EQC - Equity Commonwealth

[thepupil]

Item 7.01 Regulation FD Disclosure

 

Equity Commonwealth (the “Company”) currently has seven properties totaling 4.7 million square feet in various stages of the sale process. This includes the preliminary evaluation of the sales of 600 West Chicago Avenue in Chicago, Illinois and 1600 Market Street in Philadelphia, Pennsylvania. There is no assurance that any transactions will be completed.

The information disclosed in this Item 7.01 is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that Section. In addition, the information in this Item 7.01disclosure shall not be incorporated by reference into the filings of the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing

 

EQC quietly dropping a reg FD 8-K with no press release that they are exploring selling their 1st and 5th largest building and 40% of the remaining square footage.

 

Pretty surprised to see that they'd sell their flagship (600 West Chicago Avenue). Selling that building would make this even more of an opportunity fund and liquidation rather than a company with earning assets (aren't there REIT rules about what % can be liquidated in a given year?).

 

Those 2 buildings are 1/4 of annualized rent.

 

 

[thepupil]

After selling off nearly $5 billion in property, Sam Zell's office company may have found a deal that will make the company bigger—a lot bigger.

 

Equity Commonwealth, a Chicago-based landlord whose chairman is Zell, has approached Forest City Realty Trust to discuss a possible merger, according to Reuters. A tie-up would create a company worth more than $10 billion, with a portfolio of office and apartment buildings across the country.

 

 

 

Cleveland-based Forest City is considering an all-stock merger with Equity Commonwealth as part of a process to explore strategic alternatives, including a sale of the company, Reuters reported. Equity Commonwealth, meanwhile, has been on the prowl for a big, transformational deal after amassing a war chest through the sale of dozens of office buildings. The real estate investment trust isn't limiting its hunt to the office market.

 

Equity Commonwealth and Forest City executives did not immediately return phone calls.

 

 

Equity Commonwealth is pursuing a big acquisition about a decade after Zell's most famous real estate deal, the $39 billion sale of Equity Office Properties Trust, where he also was chairman. The company's timing was good: The real estate market and economy crashed about a year later.

 

Zell got back into the office market in a big way about three years ago when he and his longtime associate David Helfand teamed up with an investor group to take over Equity Commonwealth, then known as Commonwealth REIT. They changed the company's name and moved its headquarters from Newton, Mass. to the same Chicago office building where Zell's two other REITs, Equity Residential and Equity LifeStyle Properties, are based.

 

SHRINKING​ FIRM

 

The company has been shrinking since then, capitalizing on the strong office market by selling buildings to investors willing to pay up. Equity Commonwealth recently put its last two Chicago properties, the Groupon headquarters building at 600 W. Chicago Ave. and Triangle Plaza near O'Hare International Airport, up for sale. The REIT currently owns 20 properties totaling 11 million square feet and has a market capitalization of $3.8 billion.

 

Equity Commonwealth will sell off its entire portfolio if it can't find a good place to invest the cash from the sales. But that's not its preferred option.

 

"We have confidence in the team we've put together here. We have capacity," Helfand, the REIT's president and CEO, said on a recent conference call with analysts, according to a transcript. "The piece we can't control necessarily is the market and our ability to find a deal. But we are working hard, looking at a number of things and hopeful that we could find a deal that we think we can create value and drive opportunity and apply the team and the capital to it."

 

Equity Commonwealth shares were little changed in midday trading, at $30.43. Including dividends, the shares have returned 20.4 percent since Zell and Helfand took charge of the company in 2014, vs. 22.1 percent for the Bloomberg REIT Office Property Index.

 

Forest City is a bigger company, with a market capitalization of $6.7 billion. The REIT has been reshaping its portfolio, exiting hotel and retail markets and selling off military housing. It recently announced a deal to sell stakes in 10 regional malls around the country.

 

Forest City aims to focus on just two property types—office and apartments—down from 11 in 2011. Under pressure from an activist investor, the REIT in September said it planned to review its strategic options, including a possible sale of the company.

 

Forest City may be best known in Chicago for its involvement in the massive Central Station development in the South Loop. The REIT's current local investments include apartment and senior housing buildings in the South Loop, and the Pavilion, an 1,114-unit multifamily complex near O'Hare International Airport. Forest City also owned the Illinois Science & Technology Park in Skokie, selling it in January for $77 million.

