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AXR - AMREP Corporation


TwoCitiesCapital
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Saw an interesting write up on seeking alpha about this co. Basic premise is that there is negativity due to its magazine printing/distribution business but that it owns 20% of the real estate in a city in New Mexico.  Conservative valuations have the land valued at 2x the market cap, and unlike Sears, this has positive cash flow (though declining).

 

Can't post the link from my phone but maybe some generous soul can find it on S.A. and post for others. 

 

I haven't looked into this too much personally yet but knew I'd be able to sift through it faster with all of your input.  So, thoughts?

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Sounds interesting...

 

HOWEVER, one of the comments in VIC stated that a lot of their properties were 1/4 acre lots dispersed all over the place.  They didn't think the company had a large inventory of contiguous land.  There was also a suggestion that a vast majority of the land would only be suitable for residential development and not commercial.

 

So if this is true...I don't see anything compelling here.  Sure, the land is valued at a discount...but it needs to be a BIG discount.

 

 

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Sounds interesting...

 

HOWEVER, one of the comments in VIC stated that a lot of their properties were 1/4 acre lots dispersed all over the place.  They didn't think the company had a large inventory of contiguous land.  There was also a suggestion that a vast majority of the land would only be suitable for residential development and not commercial.

 

So if this is true...I don't see anything compelling here.  Sure, the land is valued at a discount...but it needs to be a BIG discount.

 

That comment is persuasive, I'm sure AXR has plenty of dispersed lots, but since they own 20% of the city it's hard to believe there aren't some large contiguous pieces too.

 

Anyways with the original poster having looked through property records for the whole city I find them even more persuasive.

 

In case anyone is not familiar with accessing VIC, in order for non-members to get in you need to add ?guestLogon=true to the end of the link, like so:

 

http://www.valueinvestorsclub.com/value2/Idea/ViewIdea/80534?guestLogon=true

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Sounds interesting...

 

HOWEVER, one of the comments in VIC stated that a lot of their properties were 1/4 acre lots dispersed all over the place.  They didn't think the company had a large inventory of contiguous land.  There was also a suggestion that a vast majority of the land would only be suitable for residential development and not commercial.

 

So if this is true...I don't see anything compelling here.  Sure, the land is valued at a discount...but it needs to be a BIG discount.

 

That comment is persuasive, I'm sure AXR has plenty of dispersed lots, but since they own 20% of the city it's hard to believe there aren't some large contiguous pieces too.

 

Anyways with the original poster having looked through property records for the whole city I find them even more persuasive.

 

In case anyone is not familiar with accessing VIC, in order for non-members to get in you need to add ?guestLogon=true to the end of the link, like so:

 

http://www.valueinvestorsclub.com/value2/Idea/ViewIdea/80534?guestLogon=true

 

Whether or not the land is contiguous, if they own 20% of the city's residential lots, and they are all empty, that doesn't say much about the value of real estate there. Filling residential lots on that scale takes a significant amount of times, and hundreds of transactions. If it were commercial land, one company/tenant large enough could potentially take up a large part of the land.

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seeking alpha article here:

 

http://seekingalpha.com/article/1924891-sum-of-parts-analysis-indicates-amrep-is-substantially-undervalued

 

"AMREP Southwest currently owns approximately 17,345 acres in Rio Rancho, of which approximately 4,410 acres are in several areas of contiguous properties which are being developed or are suitable for development, and approximately 2,000 acres are in areas with a high concentration of ownership, where AMREP Southwest owns more than 50% of the lots in the area."  (Pg 5 10-K 2012)

 

http://www.sec.gov/Archives/edgar/data/6207/000000620713000031/axr10k2013.htm

 

While contiguous land is definitely better, why discount the company because the land it holds because is not contiguous?  The land can still be sold for upwards of 6000 an acre. 

 

On a different note, on the sandoval county property records website I can only find 6800 lots of land that Amrep owns.  Each lot averages around one acre in size so I'm missing about 10000 lots.  This also compares to the VIC writeup which mentioned 20000+ lots.  Was anyone else able to find property records with more than 7000 lots?  Even for the 6800 lots I have currently, the assessed market value was around 54 million dollars, so assuming the other 10000+ lots have the same average value.  Probably looking at 120-180 million dollars in land assessed according to property records. 

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Sounds interesting...

 

HOWEVER, one of the comments in VIC stated that a lot of their properties were 1/4 acre lots dispersed all over the place.  They didn't think the company had a large inventory of contiguous land.  There was also a suggestion that a vast majority of the land would only be suitable for residential development and not commercial.

 

So if this is true...I don't see anything compelling here.  Sure, the land is valued at a discount...but it needs to be a BIG discount.

+1 seems like a value trap. Also it seems most of the people living there are employed by intel. So if for some reason they move away there, the price pretty much plummets. Because who would want to live there then? Can't really use it for anything else. 

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I looked up Amrep's property records on the sandoval county website.  Apparently they have 2 subsidiaries Amrep Southwest and Outer Rim.  Most of the developed, contiguous, and high value land is with Amrep Southwest.  The low quality land isn't worth much.  Adding up the total tax assessment on all the land, the value is 82 million dollars, although I wonder why my number is so much different than the 191 million the VIC write up said.  At least for me, I don't think the value differential is great enough, especially with the money losing media services segment eating up value. 

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