Author Topic: LAACZ - LA Athletic Co  (Read 25960 times)

BG2008

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Re: LAACZ - LA Athletic Co
« Reply #20 on: March 20, 2018, 06:17:33 PM »
This is a pretty good representation of the club. Renovations are pretty new.  The difference of when I was there is that there were people in the spaces rather than it being empty. 
https://www.discoverlosangeles.com/blog/los-angeles-athletic-club-hotel-champions?utm_source=Facebook&utm_medium=post&utm_campaign=SocialMedia



Spekulatius

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Re: LAACZ - LA Athletic Co
« Reply #21 on: March 21, 2018, 04:22:43 AM »
This is a pretty good representation of the club. Renovations are pretty new.  The difference of when I was there is that there were people in the spaces rather than it being empty. 
https://www.discoverlosangeles.com/blog/los-angeles-athletic-club-hotel-champions?utm_source=Facebook&utm_medium=post&utm_campaign=SocialMedia

That‘s a pretty awesome club. I would rather be member of this club in the 1920 Art Deco style with a storied history, rather than a new and maybe more practical but generic Equinox club.

I think they will keeping because it is their legacy. If they develop the building, it will probably become a new place somewhere. Anything wrong with this either, because I think these sort of things have a real and enduring brand value.
Life is too short for cheap beer and wine.

Deepdive

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Re: LAACZ - LA Athletic Co
« Reply #22 on: March 25, 2018, 07:25:45 PM »
Posted this a while back - here's a presentation on the company from Rhizome Partners, I think it's definitely worth a look.

Spekulatius

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Re: LAACZ - LA Athletic Co
« Reply #23 on: March 25, 2018, 07:56:19 PM »
It’s listed confidential, so hopefully Bill is Ok with posting it here.

One should note that recent results have been poor due to cost increasing faster than revenues. Their annual report will be published on 4/1 (probably coming in by mail a few days earlier) and they hopefully will shed some light into this trend.

I have a seizable stake (for me) since 2012 and I agree, this is a great LT investment.
Life is too short for cheap beer and wine.

BG2008

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Re: LAACZ - LA Athletic Co
« Reply #24 on: April 09, 2018, 05:07:51 PM »
2017 Annual Reports Out

Consolidated revenues grew by 5% to $81 million, driven by increased self-storage revenue in all regions.

Storage West grew from 52 to 56 self-storage facilities in 2017, as four newly constructed stores came on line – three in the Houston market and one in Phoenix. Significant startup costs are
 associated with newly opened self-storage facilities, including staffing, marketing and depreciation, while revenues are low during the beginning of the lease-up period. As occupancy increases, rents reach and then pass the break-even level, revenues offset expenses, and the property begins to generate profits.

The Houston market is extremely competitive, and we are still growing into our capacity there. But in September 2017, nearly 1,000 new customers – many of whom were dealing with the effects of the hurricane – chose Storage West Houston. The average occupancy of our five newest Houston stores nearly doubled from 26% to 49% in the space of just a few weeks.  By year end, all of the new stores reached break- even occupancy, a level far greater than we would normally expect so early in the lifecycle of new properties.

Bought back 777 shares or 1.5% of the float


EricSchleien

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Re: LAACZ - LA Athletic Co
« Reply #25 on: April 10, 2018, 12:16:22 PM »
Does anybody here have a relationship with management or have spoken to them? Something that I wonder about is whether LAACO makes sense being part of a larger self-storage management company. LAACO is clearly run for the benefit of unitholders but my concern is that there's a lot of low hanging fruit being left on the table being a stand-alone company. If I was running one of the larger SS co's, I'd much rather buy LAACO to expand my portfolio than purchase SS through a broker in the private market. I was speaking to my business broker about LAACO last week and he said there's no way he could ever find anything that cheaply valued in the private market. Also, margins would instantly expand (hence the low hanging fruit) through a more favorable cost structure. Correct me if I'm wrong but I would imagine the reason margins are higher at one of the larger publicly traded SS companies is due to the fact that as size increases, expenses don't rise nearly as quickly.

Would love to hear other input on this.

BG2008

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Re: LAACZ - LA Athletic Co
« Reply #26 on: April 10, 2018, 01:03:28 PM »
Does anybody here have a relationship with management or have spoken to them? Something that I wonder about is whether LAACO makes sense being part of a larger self-storage management company. LAACO is clearly run for the benefit of unitholders but my concern is that there's a lot of low hanging fruit being left on the table being a stand-alone company. If I was running one of the larger SS co's, I'd much rather buy LAACO to expand my portfolio than purchase SS through a broker in the private market. I was speaking to my business broker about LAACO last week and he said there's no way he could ever find anything that cheaply valued in the private market. Also, margins would instantly expand (hence the low hanging fruit) through a more favorable cost structure. Correct me if I'm wrong but I would imagine the reason margins are higher at one of the larger publicly traded SS companies is due to the fact that as size increases, expenses don't rise nearly as quickly.