 

Rumors of merger with FCE. This merger (if it happens) makes a ton of sense, in my opinion.

[thepupil]

As Sterling Bay vies to bring Amazon's second headquarters to a new campus it's planning for Chicago's North Side, it's closing in on a deal to buy a more established office hub downtown.

 

The developer is finalizing an agreement to buy the former Montgomery Ward catalog building at 600 W. Chicago Ave. from Chicago-based Equity Commonwealth, according to sources close to negotiations.

 

The deal has not been completed, but Sterling Bay is believed to have edged out other potential buyers including New York-based investor Blackstone Group to acquire the 1.65 million-square-foot building along the Chicago River for more than $500 million, a source said.

 

That price would be far more than the $390 million that Equity Commonwealth, the Chicago-based real estate investment trust run by real estate magnate Sam Zell, paid for the building in 2011.

 

The deal would be in line with the recent strategies for both the buyer and seller: Sterling Bay's continued expansion and Zell's exit from the Chicago office market.

 

In 600 W. Chicago, Sterling Bay would be taking over a stabilized, high-profile building 95 percent leased to companies including Groupon, Echo Global Logistics, Wm. Wrigley Jr. and venture fund Lightbank, among others.

 

It's a signal that the fast-growing developer is putting more of its chips on well-established trophy buildings rather than the office redevelopments on which it has built its reputation. Sterling Bay is also finalizing one of its largest acquisitions to date with a $680 million purchase of Prudential Plaza.

 

Buying such income-generating properties could provide reliable revenue streams for Sterling Bay as it works on putting the land and other pieces together for Lincoln Yards, the 30-acre mixed-use campus it is planning along the North Branch of the Chicago River. That project on the former Finkl steel site is one of 10 sites the city of Chicago submitted to Amazon as a potential destination for its proposed $5 billion second headquarters.

 

For Zell, selling 600 W. Chicago would add to the enormous war chest his Equity Commonwealth REIT has built from unloading properties in recent years.

 

Since he took over as chairman in 2014, the REIT has amassed close to $2 billion in cash primarily from selling off scores of properties, leading to rampant speculation about the timing and nature of its next move. The company has whittled its portfolio down to 20 properties as of the end of the third quarter from 156 it held three years ago.

 

Once it finalizes the sale of 600 W. Chicago, its lone remaining property in the city will be the Triangle Plaza complex near O'Hare Airport, which it's also planning to put on the market.

 

Spokeswomen for Sterling Bay and Equity Commonwealth could not be reached.

 

Selling Groupon's headquarters comes with the area around the building poised for a radical overhaul.

 

Across the river, a joint venture of developer John O'Donnell and Tribune Media recently unveiled plans to build a mixed-use complex including three office buildings and a 310-unit residential tower.

 

Those would fit into a larger development Tribune Media has planned for its 30-acre riverside parcel between Grand and Chicago avenues, where it has proposed the River District, a sprawling mixed-use plan featuring more than a dozen new buildings and 9 million square feet of commercial and residential space. That site, though also included in the city's Amazon bid, still has many major hurdles to clear before it could become reality.

 

https://www.chicagobusiness.com/realestate/20171212/CRED03/171219974/sam-zell-selling-groupon-headquarters-to-sterling-bay

 

This should take cash per share from ~$20 --> $24-$25 and gross levered (~51% LTV) real estate per share to $6-$7.

 

this is more and more becoming a Sam Zell SPAC, but it isn't really at a discount. Even if you thought everything else was worth 1.3x gross book that would only add ~$3 / share to NAV and get you to like $33/$34. So it's more or less trading at NAV, unless you are super bearish/bullish of CRE.

 

A stock for stock merger with FCE would be good for both in that it'd de-lever FCE immediately by about 3x, re-lever EQC and give the Equity team a big asset base to work with.

[CorpRaider]

Thanks.  Agree.  Very meh around $30.

[thepupil]

this is a a bit like updating the speed at which the paint is drying, but EQC announced the sale of two big buildings: the groupon builidng (600 west chicago) and 1600 Market in Philly. In both cases, EQC spent lots of money and time improving the tenant roster and the lease profile and sold the buildings for substantial premiums to gross book value.

