villainx Posted January 22, 2020 Share Posted January 22, 2020 Hopefully more color when the deal closes. Thinking about Gregmal's comment and trying to make sense of things. I guess the best perspective would be for GRIF to maintain status quo, sticking to their business. Working on what they can control and have competency, versus mainly to pretty up their assets for sale. I wonder how competitive the bidding was for the buildings. Maybe a stronger portfolio makes GRIF more attractive as a target? Maybe the larger REIT might not be as interested in tack on acquisitions like the two new properties, too small to move needle, don't want to bother with operation value add? But GRIF can work the properties and then have a stronger portfolio to be a better prospect for the big REITs? Don't know. Anyway, before I forget, thanks Gregmal, BG2008, everyone else, for all the comments (here and elsewhere). Link to comment Share on other sites More sharing options...
Gregmal Posted January 22, 2020 Share Posted January 22, 2020 I think the appropriate way to view this, and stick with me because we are in crazy times, but, it needs to be viewed as a long term investment. Doctoring the variables that collectively create your valuation “input” as defined by “how GRIF is valued by the market” is useful with respect to finding upside. But ultimately the ball is in their court and theirs alone. Removing the notion that if push comes to shove, they are sellers of stock rather than buyers, is important. And other than that, sellers all or parts of the company will do the trick as well. The other option is a share repurchase or tender. But as we write down our expectations and just view this as an investment.... it makes things much more simple(and likable). As a worst case they probably grow the NAV, let’s say 10% a year. BUT, as a shareholder in a discounted stock, you don’t get that 10%, as of now, you likely only get credit from the markets for 50% of it... so, we know have what I view as the most likely worst case scenario, which is that we see 50% of the $8 in NAV growth(assuming $80 NAV), and $4 a year on a $40 stock... not too shabby at all. Link to comment Share on other sites More sharing options...
BG2008 Posted January 22, 2020 Share Posted January 22, 2020 Prologis just announced earnings and guided to 2020 FFO of $3.67 to $3.75 and the shares trade at $95.44 for 25-26x P/FFO. I think GRIF generates $12mm of FFO on a $204mm market cap or 17x P/FFO. But GRIF is burden with large G&A because it is subscale and have public company cost that will large go away if acquired. And there is that $12/share of land bank or 30% of the market cap. https://s22.q4cdn.com/908661330/files/doc_news/Prologis-Reports-Fourth-Quarter-and-Full-Year-2019-Earnings-Results-2020.pdf I think every year that goes by, GRIF becomes a better acquisition target and a better public company if they can simply sell and 1031 $7-10mm of that land bank. Now if the management team can just do some earnings calls and go to a few conferences! It is an one foot hurdle, but it is still a hurdle! Actually, with some of the acquisitions they just made, that FFO may be closer to $13mm now (this assumes lease up of the Charlotte and LeHigh warehouse). Link to comment Share on other sites More sharing options...
BG2008 Posted January 24, 2020 Share Posted January 24, 2020 Gregmal has talked about this quite a bit and he is a much better trader than me in terms of timing entry and exits. In the last couple months, it is interesting to see the bid/ask of GRIF and overall trading volume. It does appear that there is a new shareholder base in the stock like myself, Gregmal, ThePupil, and others on this board and potentially new MOI investors who understand the wide gap between GRIF's price and NAV. I think NAV as of today is $72 and probably $76-$77 by year end. At $40, there is still 90% upside one year out if the company got bought out. There is now a solid 1,000 share bid over $40. This has become a more consistent theme. Like Gregmal says, the sellers in the $30s have likely been taken out. The shareholder base has swapped over or is in the process of swapping over to a new shareholder base that understands the intrinsic value. Most of the new shareholder base likely won't be seller until this trades with a $5 handles. Sometimes, I see these illiquid stocks gap up due to the sellers in the $30s being taken out and the remaining shareholders have no intention of selling till a $5 or $6 handle. It is an interesting set up. If this trades down to the $3s because of market selloff or what have you, it likely won't trade much lower than $37 (famous last words, rights?). At $37, I figure there are enough informed buyers that will step in buy a 50 cent dollar. I doubt GRIF ever trades to $28-30 like it did in late 2018. There is enough dry powder and interest just from guys on this board who would buy it. At $35, there is 117% 2020 year end upside for an asset class with long term structural tailwind. I know that value guys are only supposed to care about price to NAV, blah blah blah. But I think we can all improve by getting a bit better at timing our buys and sells. If you note the commentaries by Gregmal and ThePupil, you can see some of their rationale that echoes what I just wrote. Hopefully, a larger REIT or a PE shop comes along and pays a $7 handle sometime soon. But the look through compounding isn't that bad either. As the transformation continues, it will become easier for everyday folk to put a cap rate on this company. Link to comment Share on other sites More sharing options...
