Reality check on current book value of two Inlands

Reality check on current book value of two Inlands

Postby ddo2 » Fri Jun 03, 2011 7:36 am

So, I decided to noodle through the 10-Ks of Inland Western and Inland American to figure out their current value.

Using the FFO per share calculation, I came up with

29.8 for Inland American and 28.3 for Inland Western. Using a 14.3 multiple (based on RW's last post on this topic), I came up with a value of $4.26 and $4.04, respectively. Does that seem right to everyone? I kind of thought American would be closer to 6, but they have like twice as many outstanding shares than Western, which I found surprising.

Thoughts?

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Re: Reality check on current book value of two Inlands

Postby REIT Wrecks » Sun Jun 12, 2011 5:32 pm

Doug,

I haven't done the thorough analysis that I need to do, but those numbers sound about right -- although the FFO multiple is probably higher now.

Inland presented at the NAREIT conference in NYC last week. I did not attend, but apparently there was no update given as to when IWST might actually get out of the gates with an IPO. A friend of mine who did attend was a bit incredulous at what they had to say about the valuation of their shares, though. In the case of Inland American, he said IW management attempted to explain how they arrived at their price of $8.03, but they were met with a lot of skepticism.

According to him, they said this value was validated because they were "raising capital at $8.03", which of course is nothing but their hapless investors reinvesting their dividends on autopilot. How these passive retail purchases through the DRIP could possibly be considered a validation for Inland American's secretive, non-transparent DCF analysis is anyone's guess. My friend was laughing so hard when he described this exchange with IW management that he was almost out of breath:

Analyst: How do you arrive at a value of $8.03 per share?
Management: We use a DCF analysis
Analyst: Can we see the model or the assumptions?
Management: Nope, nope, we don't share the model or disclose the assumptions to anyone, but we DO get it validated by a third party, and we are raising capital at $8.03.
Analyst: Who is the third party?
Management: Umm,...well...we can't say.
Analyst: Who is buying shares at $8.03?
Management: Ah, well, ah, that $8.03 money actually comes in through our DRIP, and we set the price based on the DCF

My friend thought it was so funny that he almost wet his pants as he told me the story....

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Re: Reality check on current book value of two Inlands

Postby Lurker » Wed Nov 16, 2011 8:37 am

As an Inland American REIT owner I note the following in a letter from IA dated Nov 11th 2011:
""When will the estimated per share be calculated? Inland American Real Estate Trust will provide the valuation in late December.

What is the estimated value going to be? We do not know at the present time, but however, we believe the analysis of the estimated per share value in December may be less than the current estimated value"

Ha freakin'ha. You don't say !!!!!

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