Author Topic: SYTE - Enterprise Diversified  (Read 277264 times)

Spekulatius

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Re: SYTE - Enterprise Diversified
« Reply #670 on: April 02, 2019, 04:51:25 PM »
What a disaster. Real estate ( Mt Melrose ) lost ~$2M of which $0.96M were impairment losses and more than $1M operating losses. $2.5M in debt for interest rates from 10-13% -how did this happen? I canít even fathom the train of thought that went into financing real estate this way.

The cleanup of HVAC (mostly impairments) and Real Estate (which looks like it is burning substantial amounts of cash) is going to be very expensive. Book value is $5.9/ share and in my opinion, the current price of $8.2 is pretty generous considering the current results. Hopefully in a year from now, when HVAC is gone (I think it will be sold for very little) and the real estate is sold (I believe all the Mt Melrose properties will be eventually sold, not just the parceled out assets), this will be stabilized,  looking much cleaner and the losses will be greatly reduced.
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bizaro86

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Re: SYTE - Enterprise Diversified
« Reply #671 on: April 02, 2019, 05:24:23 PM »
A pretty standard way RE investors earn very high rates of return is to buy distressed properties low using significant leverage. Buying crappy stuff at high LTV costs high rates.

However, if you can fix the crap into good stuff, then you can conventionally refinance, often to more than what you paid for the property all-in. That makes high interest rate loans at least superficially attractive, because you can do more very high IRR deals.

I've done the buy low, rehab, refinance high, which has resulted in very high IRRs. I'm too big a wimp to do more than I can conventionally finance at the outset, but I understand the reasoning behind being more aggressive.

That said, I really doubt that business model could work at a public company. The only way I can see single family residential RE working in a public company is as a low return TIPS alternative. I don't think these guys have the cost of capital for that.

ratiman

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Re: SYTE - Enterprise Diversified
« Reply #672 on: April 03, 2019, 05:25:19 AM »
"Lexington has some interesting characteristics"? I had to LOL at that. I mean, what kind of return are you expecting from real estate in Lexington that would justify paying a corporate board, CEO, CFO, auditors, exchange fees, etc etc? Micro cap companies are for high risk, high return investments. Biotech, gold mines, roll ups. Not for rentals in Lexington. That the CEO doesn't understand that suggests to me that the whole thing should be sold and cash returned ASAP or else insiders will continue to drain even more money.
« Last Edit: April 03, 2019, 05:40:58 AM by ratiman »

Broeb22

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Re: SYTE - Enterprise Diversified
« Reply #673 on: April 03, 2019, 05:43:30 AM »
Having been at last year's annual meeting, the argument for Lexington's attractiveness is that due to the popularity of horse racing, there is something called a Greenbelt that wraps around the entire city center. The land is protected by the government to prevent redevelopment. As a result, the thesis was that this Greenbelt created limited supply and allowed investors some protection from overbuilding or suburbanization. The argument also was that Lexington is home to University of Kentucky among other large employers and that would provide insulation for the area from future economic headwinds.

The thesis seems OK, more like the execution didn't happen. But I never thought of Lexington as a big growth market either. Based on the article below, the impression is almost that they don't have enough land to grow.

https://www.kentucky.com/news/local/counties/fayette-county/article183299136.html

Spekulatius

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Re: SYTE - Enterprise Diversified
« Reply #674 on: April 03, 2019, 06:06:03 AM »
Cash burn is a concern imo. SYTE has about $460k in cash left and  cash burn appears to be ~300k/ quarter.
There are plenty of liquid assets within the investment business, but I assume these are locked. SYTE needs to dispose of these real estate properties with high interest rates quickly, or cash could become an issue. I doubt there is much demand for another stock offering.

Letís face it, this is a dumpster fire and unless itís put out quickly, there wonít be much left. I am amazed the stock trades at $8+ still.
« Last Edit: April 03, 2019, 09:36:10 AM by Spekulatius »
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Sportgamma

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Re: SYTE - Enterprise Diversified
« Reply #675 on: April 03, 2019, 06:14:45 AM »
They could go dark, right? Deregister as an SEC reporting entity and instead report to shareholders on an annual basis. Shares could still trade OTC.

If the plan works out and they reach a scale where it makes sense, they could "reappear".

That would lower the cost of operating and in cases such as Winland, shareholders have been no worse off with the company going dark.


ratiman

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Re: SYTE - Enterprise Diversified
« Reply #676 on: April 03, 2019, 06:37:43 AM »
Having been at last year's annual meeting, the argument for Lexington's attractiveness is that due to the popularity of horse racing, there is something called a Greenbelt that wraps around the entire city center. The land is protected by the government to prevent redevelopment. As a result, the thesis was that this Greenbelt created limited supply and allowed investors some protection from overbuilding or suburbanization. The argument also was that Lexington is home to University of Kentucky among other large employers and that would provide insulation for the area from future economic headwinds.

The thesis seems OK, more like the execution didn't happen. But I never thought of Lexington as a big growth market either. Based on the article below, the impression is almost that they don't have enough land to grow.

https://www.kentucky.com/news/local/counties/fayette-county/article183299136.html

By that argument, every city on a coastline has "limited supply" because it can't grow into the ocean. And what medium sized city doesn't have a hospital or university? It's hilarious that management is STILL trying to sell investors on the glorious investment potential of crapshacks in Lexington, Kentucky. I'm sorry for ranting about this, I just find the whole thing so ridiculous.

LowIQinvestor

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Re: SYTE - Enterprise Diversified
« Reply #677 on: April 03, 2019, 06:50:24 AM »
My guess is massively discounted capital raise soon

Maybe by insiders again?

Poor Charlie

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Re: SYTE - Enterprise Diversified
« Reply #678 on: April 03, 2019, 12:04:52 PM »
Iíve seen a lot of crazy stuff in small caps.  But Iíve never seen a situation where a company acquires assets from the chairman, and then those assets get written down just months later (while heís selling his stock?).  And this wasnít some minor deal like buying the chairmanís car: they acquired something like $12 million in RE against beginning equity of $16 million. 

Iím surprised the shareholder lawsuit firms havenít showed up yet.  Youíd think stuff like this would be red meat for that crowd.

Spekulatius

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Re: SYTE - Enterprise Diversified
« Reply #679 on: April 03, 2019, 12:23:33 PM »
Iíve seen a lot of crazy stuff in small caps.  But Iíve never seen a situation where a company acquires assets from the chairman, and then those assets get written down just months later (while heís selling his stock?).  And this wasnít some minor deal like buying the chairmanís car: they acquired something like $12 million in RE against beginning equity of $16 million. 

Iím surprised the shareholder lawsuit firms havenít showed up yet.  Youíd think stuff like this would be red meat for that crowd.

It certainly doesnít help to win new customers for the asset management business, thatís for sure.
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