Gregmal Posted January 24, 2020 Share Posted January 24, 2020 I wouldn't say "never see those prices again"....only because, and the beauty, if you are a long term investor in names like this, is the panic selling scenarios in illiquid names and the overreaction, even if just for a few seconds/minutes/days sometimes, where you can grab shares at ridiculous prices and then see quick snap backs and big profits(granted on smallish sums of capital). Griffin's trading reminds me a lot of FRP; a stock notorious for the occasional fat finger order. This is where having liquidity available is important and margining out if need be is not really all that risky. But generally speaking, yea...all of the above is occurring, and part of investing is pattern recognition and a whole bunch of mumbo jumbo that relates little to fundamentals. When you see this stuff occurring, there should be a tendencies to start leaning a little bit more in anticipating of going where that pattern typically takes one. When you get confirmation, much like when taking a lead in baseball, being able to start running before others react is important. There are no shares left under $40 from the old Griffin story, and the new GRIF shareholders, and future shareholders, will likely continue to eat away at the legacy ones. How quickly, remains to be seen. Link to comment Share on other sites More sharing options...
BG2008 Posted January 28, 2020 Share Posted January 28, 2020 This is great news and a great way to structure the loans. 10 years, non-recourse, 3.48% with 25 year amortization. GRIF does a better job than any other sub $1bn market cap company in "ring fencing" their debt. The total debt number should be viewed as a max number not a min number. There is optionality that GRIF's debt could be lower if they simply give keys back to the bank on some low performing assets during a rough patch. Now reading the tea-leaves. 6975 is likely close to a full lease up despite having 70k sqft that is still vacant. The lender can go "over the wall" in their underwriting. On the other hand, it looks like one of the Charlotte buildings is fully leased now as the 147k sqft 160 International Dr building appears to be fully leased on their website. I think this is a combination of a lot of tailwind in this sector and a decent management team who knows how to acquire, develop, and lease. They had no footprint in Charlotte, NC until a couple years ago and now they now have a half a million sqft. They probably created $5mm of value for the fully leased 160 International Dr. NEW YORK, Jan. 28, 2020 (GLOBE NEWSWIRE) -- Griffin Industrial Realty, Inc. (GRIF) (“Griffin”) announced that Riverbend Upper Macungie Properties I LLC and Riverbend Crossings III Holdings LLC (collectively, the “Borrowers”), each wholly owned subsidiaries of Griffin, entered into a promissory note (the “Promissory Note”) providing for a $15.0 million loan (the “Mortgage Loan”), secured by a nonrecourse mortgage given by Riverbend Upper Macungie Properties I LLC on an approximately 134,000 square foot industrial/warehouse building (“6975 Ambassador Drive”) and a nonrecourse mortgage given by Riverbend Crossings III Holdings LLC on an approximately 120,000 square foot industrial/warehouse building (“871 Nestle Way”). Both buildings are in the Lehigh Valley of Pennsylvania. The Promissory Note, issued by the Borrowers to State Farm Life Insurance Company, has a fixed interest rate of 3.48% and ten-year term, with principal payments based on a twenty-five-year amortization schedule. Approximately $3.2 million of the proceeds from the Mortgage Loan (the “Loan Proceeds”) were used to repay a maturing mortgage loan on 871 Nestle Way. The balance of the Loan Proceeds will be used for general corporate purposes, including investment in real estate assets. Link to comment Share on other sites More sharing options...
BG2008 Posted January 31, 2020 Share Posted January 31, 2020 GRIF writen up on VIC by Lukai who is pretty good at small cap value More eyeballs and more recognition of the name. Up 2% while market is down 2%, more shareholder rotation? Link to comment Share on other sites More sharing options...
