I think the company’s strategy is simply to harvest cash-flows (and real estate) from the furniture business and continue to plow it into a real estate empire. It’s probably quite tax efficient for the family to keep all the money in the mothership and find things to invest in, instead of paying it all out to shareholders.
Going forward, I think this will end up being this large semi-private real estate holdco for the family. Gives them lots to do and opportunities for jobs for more of the family members.
Might end up being a decent investment so long as they don’t overpay for their real estate investments. Given the discount to NAV, a little bit of overpaying won’t kill the thesis.
It does look like the strategy now is to create a semi private real estate company, with Tanguay becoming a smaller and smaller part of the value. And if that's how the story plays out, I think it could work out long term. But there are so many similar public companies out there, and I'm not sure the discount to NAV of BMTC is large enough to overcome the fact others are trading at similar discounts with either more focused portfolios, better portfolios, or management teams with a track record in real estate. I went back and forth, and am still going back and forth on whether I trust management enough to be stewards of capital.
Agree 100%. Many real estate options to choose from out there, and this isn’t cheap enough to take on additional management team risk.
I like to ask myself “why should these guys be so lucky to buy/invest in undervalued real estate?” The answer is that they probably aren’t.
If their land is so highly valued, why not just sell to a developer or contribute it into a JV where they don’t have to put up additional cash. Those would be good risk averse decisions.
Coming from someone who works in the industry; this happens all the time. Client gets successful and sells their business. They take the proceeds and invest in real estate because they want an income stream and something to keep them busy. The returns typically end up being subpar after all the fee-takers are paid along the way.
Interesting find, thanks for sharing.
Thanks for reading. BMTC is definitely an interesting situation, whatever one thinks of its investment prospects
I’ve been intrigued by BMTC since pre pandemic.
I think the company’s strategy is simply to harvest cash-flows (and real estate) from the furniture business and continue to plow it into a real estate empire. It’s probably quite tax efficient for the family to keep all the money in the mothership and find things to invest in, instead of paying it all out to shareholders.
Going forward, I think this will end up being this large semi-private real estate holdco for the family. Gives them lots to do and opportunities for jobs for more of the family members.
Might end up being a decent investment so long as they don’t overpay for their real estate investments. Given the discount to NAV, a little bit of overpaying won’t kill the thesis.
It's an interesting company.
It does look like the strategy now is to create a semi private real estate company, with Tanguay becoming a smaller and smaller part of the value. And if that's how the story plays out, I think it could work out long term. But there are so many similar public companies out there, and I'm not sure the discount to NAV of BMTC is large enough to overcome the fact others are trading at similar discounts with either more focused portfolios, better portfolios, or management teams with a track record in real estate. I went back and forth, and am still going back and forth on whether I trust management enough to be stewards of capital.
Agree 100%. Many real estate options to choose from out there, and this isn’t cheap enough to take on additional management team risk.
I like to ask myself “why should these guys be so lucky to buy/invest in undervalued real estate?” The answer is that they probably aren’t.
If their land is so highly valued, why not just sell to a developer or contribute it into a JV where they don’t have to put up additional cash. Those would be good risk averse decisions.
Coming from someone who works in the industry; this happens all the time. Client gets successful and sells their business. They take the proceeds and invest in real estate because they want an income stream and something to keep them busy. The returns typically end up being subpar after all the fee-takers are paid along the way.