 

I calculate gross cash per share to be $26.30 and net cash to be $18.50.

 

If we put all the debt against the remaining buildings, they'd be about 68% LTV which is too high.

 

50% LTV gets you to $5.72 per share in levered buildings and $24.2 in net cash.

 

The price has fallen such that this trades at 99% of NAV. Note that I do not do a detailed building by building NAV, but rather use gross book as a proxy which has been right enough thus far.

 

To repeat, EQC represents a SPAC like security with low absolute downside and optionality to some sort of deal. Risks of underperformance and opportunity costs are high, but risk of permanent impairment of capital is low.

 

EDIT: With the redemption of the 5 3/4% of 2042 (which were callable), that brings the buildings LTV to 50%. So $24.2 (81% of market cap) in cash and $5.72 (19% of market cap) in 50% LTV buildings.

 

 

 

[CorpRaider]

Did you listen to the call yet?  Seems like the speculation that some of the securities on the balance sheet were in another REIT with whom they were negotiating a potential transaction was correct.  They were buyers of EQC stock during the quarter at average price of ~29.60, if memory serves.

[thepupil]

The fact pattern stated in the call, along with the rumor of a potential merger w/ Forest City, fits that they were buyers of FCE in 1Q 2017. FCE averaged $22 and hit as low as $20.4. It ended the year at $24.1 and then averaged $22.2 in Q1.

 

So my guess is, they bought some FCE in Q1 2017 as it dropped, and then exited in Q1 2018 when they wouldn't be moving forward with a sale upon conclusion of strategic review.

 

FCE announced they had a lot of bidders  and the winner was in the $25-$26 range with some contingincies. Brookfield was also a rumoured buyer and I'm sure BX was in the mix.

 

Just speculation on my part based on rumor and FCE stock moves in line with how the position moved on EQC's balance sheet.

 

As I said earlier, I wish that merger happened (since I own both and believe this would've been good for both). I view EQC's rumoured interest and the winning bidder being @ $25 (as well as the company's continued simplification/de-leveraging) as decent qualification for a small slug of FCE in my real estate basket.

 

[thepupil]

CHICAGO--(BUSINESS WIRE)-- Equity Commonwealth (EQC) announced today it is under contract to sell 1735 Market Street, a 1.3 million square foot office property, in Philadelphia, Pennsylvania, for a gross sale price of $451.6 million. Proceeds after credits for capital costs, contractual lease costs, and rent abatements are expected to be approximately $435.6 million.

 

Pursuant to the sale agreement, including the buyer’s extension right, the closing is expected to occur on or before March 27, 2019, unless another date is mutually agreed by the parties. This transaction is subject to various customary closing conditions, and there is no certainty that this transaction will close.

 

During the quarter ended December 31, 2018, the company sold 97 Newberry, a 289,000 square foot industrial property, in East Windsor, Connecticut, for a gross sale price of $7.1 million.

 

About Equity Commonwealth

 

Equity Commonwealth is a Chicago based, internally managed and self-advised real estate investment trust (REIT) with commercial office properties throughout the United States. As of December 31, 2018, EQC’s portfolio comprised 10 properties and 5.1 million square feet.

 

Regulation FD Disclosures

 

We intend to use any of the following to comply with our disclosure obligations under Regulation FD: press releases, SEC filings, public conference calls, or our website. We routinely post important information on our website at www.eqcre.com, including information that may be deemed to be material. We encourage investors and others interested in the company to monitor these distribution channels for material disclosures.

 

Forward-Looking Statements

 

Some of the statements contained in this press release constitute forward-looking statements within the meaning of the federal securities laws, including, but not limited to, statements regarding consummating asset sales. Any forward-looking statements contained in this press release are intended to be made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions.

 

The forward-looking statements contained in this press release reflect the company’s current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause the company’s actual results to differ significantly from those expressed in any forward-looking statement. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all).

 

While forward-looking statements reflect the company’s good faith beliefs, they are not guarantees of future performance. We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. For a further discussion of these and other factors that could cause the company’s future results to differ materially from any forward-looking statements, see the section entitled “Risk Factors” in the company’s most recent Annual Report on Form 10-K and in the company’s Quarterly Reports on Form 10-Q for subsequent quarters.

