Tuesday, June 21, 2011

Inland Western REIT's New Value

Inland Western filed an 8-K yesterday with a new net asset value per share.  Inland Western estimates that its net asset value was $6.95 per share at March 31, 2011.  This is an increase from early 2010's $6.85 per share valuation.  Here is the opaque language, which now is common place with non-traded REIT sponsors, in the 8-K describing how Inland Western determined its valuation:
The estimated value was determined by the use of a combination of different indicators and an internal assessment of value utilizing internal financial information under a common means of valuation under the direct capitalization method.  No independent appraisals were obtained. Specifically, the estimate of the estimated per-share value was made with primary consideration of the valuation of the Company’s real estate assets which was determined by the Company’s management using methodologies consistent with publicly traded real estate investment trusts in establishing net asset values, and the estimated values of other assets and liabilities determined by the Company’s management as of March 31, 2011.
I was pretty outraged in early 2010 when Inland Western presented a value of $6.85, thinking it too high.  I guess I have mellowed over the past year because I read the filing without much of a reaction.  I think this is because Inland Western, if I am not mistaken, is planning on listing its shares in the near future.  A listing will give a true market valuation of Inland Western, and while its net asset valuation may have some merit, the stock price will be the tangible value.


Anonymous said...

I am a long-time investor in alternatives and I just wanted to say pthat this website is a great tool for monitoring the many happenings in this space that doesn't receive and over-abundance of press coverage (David Learner excluded).  I know you do an extensive amount of diligence in this space and I was wondering if you had a website where investors have access to the research your firm, Point Loma, conducts? Even for a fee, Mr. Webster, this information would be invaluable.  For the most part we're left to depend on the information our brokers provide us, which the received from the sponsors themselves or from their home office.  Analyst reports for traded securities are available to investors, yours should be too.  Anyway, its just an idea.  From what I understand you're doing some of the best researched and most informative writing out there.

Rational Realist said...

Thanks for the nice words. Unfortunately I only prepare institutional research. Working on ideas to expand it, though, and maybe a retail portion will be part of it.