Gregmal Posted February 11, 2020 Share Posted February 11, 2020 BG has been missing, but in his honor, it should be announced.... New 52 week high and a respectable sized bid at $42! Link to comment Share on other sites More sharing options...
BG2008 Posted February 12, 2020 Share Posted February 12, 2020 Gregmal, Thank you for the kind words and thank you for your post a few months back which certainly helped with instilling some sanity in me. GRIF is not going to win any awards for "investability" in this new world of indexing, large cap, and partying-in-compound-town. Like with FRP Holdings, I am starting to see a lot of the skepticism turn into believes. It's taken much longer. But, I am seeing sentiments on Seeking Alpha, VIC, and this board change lately. People are starting to talk about this idea. What's unbelievable is that the value here is still wide enough to drive a truck through. As you and Eric have mentioned about LAACZ, GRIF actually does a really good job of using leverage in a prudent way by putting non-recourse leverage on its properties. I am going to enjoy this small victory for a little bit. Knock on wood, I hope it is not transient. For those that bought in mid to late 2019, congrats to you guy. For me, this one has been a bit of a 5 match wrestle-back on the consolation bracket with a bad weight cut and a banged up body. I am wrestling for third place. If it means anything to people, GRIF is something like a quarter to 1/3 of my IRA. For those that worry about overall market or warehouse valuation, you can easily hedge out risk by buying some PLD puts. They are liquid and fairly inexpensive. 10-K should be out in the next couple of days. Link to comment Share on other sites More sharing options...
BG2008 Posted February 14, 2020 Share Posted February 14, 2020 10-K out, haven't had a chance to fully digest everything yet. GRIF is moving further along the land parcel ==>> warehouse conversion thesis. Selling Meadowood for $5.4mm for conservation. Also granted option on a 280 acres to a purchase price between $6mm to $8mm. These could take some time to sell. So this could be an additional $11.4mm to $13.4mm that could be converted into $20-25mm of warehouses with 50% LTV mortgages. GRIF is now roughly 4.2-4.3mm sqft of warehouses. Every transactions results in Griffin becoming more "investable" or "acquirable" Company NOI is at 25.3mm, take out $2mm for the office portion and you have a $23.3mm of NOI for the warehouse. There is still another $1.1mm of NOI if Lehigh and Charlotte gets leases plus the newly acquired Orlando. Looks like Warehouse NOI will be roughly $25-25.5mm. Link to comment Share on other sites More sharing options...
BG2008 Posted February 18, 2020 Share Posted February 18, 2020 This is great news and a great way to structure the loans. 10 years, non-recourse, 3.48% with 25 year amortization. GRIF does a better job than any other sub $1bn market cap company in "ring fencing" their debt. The total debt number should be viewed as a max number not a min number. There is optionality that GRIF's debt could be lower if they simply give keys back to the bank on some low performing assets during a rough patch. Now reading the tea-leaves. 6975 is likely close to a full lease up despite having 70k sqft that is still vacant. The lender can go "over the wall" in their underwriting. On the other hand, it looks like one of the Charlotte buildings is fully leased now as the 147k sqft 160 International Dr building appears to be fully leased on their website. I think this is a combination of a lot of tailwind in this sector and a decent management team who knows how to acquire, develop, and lease. They had no footprint in Charlotte, NC until a couple years ago and now they now have a half a million sqft. They probably created $5mm of value for the fully leased 160 International Dr. NEW YORK, Jan. 28, 2020 (GLOBE NEWSWIRE) -- Griffin Industrial Realty, Inc. (GRIF) (“Griffin”) announced that Riverbend Upper Macungie Properties I LLC and Riverbend Crossings III Holdings LLC (collectively, the “Borrowers”), each wholly owned subsidiaries of Griffin, entered into a promissory note (the “Promissory Note”) providing for a $15.0 million loan (the “Mortgage Loan”), secured by a nonrecourse mortgage given by Riverbend Upper Macungie Properties I LLC on an approximately 134,000 square foot industrial/warehouse building (“6975 Ambassador Drive”) and a nonrecourse mortgage given by Riverbend Crossings III Holdings LLC on an approximately 120,000 square foot industrial/warehouse building (“871 Nestle Way”). Both buildings are in the Lehigh Valley of Pennsylvania. The Promissory Note, issued by the Borrowers to State Farm Life Insurance Company, has a fixed interest rate of 3.48% and ten-year term, with principal payments based on a twenty-five-year amortization schedule. Approximately $3.2 million of the proceeds from the Mortgage Loan (the “Loan Proceeds”) were used to repay a maturing mortgage loan on 871 Nestle Way. The balance of the Loan Proceeds will be used for general corporate purposes, including investment in real estate assets. From the 10-K "In fiscal 2019, Griffin leased approximately 64,000 square feet in 6975 Ambassador. Subsequent to November 30, 2019, the balance of 6975 Ambassador was substantially leased. " I interpret that as more than 90% leased. Every once in a while, you get the tea leaves right. Link to comment Share on other sites More sharing options...
