Hello,
I'll keep it short!
I came across a 100% residential REIT.
Current AUM = $3.3B of buildings. | Located in Class AA locations
# of units owned = 12,500 units
Current p/e ratio = 2.5X
Market Cap is $700m
Here's the Play I see:
a Wholesale to Retail Arbitrage
Where we take it private and sell the assets individually at above fair market prices.
Even If we pay $1B to take it private, there's a discrepancy of $2.3B
This is a great opportunity in my eyes.
My questions are:
How should I go about this?
I'm just a licensed Commercial Broker and I spoke to a wealthy client of mine. He can buy $1B of apartments but only if its private and he doesn't want to go through a takeover event.
Should I start calling large PE funds and bring this to them? But how will that incentivize me? They could easily do it without me.
Or should I find out how much it would cost to get a take-over feasibility analysis package from an Investment Bank or Consulting firm?
Would it cost anywhere from $10K - $50K?
Anyone has any advice?
Well.. are they selling it?
Maybe you can buy, then sell to BREIT lol
Well its a public REIT, no takeover offer have come in in over 3 yrs.
So no, they're not looking to sell I guess.
WHich Is why it would be a takeover event.
I have absolutely negative idea why you are on this site asking for advice on a “$3.3B AUM REIT takeover”
Probably a case study for class or an interview.
Exactly. The barrier to entry is capital. Why should anyone give you a ton of money to do this? In fact, go deeper - do you think you're the only person in the entire industry to think of this? Probably not... so why hasn't someone else done it?
Double check ownership and anti-takeover clauses. If NAV is actually that high - and it’s not artificially being marked high - then I’m not sure why shareholders would take your bid lol. If it was that obvious why wouldn’t they just push management to sell off parts of the portfolio? You can hostile a partial discount to NAV, but this seems too good to be true
Updates:
My client is now speaking with a PE Fund to do a joint partnership on the acquisition via a friendly takeover.
are we comparing AUM and market caps? does the AUM have zero debt hence NAV?...
Fair market value of all income producing assets = $3.36B
NAV = $1.644B
Market Cap = $700m
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