Estimating the value of land So Leon's plans to develop a tract of 40 acres in Toronto. According to Ceo, they plan on building some condos, towns, etc on the site with a total gross floor area of 4.6 million square feet. There is another potential tract of land in Burlington that is about 32 acres. Anyway, the average buildable square foot value for land sales in the Toronto area is approximately $100. At 4.6 million square feet, that equates to $460 million just for the value of the land alone! However, they plan on developing the site themselves by hiring the appropriate general contractor to build on their behalf. In other words, they believe they can generate value that exceeds the current land value or else it would be easier just to sell. When you combine Burlington and Toronto then we get a value that can be anywhere from $500-$750 million for the combined properties. Burlington has a lower buildable per square foot value than Toronto but still very valuable.
It gets even better. The company has a total of 429 acres on its balance sheet. The book value for the land and buildings is only $239 million and does not even remotely reflect the true market value for these properties. On top of that, the market cap for Leon's furniture is very attractive at only $1.4 billion against a backdrop of under appreciated real estate assets on its books.
My verdict: A Strong buy!
https://financialpost.com/news/retail-marketing/leons-ceo-michael-walsh-on-retail-real-estate-and-running-a-canadian-icon/wcm/42efec3b-c6e9-4752-a99f-26e888d28cef/amp/