Accounting for Real Estate
Readers sometimes ask me about my fascination with real estate and frequent references to acreage and buildings owned by some of the companies I've written about, most typically restaurants and retailers. For me, it's all just part of the asset package, and assets are an important component of value investing. Since many of the companies I research and/or own have a value flavor, a bit of distress or are trying to work their way back to health, it's important to know what is supporting book value. What is it that they own that might have some real value, could be of interest to potential acquirers, or could backstop the company in case of bankruptcy (à la Syms Corp)?
Owning real estate is not necessarily a recipe for success. There are plenty of restaurants and retailers that own little or no real estate and are extremely successful. But remember, I'm typically looking at companies that have struggled, may have a flea or two or are simply underappreciated. I'm trying to determine whether the market is undervaluing a business and ignoring potential value....463 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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