 

https://cts.businesswire.com/ct/CT?id=bwnews&sty=20190130005766r1&sid=acqr7&distro=nx&lang=en

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20190130005766/en/

 

Sarah Byrnes, Investor Relations

(312) 646-2801

www.eqcre.com

 

Source: Equity Commonwealth

 

Copyright Business Wire 201

 

Another major de-risking event. Equity Commonwealth sells its largest building and last building in Philly for $430 million. Gross book of $327 million, net book of $194 million.

 

REIT rules will require the gain (from their tax basis, not the GAAP book or undepreciated book) to be distributed as a dividend since EQC ran out of NOL's, probably will be like 3-5% or so of market cap.

 

Here's a recent VIC thesis that gets to NAV of $34.5 - $36 w/ some optionality. Seems like he was plugging in the rumoured $500mm for Philly building, so maybe chop off 50 cents.

 

https://www.valueinvestorsclub.com/idea/EQUITY_COMMONWEALTH/1215679567

 

it hasn't been exciting for a while but just updating on the sale of the biggest asset.

 

Been about 5 yrs from beginning of thread

5 yr: 7.2% / year versus REIT index (8.6%) and S&P (8.5%)

3 yr: 5.5% / year versus REIT index (4.3%) and S&P (9.3%)

1 yr: 6.7% / year versys REIT indec (-4.6%) and S&P (-4.4%)

 

Overall, I think this has been a safe way to make an okay rate of return, but has been longer in duration than expected. If one cash-adjusted (risk adjusted) the above, the results would be far better. As non-volatile as the stock has been, it has offered great trading opportunities with the huge portion of the market cap that is cash (like when the VIC article was written). In the end though, it hasn't killed it.

 

 

 

 

[thepupil]

sold this a while back.

 

Just updating for the recent distribution.

 

world's most boring stock. thread started almost 6 years ago at $23, has since paid out an updated $6 of divvies and will have a pro-forma stock price of $30 with NAV a couple bucks higher.

 

 

 

Equity Commonwealth Declares Special Cash Distribution of $3.50 Per Common Share

Business Wire

CHICAGO -- September 24, 2019

Equity Commonwealth (NYSE: EQC) announced today that its Board of Trustees has declared a special, one-time cash distribution of $3.50 per common share which will be paid on October 23, 2019 to shareholders of record on October 7, 2019.

The company currently expects the tax character of the distribution on the common shares during 2019 to be approximately half ordinary income and approximately half capital gain dividend. The company cannot provide any assurances that its current expectations will prove to be accurate. The actual tax characterization will be based on the company’s results of operations for the full year 2019. The company currently expects to announce the tax characterization of the 2019 distribution with its normal tax reporting in January 2020.

[thepupil]

https://seekingalpha.com/pr/17777718-equity-commonwealth-reports-full-year-2019-results

 

EQC down to 5 buildings after selling Brookline Mass Building and Tower in Bellevue. 2 more big successful monetization.

 

EQC will have about $3.4 billion of net cash and 5 buildings which collectively do about $65mm of Annualized rental revenue.

 

At $4 billion market cap + some preferreds, in my view, the stock is and has not been undervalued for some time as these very successful monetizations have been priced in.

 

given the 85% or so of the market cap in net cash and the REIT rule required large distribution from the recent sales gains (like last year), this is one to watch because if it goes down by just a little bit, it can become cheap and very safe.

 

probably won't happen though

 

fun case study in how loooooooooooooooooong liquidations can be (granted EQC has been saying they've been looking for an acquisition so it's not a pure liquidation)

 

[thepupil]

Didn't like it at $4 billion, but like it a little at $3.8 billion.

 

Why? well as markets go down, I would argue cash in Mr. Zell and team's hands becomes more valuable.

 

$122mm preferreds + $3,750mm market cap = $3,872mm

 

what does that get you?

 

$3,350 of cash pro-forma for completed asset sales

$650-$750mm of remaining buildings

$4,000mm at the midpoint.

 

trades about 96% of NAV.

