Author Topic: GRIF - Griffin Industrial Realty  (Read 50084 times)

BG2008

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Re: GRIF - Griffin Industrial Realty
« Reply #130 on: January 28, 2020, 10:13:13 AM »
This is great news and a great way to structure the loans.  10 years, non-recourse, 3.48% with 25 year amortization.  GRIF does a better job than any other sub $1bn market cap company in "ring fencing" their debt.  The total debt number should be viewed as a max number not a min number.  There is optionality that GRIF's debt could be lower if they simply give keys back to the bank on some low performing assets during a rough patch.

Now reading the tea-leaves.  6975 is likely close to a full lease up despite having 70k sqft that is still vacant.  The lender can go "over the wall" in their underwriting.   On the other hand, it looks like one of the Charlotte buildings is fully leased now as the 147k sqft 160 International Dr building appears to be fully leased on their website.   

I think this is a combination of a lot of tailwind in this sector and a decent management team who knows how to acquire, develop, and lease.  They had no footprint in Charlotte, NC until a couple years ago and now they now have a half a million sqft.  They probably created $5mm of value for the fully leased 160 International Dr.     

NEW YORK, Jan. 28, 2020 (GLOBE NEWSWIRE) -- Griffin Industrial Realty, Inc. (GRIF) (“Griffin”) announced that Riverbend Upper Macungie Properties I LLC and Riverbend Crossings III Holdings LLC (collectively, the “Borrowers”), each wholly owned subsidiaries of Griffin, entered into a promissory note (the “Promissory Note”) providing for a $15.0 million loan (the “Mortgage Loan”), secured by a nonrecourse mortgage given by Riverbend Upper Macungie Properties I LLC on an approximately 134,000 square foot industrial/warehouse building (“6975 Ambassador Drive”) and a nonrecourse mortgage given by Riverbend Crossings III Holdings LLC on an approximately 120,000 square foot industrial/warehouse building (“871 Nestle Way”). Both buildings are in the Lehigh Valley of Pennsylvania. The Promissory Note, issued by the Borrowers to State Farm Life Insurance Company, has a fixed interest rate of 3.48% and ten-year term, with principal payments based on a twenty-five-year amortization schedule. Approximately $3.2 million of the proceeds from the Mortgage Loan (the “Loan Proceeds”) were used to repay a maturing mortgage loan on 871 Nestle Way. The balance of the Loan Proceeds will be used for general corporate purposes, including investment in real estate assets.


BG2008

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Re: GRIF - Griffin Industrial Realty
« Reply #131 on: January 31, 2020, 10:05:15 AM »
GRIF writen up on VIC by Lukai who is pretty good at small cap value

More eyeballs and more recognition of the name. 

Up 2% while market is down 2%, more shareholder rotation? 


« Last Edit: January 31, 2020, 10:07:05 AM by BG2008 »

Gregmal

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Re: GRIF - Griffin Industrial Realty
« Reply #132 on: February 11, 2020, 10:35:36 AM »
BG has been missing, but in his honor, it should be announced.... New 52 week high and a respectable sized bid at $42!

BG2008

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Re: GRIF - Griffin Industrial Realty
« Reply #133 on: February 12, 2020, 09:01:43 AM »
Gregmal,

Thank you for the kind words and thank you for your post a few months back which certainly helped with instilling some sanity in me. 

GRIF is not going to win any awards for "investability" in this new world of indexing, large cap, and partying-in-compound-town.  Like with FRP Holdings, I am starting to see a lot of the skepticism turn into believes.  It's taken much longer.  But, I am seeing sentiments on Seeking Alpha, VIC, and this board change lately.  People are starting to talk about this idea.  What's unbelievable is that the value here is still wide enough to drive a truck through.  As you and Eric have mentioned about LAACZ, GRIF actually does a really good job of using leverage in a prudent way by putting non-recourse leverage on its properties.   I am going to enjoy this small victory for a little bit.  Knock on wood, I hope it is not transient.  For those that bought in mid to late 2019, congrats to you guy.  For me, this one has been a bit of a 5 match wrestle-back on the consolation bracket with a bad weight cut and a banged up body.  I am wrestling for third place.  If it means anything to people, GRIF is something like a quarter to 1/3 of my IRA. 

For those that worry about overall market or warehouse valuation, you can easily hedge out risk by buying some PLD puts.  They are liquid and fairly inexpensive.  10-K should be out in the next couple of days.   

BG2008

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Re: GRIF - Griffin Industrial Realty
« Reply #134 on: February 13, 2020, 04:55:34 PM »
10-K out, haven't had a chance to fully digest everything yet.  GRIF is moving further along the land parcel ==>> warehouse conversion thesis.  Selling Meadowood for $5.4mm for conservation.  Also granted option on a 280 acres to a purchase price between $6mm to $8mm. These could take some time to sell. So this could be an additional $11.4mm to $13.4mm that could be converted into $20-25mm of warehouses with 50% LTV mortgages.  GRIF is now roughly 4.2-4.3mm sqft of warehouses.  Every transactions results in Griffin becoming more "investable" or "acquirable"  Company NOI is at 25.3mm, take out $2mm for the office portion and you have a $23.3mm of NOI for the warehouse.  There is still another $1.1mm of NOI if Lehigh and Charlotte gets leases plus the newly acquired Orlando.  Looks like Warehouse NOI will be roughly $25-25.5mm. 

BG2008

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Re: GRIF - Griffin Industrial Realty
« Reply #135 on: February 17, 2020, 09:28:53 PM »
This is great news and a great way to structure the loans.  10 years, non-recourse, 3.48% with 25 year amortization.  GRIF does a better job than any other sub $1bn market cap company in "ring fencing" their debt.  The total debt number should be viewed as a max number not a min number.  There is optionality that GRIF's debt could be lower if they simply give keys back to the bank on some low performing assets during a rough patch.

