iStar Financial (NYSE:STAR)
is not a stock for beginners or casual investors. Its combination of
real estate lending, net leasing, operating properties, and land
development makes it a complex hybrid that incorporates aspects of
companies like Cheung Kong (OTCPK:CHEUY), Forest City (FCE-A), and Lexington Realty Trust (NYSE:LXP).
What's more, it's also a credit recovery and residential housing
recovery story as the company continues to clean up legacy
non-performing loans and underperforming assets while deploying new
capital into projects.
To value iStar, I believe you have to be
able to estimate the value of the real estate finance portfolio (loans
and mortgages to real estate companies), the value of the net lease
portfolio, the value of the operated portfolio, and the development
potential of the land portfolio. This is, at best, a big headache for
most investors. I believe the underlying potential is still worthwhile,
with a fair value of around $18.50 on the basis of my estimated of
economic book value, and there is upside from improving real estate
markets and downside from a reversal in those markets and/or higher
financing costs.
Please read the full article here:
iStar Financial Still Worth The Hassle
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