 

note that one should buy in tax advantaged accounts, something like $400mm (just over 10%) or whatever will have to be dividended before year end for REIT rules which will slightly decrease the effective NAV multiple paid, but not materially.

 

From the last call:

Taxable gains from this disposition will total over $220 million and will require the payment of another special dividend.

Assuming the sale of Tower 333, which is currently under contract, an incremental $190 million of taxable gain will be generated. We will also generate taxable income in the normal course of our business, which will impact the size of this year's distribution. We continue to look for opportunities where our team, liquidity and financial strength, will provide a competitive advantage.

 

beyond a deal that the market doesn't like, the biggest risk here is obviously opportunity cost.

 

for all you fellas using this drop to buy 50 cent dollars, I congratulate you. please direct me to them.

 

Diversify that up with some 95 cent dollars.

 

 

[BG2008]

Didn't like it at $4 billion, but like it a little at $3.8 billion.

 

Why? well as markets go down, I would argue cash in Mr. Zell and team's hands becomes more valuable.

 

$122mm preferreds + $3,750mm market cap = $3,872mm

 

what does that get you?

 

$3,350 of cash pro-forma for completed asset sales

$650-$750mm of remaining buildings

$4,000mm at the midpoint.

 

trades about 96% of NAV.

 

note that one should buy in tax advantaged accounts, something like $400mm (just over 10%) or whatever will have to be dividended before year end for REIT rules which will slightly decrease the effective NAV multiple paid, but not materially.

 

From the last call:

Taxable gains from this disposition will total over $220 million and will require the payment of another special dividend.

Assuming the sale of Tower 333, which is currently under contract, an incremental $190 million of taxable gain will be generated. We will also generate taxable income in the normal course of our business, which will impact the size of this year's distribution. We continue to look for opportunities where our team, liquidity and financial strength, will provide a competitive advantage.

 

beyond a deal that the market doesn't like, the biggest risk here is obviously opportunity cost.

 

for all you fellas using this drop to buy 50 cent dollars, I congratulate you. please direct me to them.

 

Diversify that up with some 95 cent dollars.

 

That Sam Zell knows a thing or two about market cycles

 

Just to be contrarian, look at the track record of ROIC.  That is very similar to what Equity Commonwealth is trying to do.  It's not the home run that people hoped for and Stuart Tanz is a pretty darn good operator. 

[thepupil]

yea, the bear case is there's so much real estate PE dry powder that EQC really doesn't need to exist / won't be able to consummate a deal.

 

I think EQC could outmanuever PE by opportunistically buying a real estate stock in a way that most PE firms wouldn't (some would). FCE is a good precedent. EQC was buying FCE stock, but then Brookfield outbid them (I maintain Brookfield modestly underpaid for FCE).

 

BG2008, I would note that the EQC bear case is your and my entire real estate related portfolios' bull case lol.

[thepupil]

share repo announced. we are at about 105% of net cash and 89% of NAV.

 

this is the one stock I own that I want to keep falling. tis only natural that it will not : )

 

 

 

 

Equity Commonwealth Announces $150 Million Share Repurchase Authorization

 

Equity Commonwealth <EQC> announced today that its Board of Trustees authorized the repurchase of an additional $150 million of its outstanding common shares over the next 12 months under the company’s existing share repurchase program. The prior $150 million authorization will expire on March 13, 2020.

 

Any purchases made pursuant to the program will be made from time to time in the open market, privately negotiated transactions or other manners as permitted by federal securities laws. The timing, manner, price and amount of any repurchases will be determined by the company in its discretion and will be subject to economic and market conditions, stock price, applicable legal requirements and other factors. The program may be suspended or discontinued at any time.

 

About Equity Commonwealth

 

Equity Commonwealth (NYSE: EQC) is a Chicago based, internally managed and self-advised real estate investment trust (REIT) with commercial office properties in the United States. As of February 12, 2020, EQC’s portfolio comprised 6 properties and 2.2 million square feet.

 

Regulation FD Disclosures

 

We use any of the following to comply with our disclosure obligations under Regulation FD: press releases, SEC filings, public conference calls, or our website. We routinely post important information on our website at www.eqcre.com

, including information that may be deemed to be material. We encourage investors and others interested in the company to monitor these distribution channels for material disclosures.

