Hi Colleen,
Regarding the following earlier press release:
#reply-5176973
One of EDII's subsidiaries Texas Real Estate Enterprises owns two properties in Houston that are very undervalued. One 40 acre industrial site next to the Interstate is on the books for original
acquisition cost 20 years ago of $183,000.
Take note what this statement implies. That because the original acquisition cost was $183K, the current value must be greater. No current appraisal is provided. The estimated current value is whatever the reader might imagine. Although the original purchase price may have been $183K, what was the appraisal worth 20 years ago? Was the original purchase price too much or too little? More importantly, what's the property worth in 1998 dollars, as determined by an independent appraiser? Whoever wrote this "hidden asset" statement did so in a manner that is not meaningful for shareholders.
The second property, recorded on the books at $1,800,000, is the
290 acre Galveston Bay location (mineral rights severed) that has been
offered to Marvin Davis' oil company for $10 million. The property has water access to Galveston Bay and looks out on Marvin Davis' oil rig. The parcel faces Dickinson Bayou on the left, Galveston Bay to the front, and a 730 acre parcel to the right. The adjacent 730 acre property is surrounded on two sides by a Wildlife Reserve facing
Galveston Bay and the main highway in back. There is no water access to the property except through EDII's land. It does have long frontage on the highway and several producing wells (mineral rights owned) on the side on the property farthest from EDII's land.
EDII Management is negotiating with the owners of the land to acquire it. There is a great future for the combination of the two parcels together.
Again, the implication is that the $1.8M value carried on the books must be higher today because the company offered the single piece of property to Marvin Davis (who apparently hasn't accepted this offer yet) for $10M. That's tantamount to me offering to sell you my house for $10M. Of course you don't accept because my house might not appraise for $10M. Another implication is that if the second piece of adjacent property is acquired (assumedly at a bargain price because these other property owners have no choice but to sell to the company because they have no water accessibility), the combined value of the two properties sold as a single parcel is more valuable than if the two properties were sold separately.
The implication of this press release (to me) is to play upon the greed factor in the individual investor, because each of us will read and re-read the press release, and have a different value picture in our minds. Remember, the company has said nothing about appraised values or current property values. All that's really occurred is that some vague references to values have been made, and it's up to each and every one of us to figure out what that means in today's dollars.
KJC |