BG2008 Posted February 25, 2020 Share Posted February 25, 2020 Key Updates From 10-K Will be selling $15-17mm of land parcels under 3 separate agreements. This is $3-3.5 a share. This is easiest to value as there are contracts. ($5.4mm for Meadowood, $3.8mm for Phoenix, and $6.0 to $8.0 for a 277 acre parcel) Total Land Parcel value is about $95mm (undiscounted, call it $65mm for discounted value) Company recently uploaded their key land parcels on their website. http://www.griffinindustrial.com/portfolio/properties The 520k sqft buildable in Charlotte, NC is carried on the book at $6.1mm and was acquired in 2019. The LeHigh development site is worth $2.7mm book value and was also acquired in 2019. The two nurseries are worth $11-12mm with the CT worth much more than FL as the tenant has a purchase clause for $9.5mm. Let's just ball park it. You can discount it if you want. There are another 400-450 acres that are zoned for industrial/commercial developments that are worth roughly mostly $100k to $140k. Call this bucket $42mm undiscoutned. These are the parcels on the companies website. There is another 814 acres that are lower value at $15k. Note that land they are selling to conservation group is done at $19.5k (Meadowood). Past transactions tend to reflect over $100k/acre for the best commercial and shovel ready parcels. Adding everything up gets you to roughly $95mm undiscounted. Link to comment Share on other sites More sharing options...
BG2008 Posted February 25, 2020 Share Posted February 25, 2020 3 Year Reflection CEO has been better than I expected Streamlined story - Land Parcel converted into Warehouses and sold non-core such as centaur G&A has actually stayed flat in 2017, 2018, and 2019 per the CEO's statement. Warehouse growth (Shares O/S stayed relatively flat during this time) from Nov 17 to Nov 2019 Hartford from 1.817mm to 2.052mm LeHigh from 1.18mm to 1.317mm Charlotte from 277k to 560k Over 90% of debt is non-recourse mortgages and nothing major due till 2025. If you want to hedge out sector/market risk, short some Prologis. It trades below 4% cap rate. Link to comment Share on other sites More sharing options...
KJP Posted March 4, 2020 Share Posted March 4, 2020 Converting to REIT, selling CT multi-story office, and appointing Gordon DuGan (formerly of Gramercy Property Trust) as Chairman: http://www.griffinindustrial.com/about/news-events/griffin-board-approves-plan-to-pursue-conversion-to-a-reit http://www.griffinindustrial.com/about/news-events/griffin-announces-business-updates New slide deck: http://www.griffinindustrial.com/assets/uploads/files/GRIFFIN%20INDUSTRIAL%20REALTY%20Investor%20Presentation%20FINAL.pdf I assume the plan is for depreciation to shield enough cash flow to continue to fund development while still meeting the REIT requirement of distributing 90% of taxable income to shareholders. Link to comment Share on other sites More sharing options...
Gregmal Posted March 4, 2020 Share Posted March 4, 2020 Boom. There’s the narrative changer. Let’s just hope they don’t turn around and start issuing stock when this goes to $50. Link to comment Share on other sites More sharing options...
