Using Veritas to Construct the "Per…

29-04-2017 Hits:93225 BoomBustBlog Reggie Middleton

Using Veritas to Construct the "Perfect" Digital Investment Portfolio" & How to Value "Hard to Value" tokens, Pt 1

The golden grail of investing is to find that investable asset that provides the greatest reward with the least risk. Alas, despite how commonsensical that precept seems to be, many...

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The Veritas 2017 Token Offering Summary …

15-04-2017 Hits:84502 BoomBustBlog Reggie Middleton

The Veritas 2017 Token Offering Summary Available For Download and Sharing

The Veritas Offering Summary is now available for download, which packs all the information about Veritas in a single page. A step by step guide to purchasing Veritas can be downloaded here.

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What Happens When the Fund Fee Fight Hit…

10-04-2017 Hits:84417 BoomBustBlog Reggie Middleton

What Happens When the Fund Fee Fight Hits the Blockchain

A hedge fund recently made news by securitizing its LP units as Ethereum-based tokens and selling them as tradeable (thereby liquid) assets. This brings technology to the VC industry that...

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Veritaseum: The ICO That's Ushering in t…

07-04-2017 Hits:88975 BoomBustBlog Reggie Middleton

Veritaseum: The ICO That's Ushering in the Era of P2P Capital Markets

Veritaseum is in the process of building peer-to-peer capital markets that enable financial and value market participants to deal directly with each other on a counterparty risk-free basis in lieu...

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This Is Ground Zero for the 2017 Veritas…

03-04-2017 Hits:87460 BoomBustBlog Reggie Middleton

This Is Ground Zero for the 2017 Veritas Offering. Are You Ready to Get Your Key to the P2P Capital Markets?

This is the link to the Veritas Crowdsale landing page. Here is where you will be able to buy the Veritas ICO when it is launched in mid-April. Below, please...

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What is the Value Proposition For Verita…

01-04-2017 Hits:87270 BoomBustBlog Reggie Middleton

What is the Value Proposition For Veritas, Veritaseum's Software Token?

 A YouTube commenter asked a very good question that we will like to take some time to answer. The question was, verbatim: I've watched your video and gone through the slides. The exchange...

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This Real Estate Bubble, Like Some Relat…

28-03-2017 Hits:58435 BoomBustBlog Reggie Middleton

This Real Estate Bubble, Like Some Relationships, Is Complicated...

CNBC reports US home prices rise 5.9 percent to 31-month high in January according to S&P CoreLogic Case-Shiller. This puts the 20 city index close to an all time high, including...

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Bloomberg Chimes In With My Warnings As …

28-03-2017 Hits:86804 BoomBustBlog Reggie Middleton

Bloomberg Chimes In With My Warnings As Landlords Offer First Time Ever Concessions to Retail Renters

Over the last quarter I've been warning about the significant weakness in retailers and the retail real estate that most occupy (links supplied below). Now, Bloomberg reports: Manhattan Landlords Are Offering...

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Our Apple Analysis This Week - This Comp…

27-03-2017 Hits:86415 BoomBustBlog Reggie Middleton

Our Apple Analysis This Week - This Company Is Not What Most Think It IS

We will releasing our Apple forensic analysis and valuation this week for subscribers (click here to subscribe - lowest tier is the same as a Netflix subscription). As can be...

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The Country's First Newly Elected Lame D…

27-03-2017 Hits:86771 BoomBustBlog Reggie Middleton

The Country's First Newly Elected Lame Duck President Will Cause Massive Reversal Of Speculative Gains

Note: Subscribers should reference  the paywall material here for stocks that should give a good risk/reward scenario for bearish trades. The Trump administration's legislative outlook is effectively a political desert, with...

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Sears Finally Throws In The Towel Exactl…

22-03-2017 Hits:93058 BoomBustBlog Reggie Middleton

Sears Finally Throws In The Towel Exactly When I Predicted "has ‘substantial doubt’ about its future"

My prediction of Sears collapsing once interest rates started ticking upwards was absolutely on point.

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The Transformation of Television in Amer…

21-03-2017 Hits:90401 BoomBustBlog Reggie Middleton

The Transformation of Television in America and Worldwide

TV has changed more in the past 10 years than it has since it's inception nearly 100 years ago This change is profound, and the primary benefactors look and act...

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From PR Newswire

Simon Property Group Makes $10 Billion Offer to Acquire General Growth Properties

Offer Provides 100% Cash Recovery Plus Accrued Interest To All Unsecured Creditors; Would Accelerate General Growth's Emergence From Bankruptcy

General Growth Shareholders Would Receive Value Exceeding $9.00 Per Share, Including $6.00 Per Share In Cash Plus Assets Valued At More Than $3.00 Per Share, While Avoiding Likely Dilution From Stand-Alone Recapitalization

Offer Supported By General Growth's Official Unsecured Creditor Committee

Acquisition of General Growth Portfolio By Best In Class Operator Offers Significant Value-Creation Opportunity For Simon Shareholders

For those that don't follow me regularly, I released bearish research and shorted GGP at around $57 in 2007. It was a very profitable trade since GGP filed for bankruptcy a year later. Ackman from Pershing Square bought GGP shares/calls/swaps between 50 cents and 2 dollars per share, resulting in what looks like a home run deal.