Now reading the tea-leaves.  6975 is likely close to a full lease up despite having 70k sqft that is still vacant.  The lender can go "over the wall" in their underwriting.   On the other hand, it looks like one of the Charlotte buildings is fully leased now as the 147k sqft 160 International Dr building appears to be fully leased on their website.   

I think this is a combination of a lot of tailwind in this sector and a decent management team who knows how to acquire, develop, and lease.  They had no footprint in Charlotte, NC until a couple years ago and now they now have a half a million sqft.  They probably created $5mm of value for the fully leased 160 International Dr.     

NEW YORK, Jan. 28, 2020 (GLOBE NEWSWIRE) -- Griffin Industrial Realty, Inc. (GRIF) (“Griffin”) announced that Riverbend Upper Macungie Properties I LLC and Riverbend Crossings III Holdings LLC (collectively, the “Borrowers”), each wholly owned subsidiaries of Griffin, entered into a promissory note (the “Promissory Note”) providing for a $15.0 million loan (the “Mortgage Loan”), secured by a nonrecourse mortgage given by Riverbend Upper Macungie Properties I LLC on an approximately 134,000 square foot industrial/warehouse building (“6975 Ambassador Drive”) and a nonrecourse mortgage given by Riverbend Crossings III Holdings LLC on an approximately 120,000 square foot industrial/warehouse building (“871 Nestle Way”). Both buildings are in the Lehigh Valley of Pennsylvania. The Promissory Note, issued by the Borrowers to State Farm Life Insurance Company, has a fixed interest rate of 3.48% and ten-year term, with principal payments based on a twenty-five-year amortization schedule. Approximately $3.2 million of the proceeds from the Mortgage Loan (the “Loan Proceeds”) were used to repay a maturing mortgage loan on 871 Nestle Way. The balance of the Loan Proceeds will be used for general corporate purposes, including investment in real estate assets.

From the 10-K "In fiscal 2019, Griffin leased approximately 64,000 square feet in 6975 Ambassador. Subsequent to November 30, 2019, the balance of 6975 Ambassador was substantially leased. "  I interpret that as more than 90% leased.  Every once in a while, you get the tea leaves right.   

BG2008

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Re: GRIF - Griffin Industrial Realty
« Reply #136 on: February 25, 2020, 10:50:47 AM »
Key Updates From 10-K

Will be selling $15-17mm of land parcels under 3 separate agreements.  This is $3-3.5 a share.  This is easiest to value as there are contracts. ($5.4mm for Meadowood, $3.8mm for Phoenix, and $6.0 to $8.0 for a 277 acre parcel)
Total Land Parcel value is about $95mm (undiscounted, call it $65mm for discounted value) 
Company recently uploaded their key land parcels on their website.  http://www.griffinindustrial.com/portfolio/properties
The 520k sqft buildable in Charlotte, NC is carried on the book at $6.1mm and was acquired in 2019.  The LeHigh development site is worth $2.7mm book value and was also acquired in 2019.   
The two nurseries are worth $11-12mm with the CT worth much more than FL as the tenant has a purchase clause for $9.5mm.  Let's just ball park it.  You can discount it if you want. 
There are another 400-450 acres that are zoned for industrial/commercial developments that are worth roughly mostly $100k to $140k.  Call this bucket $42mm undiscoutned.  These are the parcels on the companies website. 
There is another 814 acres that are lower value at $15k.  Note that land they are selling to conservation group is done at $19.5k (Meadowood).   
Past transactions tend to reflect over $100k/acre for the best commercial and shovel ready parcels.

Adding everything up gets you to roughly $95mm undiscounted.   


BG2008

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Re: GRIF - Griffin Industrial Realty
« Reply #137 on: February 25, 2020, 10:55:13 AM »
3 Year Reflection

CEO has been better than I expected
Streamlined story - Land Parcel converted into Warehouses and sold non-core such as centaur
G&A has actually stayed flat in 2017, 2018, and 2019 per the CEO's statement. 
Warehouse growth (Shares O/S stayed relatively flat during this time) from Nov 17 to Nov 2019

Hartford from 1.817mm to 2.052mm
LeHigh from 1.18mm to 1.317mm
Charlotte from 277k to 560k

Over 90% of debt is non-recourse mortgages and nothing major due till 2025. 

If you want to hedge out sector/market risk, short some Prologis.  It trades below 4% cap rate. 



KJP

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Re: GRIF - Griffin Industrial Realty
« Reply #138 on: March 04, 2020, 05:45:47 AM »
Converting to REIT, selling CT multi-story office, and appointing Gordon DuGan (formerly of Gramercy Property Trust) as Chairman:

http://www.griffinindustrial.com/about/news-events/griffin-board-approves-plan-to-pursue-conversion-to-a-reit

http://www.griffinindustrial.com/about/news-events/griffin-announces-business-updates

New slide deck:  http://www.griffinindustrial.com/assets/uploads/files/GRIFFIN%20INDUSTRIAL%20REALTY%20Investor%20Presentation%20FINAL.pdf

I assume the plan is for depreciation to shield enough cash flow to continue to fund development while still meeting the REIT requirement of distributing 90% of taxable income to shareholders.
« Last Edit: March 04, 2020, 05:52:55 AM by KJP »

Gregmal

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Re: GRIF - Griffin Industrial Realty
« Reply #139 on: March 04, 2020, 05:57:45 AM »
Boom. There’s the narrative changer. Let’s just hope they don’t turn around and start issuing stock when this goes to $50.