is more of the same.