Would love to hear other input on this.

Take a number and get on the queue  :P   

Yes to most of your questions.  I doubt the management will sell.  Some hedge fund manager offered a take private years ago.  I think if they offer $4,000-$5,000 a share, they may.  The structure is what it is.  If you want to own RE and don't have to do a lot of work, this is an awesome investment.  If you want a quick IRR, selling to a PSA would obviously make sense.     
« Last Edit: April 10, 2018, 01:06:58 PM by BG2008 »

EricSchleien

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Re: LAACZ - LA Athletic Co
« Reply #27 on: February 26, 2019, 06:26:02 PM »
Has anyone followed this recently? I bought some more shares last quarter - the stock price is basically the same as it was last year even though the business has gotten slightly better.

Also, I have bugged them about doing a tender offer at a price slightly higher than it is today. I told them there's no downside if they can't get a lot of units. They've told me that the reason they stay public is that there are people who have relied on the stock ownership for several generations and there's a few families in LA that rely on the company's stock. My thinking is that if some shareholders wanted liquidity, it would give them a way out. It would also allow LAACO to increase the speed of their buybacks which is severely limited due to how thinly traded the units are.

Are there any other unitholders on this board that would be in favor of a tender offer at say 10% above the current unit price?

I currently have 170 units.

johnny

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Re: LAACZ - LA Athletic Co
« Reply #28 on: February 26, 2019, 10:08:26 PM »
I wouldn't be very enthusiastic/confident about tender pricing until I felt more informed about what sort of returns they model on building new facilities; they don't really reveal much here. In 2013 they briefly outlined why they were preferring to build rather than buy new facilities, indicating that the return was something like "3 or more" percentage points better for builds. So I guess that gives us some vague, relative idea, from half a decade ago when it was pretty cheap to book concrete trucks. Have I missed some burst of transparency/clarity on this?

Anyway, if they're building new facilities at 10x EBITDA, then buybacks at 14X aren't exactly something I'm going to go out of my way to draft a petition over.

Topic change: One of the reasons I talked myself into playing around here was that I liked the performance of the business over the last recession. Peak-to-trough FCF change was like -16%.

I now think it's an error to model future recession-proofiness this way. Current national spending on new self-storage construction clocks in at like 2-3x what it did in the years preceding 08/09...I think people paying 20x EBITDA for these businesses are sort of nuts.

That said, 13x is fine. I have a few units, mostly because I enjoy passive-aggressively invoking them as a hedge against my family's storage-unit addiction.

Spekulatius

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Re: LAACZ - LA Athletic Co
« Reply #29 on: February 27, 2019, 03:46:32 AM »
Has anyone followed this recently? I bought some more shares last quarter - the stock price is basically the same as it was last year even though the business has gotten slightly better.

Also, I have bugged them about doing a tender offer at a price slightly higher than it is today. I told them there's no downside if they can't get a lot of units. They've told me that the reason they stay public is that there are people who have relied on the stock ownership for several generations and there's a few families in LA that rely on the company's stock. My thinking is that if some shareholders wanted liquidity, it would give them a way out. It would also allow LAACO to increase the speed of their buybacks which is severely limited due to how thinly traded the units are.

Are there any other unitholders on this board that would be in favor of a tender offer at say 10% above the current unit price?

I currently have 170 units.

I thought about this and reviewed the last few years annual statements since I bought it in 2012 and I don’t feel that a tender is such a no brainer. For one thing, getting 10% of the shares tendered would add about $40M to their existing $80M in debt. This is probably OK, but I really liked about this investment that here was very little debt when I bought into this to begin with and I would like them to keep it this way. Their leverage is already somewhat larger than in 2012, due to Capex expenses gong into the new facilities in Texas. I also note that they reduced their units from about 172.5k to 165.5k since I owned it, which is not too bad considering that they are growing their business, while paying a nice distribution a along. The other issue with reducing the unit count is that the liquidity for the remaining shareholders will get even worse. I’d rather have them put a message in the annual report that they are willing to buy back shares from owners in a privately negotiated  transaction at prevailing market prices by contacting management.

I think the bigger question for me is how they feel about the expansion into Texas after being there a couple of years and if they feel it’s giving a good return on investment. In particular the Houston market, which is dependent on Energy and has low barriers to entry looks iffy to me.

FWIW, I just added a few units a couple of days ago below $2200.
« Last Edit: February 27, 2019, 07:45:52 PM by Spekulatius »
Life is too short for cheap beer and wine.