BG2008 Posted March 4, 2020 Share Posted March 4, 2020 Converting to REIT, selling CT multi-story office, and appointing Gordon DuGan (formerly of Gramercy Property Trust) as Chairman: http://www.griffinindustrial.com/about/news-events/griffin-board-approves-plan-to-pursue-conversion-to-a-reit http://www.griffinindustrial.com/about/news-events/griffin-announces-business-updates New slide deck: http://www.griffinindustrial.com/assets/uploads/files/GRIFFIN%20INDUSTRIAL%20REALTY%20Investor%20Presentation%20FINAL.pdf I assume the plan is for depreciation to shield enough cash flow to continue to fund development while still meeting the REIT requirement of distributing 90% of taxable income to shareholders. It is interesting to note that the Father-In-Law of the CEO stepped down as the executive Chairman and gave up a cushy $350k annual comp and they bought in the former CEO/Chairman of Grammercy Property Trust as the new chairman. Note that Grammercy was sold to Blackstone in a $7.6bn deal. Link to comment Share on other sites More sharing options...
griezeman23 Posted March 4, 2020 Share Posted March 4, 2020 Converting to REIT, selling CT multi-story office, and appointing Gordon DuGan (formerly of Gramercy Property Trust) as Chairman: http://www.griffinindustrial.com/about/news-events/griffin-board-approves-plan-to-pursue-conversion-to-a-reit http://www.griffinindustrial.com/about/news-events/griffin-announces-business-updates New slide deck: http://www.griffinindustrial.com/assets/uploads/files/GRIFFIN%20INDUSTRIAL%20REALTY%20Investor%20Presentation%20FINAL.pdf I assume the plan is for depreciation to shield enough cash flow to continue to fund development while still meeting the REIT requirement of distributing 90% of taxable income to shareholders. It is interesting to note that the Father-In-Law of the CEO stepped down as the executive Chairman and gave up a cushy $350k annual comp and they bought in the former CEO/Chairman of Grammercy Property Trust as the new chairman. Note that Grammercy was sold to Blackstone in a $7.6bn deal. I would think this brings more legitimacy to GRIF. I would also think a sale is more likely now (than before), given the likely contacts the new chairman has... Great call and work btw BG. Link to comment Share on other sites More sharing options...
Williams406 Posted March 4, 2020 Share Posted March 4, 2020 Almost $2.5/share added per press release today. Let's try 5 releases tomorrow. I second the thanks for BG's work here and the board's. This one is shaping up nicely. Link to comment Share on other sites More sharing options...
shhughes1116 Posted March 4, 2020 Share Posted March 4, 2020 Converting to REIT, selling CT multi-story office, and appointing Gordon DuGan (formerly of Gramercy Property Trust) as Chairman: http://www.griffinindustrial.com/about/news-events/griffin-board-approves-plan-to-pursue-conversion-to-a-reit http://www.griffinindustrial.com/about/news-events/griffin-announces-business-updates New slide deck: http://www.griffinindustrial.com/assets/uploads/files/GRIFFIN%20INDUSTRIAL%20REALTY%20Investor%20Presentation%20FINAL.pdf I assume the plan is for depreciation to shield enough cash flow to continue to fund development while still meeting the REIT requirement of distributing 90% of taxable income to shareholders. It is interesting to note that the Father-In-Law of the CEO stepped down as the executive Chairman and gave up a cushy $350k annual comp and they bought in the former CEO/Chairman of Grammercy Property Trust as the new chairman. Note that Grammercy was sold to Blackstone in a $7.6bn deal. I would think this brings more legitimacy to GRIF. I would also think a sale is more likely now (than before), given the likely contacts the new chairman has... Great call and work btw BG. I've have lots of respect for Dugan after his work at W.P. Care, and subsequently his work at Grammercy Property Trust. Always direct on conference calls about his plan and strategy, and then followed through on his plan and strategy, culminating in the sale to Blackstone. Before the sale, he did a good job building up the portfolio, without accumulating a bunch of junk. After he left GPT, I have been waiting for him to get back in the game with a listed company so I could invest some money "alongside him". His incentives at GPT were pretty well-aligned with shareholders. I wonder if that is the case here, and if so, how they have done that. My original position in GRIF was about 3.5% of my portfolio. After the news today, I bought some more shares, with the position now representing ~7% of my portfolio. Many thanks to those that hashed out this idea. I have followed along and think you guys were right on target. Link to comment Share on other sites More sharing options...