 

Forward-Looking Statements

 

Some of the statements contained in this press release constitute forward-looking statements within the meaning of the federal securities laws, including, but not limited to, any statements regarding future share repurchases. Any forward-looking statements contained in this press release are intended to be made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions.

[thepupil]

sold some december $30 puts at $2.70, $2.10 of extrinsic value. happy to bear the downside of a cash pile plus some unlevered buildings for 7% over 9 months, used the proceeds to partially fund some puts on stocks with more risk.

 

[CorpRaider]

Nice.  Sell it people!

[thepupil]

bought back those puts the other day for a loss, sold the puts I bought with the proceeds for a substantial gain...

 

now EQC is down today to $3.4 billion, roughly 85% of NAV/100% of net cash.

 

the option value of that cash is increasing as the REIT index has fallen by 40%, but at the same time the opportunity cost of owning EQC is also increasing.

 

 

 

[CorpRaider]

Yeah at this rate in a few weeks he can take over SLG, VNO, and ESRT.  :o

[thepupil]

this is a gloriously volatile trading vehicle for something that should have a beta of 0.1 or even negative beta since distress helps the chance of a good deal...up 7% today; it is just a pile of cash.. have been in and out of EQC 2 times in the past month.

 

Also doing some quasi small time fully funded market making in less liquid bonds and prefs but this is a pile of cash so it’s a sleep well at night trading vehicle (unless they did some crazy deal that people hated)

[thepupil]

sold again in IRA for 10-12% on lots purchased 4-5 trading days ago.

 

i invite small time competition in taking advantage of this very low risk of permanent impairment trading vehicle here.

 

[CorpRaider]

Haha.  Been thinking of selling today too.  Looking for stuff to sell, but I kind of hate to get rid of a cash bag with optionality where I've been waiting for them to have opportunity; but you know mkt is likely to give us another chance to participate if/when they do something because they ain't likely to pay up for something that looks great/easy. 

[RiskAdjReturn]

for you real estate guys, In EQC's recent Washington asset, the transcript I read said over 400 million sale price, but netted only 316.7 after " credits for contractual lease costs and transfer taxes"..... thats huge leakage? what are these items and why so big. makes me think nav is a fluff number in REITs if leakage is this substantial. any thoughts here?

[thepupil]

EQC sold their building in Georgetown for $85mm and a 7% cap rate, brining YTD capital gainst to $440mm which will need to be distributed. they think public market is cheap but won't do anything but a friendly transaction. 

 

Emmanuel Korchman -- Citigroup -- Analyst

 

Hey, good morning everyone. David, maybe you could comment on sort of what's going on in the public markets and where valuation is being implied there versus any shifts or potential shift that you're seeing in the private markets, and how that impacts both your underwriting and your point earlier that you kind of revisit the way that you've looked at everything in the past?

 

David Helfand -- President and Chief Executive Officer

 

Sure. Thanks Manny. Good morning. It's really -- I think you ask an interesting question, and we are obviously monitoring public companies, understanding the trading values and in particular, as you well know there are haves and have nots across sectors, certainly the data centers and cell towers, industrial and SFR and residential are the haves, and then there is a number of others that have been hit pretty hard, whether that -- the market has got it right or not, that's a judgment people make for themselves. With respect to the office side, values have been hit pretty hard, and it's hard to reconcile them, whether the market's right, because there so little transaction activity in the private market.

 

There have been some deals have gotten done. We got one deal done. A number of the deals that gotten done were started pre-COVID. So I think it's just hard to see any read through from the private market, as the indicator of what -- where things are going to settle. I think we're waiting to see both lease transactions, as well as sale transactions. And as it relates to the public market, I mean you know better than me, whether things are cheap or not. But certainly, it appears -- to us, if you look at some of the office companies that need price per pound implied by the equity price is a pretty compelling number. The question is how much of the company can you buy at those kind of prices.

 

[CorpRaider]

Zell was on a video call thing via NYU Stern a week or two ago and said something like "REITs are kinda' cheap like 20% but not pound the table cheap given the environment."  He said he thinks market is frozen and will thaw in the fall/winter when banks force some movement.  It's on youtube if anyone is interested.

[thepupil]

 

Thanks! Will have a listen link above