GRIF - Griffin Industrial Realty

[Deepdive]

Found this company through Rhizome's Q3 Letter. Griffin looks interesting. They own warehouses in Hartford, Lehigh Valley, and Charlotte. The company also owns 4,000 acres of land that does not generate much in revenue. According to the letter, NAV is 80% higher than their cost and it looks like the NOI is ~$25mm after the company announced some additional leasing. There are structural trends of building warehouses closer to the end consumer. At an EV of $295mm, the company is trading at a mid-8 cap rate.

Also, looks like they made the right call selling FRPH when they did. It trades at $46/share now.

[mjohn707]

Found this company through Rhizome's Q3 Letter. Griffin looks interesting. They own warehouses in Hartford, Lehigh Valley, and Charlotte. The company also owns 4,000 acres of land that does not generate much in revenue. According to the letter, NAV is 80% higher than their cost and it looks like the NOI is ~$25mm after the company announced some additional leasing. There are structural trends of building warehouses closer to the end consumer. At an EV of $295mm, the company is trading at a mid-8 cap rate.

Also, looks like they made the right call selling FRPH when they did. It trades at $46/share now.

I looked at these guys recently and I thought it might be a good bet just a little cheaper than it’s trading now.  They had a good write up on VIC a few months back.  Admittedly it’s hard to really get an exact idea of what all the land is worth, the bits not producing income and all, but I couldn’t get there at the current price.  It’s enitirely possible you’re right that it’s decent now though

[alexbossert]

My friend and fellow CoBF board member, Bill Chen, prepared a very thorough and well done slide deck on Griffin.

At today's stock price of $38, Griffin is trading at less than 60% of NAV and NAV is growing by $4-$5 per share annually.

Link to Bill's report: https://gallery.mailchimp.com/bca5bc00638aa58b6cada7fab/files/799e8065-19b3-4ca4-acd5-5c0c6881f1d6/GRIF_Presentation_by_Rhizome_Partners_Final_Version_May_2019.pdf

[glorysk87]

I guess the questions are: what's the market missing? And what is going to cause this to trade up to it's fair valuation?

[cameronfen]

I guess the questions are: what's the market missing? And what is going to cause this to trade up to it's fair valuation?

They mention the undeveloped land as a big reason that is worth a lot but not generating anything now but in process of being developed

[Greg]

Run by the son-in-law and the son-in-law of the son-in-law. Where it stops nobody knows.

[Spekulatius]

Reasons why ai thought this trades at a discount:
1) I assumed that cap rates were higher than what they are
2) unclear value of undeveloped land
3) tax inefficient structure (c-Corp)
4) corporate overhead a bit high
5)  unclear outlook for real estate in Windsor, CT (I am sometimes in this area and economic outlook doesn’t look that great)


Son in law or not, they seem to have done a decent job creating value. Much of it is due to tailwinds, but part of it is that they do seem to know what they are doing.

[BG2008]

Does anyone know of the cannabis growing laws in Connecticut and Florida?  Griffin used to be called Griffin Land and Nursery. They literally have nursery and green houses that they lease to a nursery operation in both CT and FL.  They used to grow Tobacco leaves in CT on those land.  This is a bit of musing and maybe this is what the company needs to do to get the market to pay attention to it. 

[Deepdive]

I guess the questions are: what's the market missing? And what is going to cause this to trade up to it's fair valuation?

The market is likely missing the entire thesis
No sellside coverage
They don't go to conferences
No meaningful institutional ownership
People probably think 8% cap rate is appropriate when 5.5-6.5% is the right range

[Deepdive]

I guess the questions are: what's the market missing? And what is going to cause this to trade up to it's fair valuation?

The market is likely missing the entire thesis
No sellside coverage
They don't go to conferences
No meaningful institutional ownership
People probably think 8% cap rate is appropriate when 5.5-6.5% is the right range

At the current price, you don't need it to trade up to fair value for you to do well, just small incremental buyers in the market.  Feels like it is really under the radar.