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September 24, 2007
Forest City Marketplace
Newsletter Value Investor Insight carried an interview August 31st with Third Avenue Management's Michael Winer. Since inception, his now $3 billion fund has earned 18.6% annually, vs. 5.8% for the S&P 500. Here's an excerpt from the interview, in which Winer describes why he thinks The St. Joe Company (JOE) and Forest City Enterprises (FCE.A) are mispriced.
MW: We're generally not interested in companies that pay full market prices to acquire properties, hoping to finance them in a way that creates a spread between financing costs and the yield on the assets. What have they really done to create value? We prefer companies that are experts in complex projects and that creatively develop or redevelop projects to build long-term value. Forest, for example, goes into blighted urban areas and works with government officials and agencies to develop projects that will improve the areas in which they build. They're creating new cash flow streams that generate both an attractive return on their invested dollar and increased asset values. That's how you make real money in real estate.
NoLandGrab: What Michael Winer means is that they "prefer companies that are experts" in securing massive government subsidies for their projects "to build long-term value.... That's how you make real money in real estate."
Posted by lumi at September 24, 2007 7:50 AM