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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Spekulatius who wrote (59285)	3/26/2017 1:25:43 PM
From: E_K_S	Read Replies (1) \| Respond to of 78476

RE: REITs - Mall properties; It's all about the location and highest & best use of that real estate. I have been scanning several of these so called out dated Mall properties looking for values. If you look at those that own parcels in high density prime urban areas (ie look at KIM's portfolio), calculate the acreage they have in just their parking spaces, look at holding where they may/could get re-zoning for multi-use (including residential), one can make the argument that a certain % of this real estate (maybe 25%) could be updated to residential/retail. It's all about the economics and if current City zoning can be changed to multi-use planned development. That may/could include retail on ground floors and residential on 2nd-3rd floor. Parking moved to underground and essentially converting some of these prime location malls to accommodate high density housing. Here in Silicon Valley specifically San Jose, we are seeing this happen for many of the legacy Mall locations. The local infrastructure must be able to accommodate the new use (roads, schools, police & fire) but the added value from high density housing adds at least a 10x order of magnitude in FCF if such a project is completed. Even horizontal parking is converted to vertical under/above ground, you gain a significant amount of the real estate from used parking slots to develop. I was also thinking that a % of those upgraded parking garages spaces could be leased to Uber type companies to park the self-driving cars during the day/night while not in use. Those verticals could be gassed and/or charged & maintained ready for servicing customers located in the prime urban location. So, now it all about location of the real estate. My value proposition uses this thesis so I have KIM REIT at the top of my list (at/near multi year lows too) for this type of transition (maybe 10-15 year build out). I think it is still early so have not started buying but will begin to build a position in a few of these hated Mall REITs later this year. Their real estate must be located in prime urban areas, have the majority of their current parking slots in standard horizontal spaces and have friendly City/County municipalities looking for high density mixed use developments that will enhance the next growth phase of their town/city. EKS