Using Veritas to Construct the "Per…

29-04-2017 Hits:94611 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:85523 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:85899 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:89999 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:88435 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:88176 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:59312 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:87769 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:87309 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:87656 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:94068 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:91350 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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My final valuation numbers and assumptions are now available for the March Residential REIT subject. Enjoy!


Most of the company's properties were acquired recently with nearly 64 properties, or 74% of total properties acquired in or after 2006. These included 40 properties which were acquired due to the acquisition on June 11, 2008. Keeping in mind the lengthy transaction cycle in real estate deals, one can assume that the pricing for the deals preceding the deal closing by 6 to 18 months. This is pertinent in that the commercial and residential real estate bubble peaked between the 2nd half of 2006 and the 2nd half 2007, when the majority of the properties where purchased. 

Year of acquisition / development

# of properties

% of total

Before 1999















2008 and later



Total Properties



Under the base case scenario XXX's fair value per share stands at $10.2 and $13.2 under CFAT (Cash Flow After Taxes) and NOI (Net Operating Income) based valuation approach, respectively. Assuming equal weights to both these techniques this translates into weighted average share price of $11.7 representing 39.1% downside from current price of $19.3.

XXX's valuation under bear case scenario is expected at $8.4 based on weighted average NOI and CFAT valuation technique, which represents a 56.4% downside risk from current price of $19.3.

Even under the most optimistic set of assumptions XXX's per share valuation pose a downside risk of 8.5% with weighted average share price of $17.6. Needless to say, I feel XXX is overpriced, and optimism has not been the operative word of the day in recent macro circles!

Refinancing existing loan obligations would be a challenging affair for the company, particularly in view depressing operating performance

Owing to the acquisition, XXX's debt increased to $1.3 bn in 2008 from $0.5 bn in 2007. As of December 2008 XXX's debt-to-FFO was at 28.8x while average maturity of its debt is 4.3 years, clearly demonstrating that the company will have to resort to external sources of funding, most likely borrowing, to meet its financing obligations. In 2009, XXX has debt obligations of $231 mn, with a total of $531 mn payable by 2011. In addition to this, the company has new development financing needs to the tune of $205 mn by 2011 and recurring capex requirement of $28 mn by 2011. Overall AXXXs total funding requirements for re-financing upcoming loan obligations and capex expenditures is about $764 mn by 2011. Despite huge financing requirements, the company's operating cash flows at $33 mn for 2008 was not even sufficient to finance its dividend distribution of $51 mn. With the market's appetite for CMBS securities completely dried up, XXX will have a GGP-style, tough time in raising $810 mn by 2011 - including $303 mn by 2009 alone. If you remember, I made a similar call on GGP late in 2007 (see GGP and the type of investigative analysis you will not get from your brokerage house). As long as CMBS market is hampered as it is, and the regional banks and insurers suffer due to operating losses and hits to their investment portfolios, the traditional and extant REIT business model is broken, and those REITS which binged on cheap, yet excessive debt and/or those who rushed to overpay for properties with compressed cap rates will suffer significantly through value destruction and collapsing share prices. I expect to see the trendline of XXX to start showing more of a correlation to that of GGP's.

Properties purchases made in 2008 seem to be an expensive buy

XXX has grossly overpaid for properties acquired in 2008 and 2007 with an average purchase price of 33% and 48% higher than current valuations, respectively. Of the 44 properties acquired during 2008, 9 properties have LTV greater than 100%. XXX's overall loan-to-value ratio is at 70% under the base case scenario and 77.7% and 62.4% under bear case and bull case scenario, respectively. My understanding is that the refi threshold in reference to LTVs is currently in the 65% range (keep in mind that this is the refi threshold, not the purchase threshold), with banks and lenders capital constrained and under the assumption that rents, valuations and macro conditions will be trending down before things improve. XXX's aggregate LTV in both the base and bear scenarios is well above that, and in the bull (rosily optimistic) scenario barely squeaks by. This is the exact problem GGP ran into last year, and I expect them to file for bankruptcy within a few weeks. With a significant number of properties acquired during the peak of the real estate and credit bubble financed with debt, these properties have quickly fell under water which could further complicate the problems in refinancing XXX's relatively large debt obligations.

I will be releasing an advanced property valuation schedule for Professional and Institutional Subscribers within 5 business days.

American Campus Communities (ACC) Forensic Summary Forensic Summary 2009-03-23 00:21:15 538.57 Kb