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Strategies & Market Trends : Value Investing

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To: Paul Senior who wrote (31486)	7/16/2008 1:32:02 AM
From: Spekulatius	Read Replies (1) of 78627

re BDN I would recommend to be careful with BDN. leverage is simply too high and the valuation in terms of EBITDA/EV is not favorable. Basically BDN trades at 12x EV/EBITDA. Since most of the EV consists of debt (3B$ Debt 1.2B$ market cap), the lower equity prices do not improve this ratio a lot. now they are trying to reduce leverage (because cost of capital is going up) which so far has led to writeoffs. I take this as an indication that the assets on BDN's balance sheet are not undervalued. HRP seems like a better deal. there EV/EBITDA ratio is about 10.4 which is approx. 15% less than BDN. They deploy less leverage and they were also able to sell some properties for a book value gain. The analysis below is still mostly correct. Just looking at market cap/FFO does not cut it in a capital constraint environment. Same is true for some hotel REITS. I warned out AHT which also was not cheap enough in terms of EV/EBITDA. their future looks bleak, IMO. Message 23730103

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