Post by
undervalue on Oct 24, 2022 3:06pm
Silverdale visit notes
I drove to Silverdale on the way home. This is not a commute location if you work often in Vancouver.
First, the scale is ridiculous. It is a giant hillside.
I went into the Nelson and Grove show home.
The neighborhood is really good. The area is high end. Neighborhood properties had much larger lots and gorgeous properties. It's not hillbilly.
Morningstar builds clever. The homes are really well done on tight lots.
They are very attractive, I get why they sold.
I spoke with sales office.
Customers work mostly in Surrey, Langley and Abbotsford.
These are the least expensive prices in the West Valley for new homes.
Maple Ridge etc. are 200k more
They got over half sold, then hit the wall. They have almost completed the builds on the first street. The second street is sold, and it is just at foundation stage.
There are large Allen block retaining walls that are expensive and used thru out. Morningstar is a wholly owned division of Polygon at this point.
The jv built Archer Green, but is just selling single lot lands here.
My take on costs was that the singles cost $200 or less a foot to build.
So, 400 or 500k for the lot, 500k for the build, and anything over is builder margin.
There are a few extra sold dots in the sales office map, they might spec build a few to keep the ball rolling.
If I bought today, it is a year to deliver.
As for the next part of Silverdale, they thought if the market normalized, 2 years.
There is a discussion of connecting a sewer line from this area as a temporary way to get rolling.
Polygon has another sales team for multi. The jv will be engaging other builders it is assummed. They will want to rip thru on a greater scale than they can build on their own.
Archer Green is really tight. The density is claustrophobic. They timed that project to perfection. They are still working on exteriors of some blocks, so more closings are upcoming for the jv. These were likely the last units at the higher prices.
The Madison Ventures web site said that Sam Grippo and his buddies bought the acreage when they were teenagers. He has been waiting to be paid for 55 years.
The vision is huge, it is crazy how long it takes just to drive a fraction of the place.
Take out service costs, my guess the jv brings in 20 million if the lots are 500k.
It is difficult to not like how strategic Sam Grippo has been. You can almost see the strategy in Mt. Pleasant. Silverdale, we are the beneficiaries of his idea without waiting 55 years.
Conclusion, we have a clear runway at Silverdale when the market balances after this interest rate spike. Free cash in the hands of a smart or perhaps a smart stubborn guy. Mpc will not be a value trap, more a grower without dilution. There are lots of redevelopment options in his portfolio.
It takes balls to stick with something you knew made sense.