villainx Posted March 4, 2020 Share Posted March 4, 2020 I've have lots of respect for Dugan after his work at W.P. Care, and subsequently his work at Grammercy Property Trust. Always direct on conference calls about his plan and strategy, and then followed through on his plan and strategy, culminating in the sale to Blackstone. Before the sale, he did a good job building up the portfolio, without accumulating a bunch of junk. After he left GPT, I have been waiting for him to get back in the game with a listed company so I could invest some money "alongside him". His incentives at GPT were pretty well-aligned with shareholders. I wonder if that is the case here, and if so, how they have done that. Thanks for fleshing out the story! What do folks see from here? Link to comment Share on other sites More sharing options...
vpagano Posted March 13, 2020 Share Posted March 13, 2020 I don't think it was put in here today, but they purchased another Orlando warehouse. 68K sq. foot, mostly vacant, for $5.7M: http://www.griffinindustrial.com/about/news-events/griffin-announces-closing-on-orlando-fl-building-acquisition Link to comment Share on other sites More sharing options...
matts Posted March 22, 2020 Share Posted March 22, 2020 Has Griffin ever disclosed tenant profile characteristics? Does anyone have info on the types of businesses they have exposure to? Sorry if i missed it in the rest of the thread, I did look through all of it. Link to comment Share on other sites More sharing options...
KJP Posted March 25, 2020 Share Posted March 25, 2020 Has Griffin ever disclosed tenant profile characteristics? Does anyone have info on the types of businesses they have exposure to? Sorry if i missed it in the rest of the thread, I did look through all of it. Your comment on the other thread piqued my interest. Many states require long term leases to be recorded in property records. You can also find some information on tenants in tax filings. I took a look at the four Northampton County, Pennsylvania properties. Here's what I found with links to the source: Buildings - Tenant 4270 Fritch Drive, Lower Nazareth, Twp -- NFI/SAAB (https://www.ncpub.org/_Web/datalets/datalet.aspx?mode=commercial_nh&sIndex=6&idx=1&LMparent=20) 5220 Jaindl Blvd, Hanover Twp -- RICOH (https://www.ncpub.org/_Web/datalets/datalet.aspx?mode=commercial_nh&sIndex=7&idx=1&LMparent=20) 5210 Jaindl Blvd, Hanover Twp -- DevTech and Telsa (might be a typo in that name) (https://www.ncpub.org/_Web/datalets/datalet.aspx?mode=commercial_nh&sIndex=8&idx=1&LMparent=20) 4275 Fritch Drive, Lower Nazareth Twp -- Kuehne & Nagel (https://www.ncpub.org/_Web/datalets/datalet.aspx?mode=commercial_nh&sIndex=5&idx=1&LMparent=20) Some pretty big companies on that list. Link to comment Share on other sites More sharing options...
KJP Posted March 25, 2020 Share Posted March 25, 2020 I took a quick look at North Carolina and Connecticut property records as well. For North Carolina: ~50% of 160 International Drive (73,000 sq ft) is leased to Brooks Equipment, a national distributor of fire protection equipment (https://www.brooksequipment.com/Locations/) (See Instrument 28187, Book 13780, page 0091 of the Cabarrus County, NC property records) In the Windsor, CT property records, I found records of recent leases to the following: SCA Pharmaceuticals (at Tradeport Development V, LLC): https://scapharma.com/about/ Blue Line Foodservice Distribution, Inc.: https://www.linkedin.com/company/the-illitch-group-blue-line-distribution- Link to comment Share on other sites More sharing options...
matts Posted March 25, 2020 Share Posted March 25, 2020 I took a quick look at North Carolina and Connecticut property records as well. For North Carolina: ~50% of 160 International Drive (73,000 sq ft) is leased to Brooks Equipment, a national distributor of fire protection equipment (https://www.brooksequipment.com/Locations/) (See Instrument 28187, Book 13780, page 0091 of the Cabarrus County, NC property records) In the Windsor, CT property records, I found records of recent leases to the following: SCA Pharmaceuticals (at Tradeport Development V, LLC): https://scapharma.com/about/ Blue Line Foodservice Distribution, Inc.: https://www.linkedin.com/company/the-illitch-group-blue-line-distribution- Thanks. I started looking for the CT info as well to do my part, and here you are, already got it. most of these look like fine tenants. I'm just surprised how far this thing is dropping. I know, it's illiquid, but still. Link to comment Share on other sites More sharing options...
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