H&R Real Estate Investment Trust HRUFF

Another 14 Year Option

[Frankie10]

Most people don't understand and/or appreciate what management is doing here.

Cheers to another solid quarter.

[Mephistopheles3]

One interesting point on the sale of this office building is that this one was slated for redevelopment (100 Wynford Dr.).  So H&R will continue the zoning process for redevelopment which will take years to do and when it's successful, they will be able to just buy the building back which would have a much improved fair value.  If they can't convert it or the market crashes

[Frankie10]

Great call. Missed that detail. Everyone here should be asking themselves what $1 14/16 years from now will be worth in today's dollars. 

[materialsgirl]

The option to buy back offices 14 or 15 years from now could be  worth a fortune in the future. There is no way to quantify the value and the company will carry  the option on their books at zero value unless they sell the option in 10  or 12 years.  Nobody would pay any cash for the option in 2022. It is far too long into the future. mat

[Frankie10]

I pay for it everytime I buy equity in HR. I intentionally want HR to represent all or a meaningful amount of my real estate allocation so that I can maximize my overall exposure to quality, us real estate, and the options.

[materialsgirl]

I was saying that no other business entity would pay much money to HR REIT for the right to buy these properties. HR even said during the Q2 call that there would not be any other company that  would pay more than pennies for the option due to the long time line. mat

[Frankie10]

Agreed. They definitley put that in there for fun. Just want to keep their auditors on their toes. Good call.