Sunday, January 24, 2010

Fresh S-11 for Verde Realty

Verde Realty filed an S-11, to take this existing and operational REIT public. According the filing Verde already owns a multifamily rental portfolio of 14 properties totaling 4,790 units, an industrial distribution portfolio of 87 properties totaling 12.0 million square feet. In addition to the operating portfolio, the company has a land bank of approximately 1900 acres for multifamily/industrial development as together with roughly 33,000 acres in New Mexico for "low-density residential lot development." Verde's management team is lead by C. Ronald Blankenship, who was previous involved with the Security Capital companies and various bits of REIT drama in the 1990-2002 period. Outgrowths of this work included the formation of Prologis and Archstone Comunities trust, which eventually became Archstone-Smith (ASN). Per the S-11
Historically, Verde has been focused on major southern and U.S.-Mexico border markets. As we seek to deploy capital that we raise in this offering, we intend to leverage our senior management team’s broad geographic experience and focus on multifamily rental properties and industrial opportunities within our existing U.S. and Mexican markets, as well as select targeted markets in the western and southwestern United States, which may include: Los Angeles, California; Las Vegas, Nevada; Phoenix, Arizona; Riverside-San Bernardino, California; San Francisco, California; Seattle, Washington; and Denver, Colorado.
What makes Verde somewhat hard to figure out is the poor operating metrics (aka negative FFO), which are perhaps offset by by four multi-family properties which are coming online due the completion of construction during 2H09-1Q10. My guesses that the lease up should push the company into break even territory and that Verde's management will have some explaining to do during the IPO roadshow.

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