Author Topic: GRIF - Griffin Industrial Realty  (Read 2272 times)

Greg

  • Newbie
  • *
  • Posts: 39
Re: GRIF - Griffin Industrial Realty
« Reply #10 on: June 22, 2019, 09:01:28 PM »
G&A $7+ million does not seem too good for the non-employee outside stockholders. The members of the Cullman family who control GRIF, but are not employed by it, may be better off if were sold to a good REIT which would (1) take out a lot of the expenses and (2) pay them a dividend.


Deepdive

  • Full Member
  • ***
  • Posts: 106
Re: GRIF - Griffin Industrial Realty
« Reply #11 on: June 22, 2019, 09:42:01 PM »
G&A $7+ million does not seem too good for the non-employee outside stockholders. The members of the Cullman family who control GRIF, but are not employed by it, may be better off if were sold to a good REIT which would (1) take out a lot of the expenses and (2) pay them a dividend.

How closely have you looked at the company?  People said the same about FRP Holdings which had a similar $7-8mm G&A and that turned out pretty well.  It cost about $2mm a year just to be public.  The company explains some of this in one of their presentations and they are quite conscious about this.  Some of it is the property tax for their large 4,000 acre of land holding.  They expense some leasing expenses that would normally be capitalized under most REIT treatments.  They chose to have the leasing guy in house because they feel his productivity would cost 2-3x if they outsourced it.  A lot of the G&A also goes towards development activities, site acquisition, permitting, obtaining financing, construction management, etc.  G&A would be lower if they just paid 5.5% cap for a leased warehouse.  They have kept the G&A relatively the same despite growing revenue and NOI by quite a bit in the last 3 years.  Despite the $7mm in G&A, they are still creating $4-5 per share of value a year on a $38 stock. 

If you want everything nice and perfect with larger scale, normalized G&A ratio, REIT status, high ESG scores, etc, you can pay sub 5% cap rate for Prologis.  GRIF trades at over 10% cap when adjusted for office and land parcels.

Sure they can sell to a REIT and we can all cash out at $70 a share

Greg

  • Newbie
  • *
  • Posts: 39
Re: GRIF - Griffin Industrial Realty
« Reply #12 on: June 23, 2019, 03:41:05 PM »
I suspect that the members of the controlling Cullman and Ernst Group, who are mainly individuals, would fare best  in a tax-free exchange with a strong company that is either a good compounder or pays a reasonable dividend. Taking out $7.5 million G&A a year alone can translate to an additional $1.50 dividend. Could be handled with a preferred stock.

Deepdive

  • Full Member
  • ***
  • Posts: 106
Re: GRIF - Griffin Industrial Realty
« Reply #13 on: June 23, 2019, 05:08:18 PM »
I suspect that the members of the controlling Cullman and Ernst Group, who are mainly individuals, would fare best  in a tax-free exchange with a strong company that is either a good compounder or pays a reasonable dividend. Taking out $7.5 million G&A a year alone can translate to an additional $1.50 dividend. Could be handled with a preferred stock.

I understand and agree with you to a certain extent.  But have you actually looked at what the current management team have done in the last 5-10 years with regards to getting out of the nursery business, diversifying the company into LeHigh Valley and Charlotte, and growing the warehouse business?  They actually did a pretty good job.  Most companies can get a premium by selling to a larger REIT and I would like them to sell to Prologis.  But I think all shareholders will do quite well if they let the current management team continue to execute.  The current format has certain advantages such as having all non-recourse debt at the property level.