He was confronted by Hovde Advisors, a DC asset management firm who was short the stock, over valuation and the closest thing to a hedge fund soap opera episode ensued.

While the SPG offer is nowhere near where Ackman was forecasting, it has been a profitable deal nonetheless.

I have made the subscription version of the full analysis available to anyone who registers now that this story has pretty much played its course. The full comparative analysis with updated valuation is now freely available upon free registration here: Middleton vs Ackman vs Hovde on GGP - subscription edition w. updated valaution Middleton vs Ackman vs Hovde on GGP - subscription edition w. updated valuation 2009-12-26 20:43:17 1.51 Mb.You may click here to subscribe to premium research or to register for free. Readers should be cognizant of the marketing component of investors publicly stated valuations. To illustrate this, Let me post three paragraphs from the aforementioned analysis that pretty much says it all (keep in mind that SPG just offered $9 or so per share). I'll leave it up to the readers to determine who was the most accurate regarding GGP both on the short side going down (I think I was the only one declaring a position publicly) and on the long side going up (I did not have a position):

GGP valuation analysis

Hovde Capital Advisors

Hovde applies Q3 2009 annualized NOI (adjusted for lease termination fees, tenant allowances, maintenance capital expenditure and other non cash items) to Ackman's May 2009 GGP valuation analysis, and estimates the implied equity value of $5.73 per share at a 7.5% cap rate and negative $5.03 per share at an 8.5% cap rate. After incorporating the conversion of the unsecured debt into equity at price of $6 per share, the implied equity value is $5.94 per share at a 7.5% cap rate and $3.62 per share at an 8.5% cap rate

Ackman's response

Based on cash NOI (not adjusted for lease termination fees, tenant allowances, maintenance capital expenditure) for LTM ending Sep 2009, Ackman values GGP at $23.7, $32.0 and $41.6 per share at cap rate of 7.21%, 6.71% and 6.21%, respectively 

Boombustblog's view

Based on our observations about assumed NOI and cap rate for valuation, we have revised Ackman's valuation analysis.

We computed cash NOI (adjusted for lease termination fees, tenant allowances, maintenance capital expenditure and other non cash items) for LTM ending Sep 2009. However, to factor in the impending rental decline to be realized in the short term largely owing to lease roll-overs, we estimated 2010 NOI assuming y-o-y decline of 7.5% against 5.4% y-o-y decline in 3Q09. We applied estimated 2010 NOI and more realistic cap rate range of 7.0% to 8.0% to the Ackman's valuation analysis. GGP's valuation is $6.8 per share under the base case and $13.6 per share and $0.8 per share under the optimistic case and adverse case, respectively.

It appears as if SPG offered a reasonable acquisition premium (in equity) over what we feel is reasonable for GGP. The cash offer was accurate to within eighty cents! It looks like someone over at Simon Properties reads the BoomBust! Ackman's (publicy disseminated) valuations were apparently in the stratosphere (and our analysis clearly demonstrated this point) while Hovde was a little pessimistic. Of course, the deal is not closed yet, so this is all just speculation for right now. I recommend all interested parties register and choose a free (or premium paid) subscription and download the full 11 page analysis referenced above.

Below is a quick chronology of events:

This is part III of a IV part series on GGP. Reference parts one and two for context. The majority of work on GGP is now done, and I will (as my time permits) start disseminating the non-propri
Wednesday, 09 January 2008

Was I right on my call on Commercial Real Estate Crashing?
(Archived/Reggie Middleton's Boom Bust Blog/MyBlog)
...Cometh, and I know who is leading the way! Generally Negative Growth in General Growth Properties - GGP Part II General Growth Properties & the Commercial Real Estate Crash, pt III - The Story G...
Tuesday, 12 February 2008
If only more rich heiresses read my blog
(Reggie Middleton's Boom Bust Blog/MyBlog)
The GGP story seems to go on forever.  Hat tip to CK for pointing this one out to me. For those that do not know,  I shorted GGP in late 2007, after exhaustive research and it took a year to
Friday, 21 August 2009 CRE malls (Ackman's CRE presentation). Several of my subscribers have commented on his success with GGP as well as the upward climb of REITs in general. I decided to go out of my way to create a co...
Tuesday, 15 December 2009
I am here to weigh in on the increasingly popular marketing battle over GGP's (General Growth Properties) value in, and out of bankruptcy. The players in question are large buyside institutions who ow
Saturday, 26 December 2009

The next step in the GGP saga
(Reggie Middleton's Boom Bust Blog/MyBlog)
Hovde has issued a reply to Ackman's second GGP presentation. These hedge funds put out more analysis than the bank analysts that follow GGP, SERIOUSLY! For those that need a recap: My responses to
Tuesday, 29 December 2009