Hidden ValueWhile the proposals have shone a spotlight on the co.., they lack enough detail to support them in my view. There would be a ~$50M capital gain in the year of sale, half of which would be taxable. To ignore the tax implications seems careless and self serving. If GC is serious he must provide a cost - benefit analysis to clearly demonstrate the wisdom of supporting his proposals.
A sale lease back arrangement certainly would add risk to the co.. With a cap rate of 4% assumed on the 2 properties sold for $62M, a landlord would need to charge rent of ~$2M annually to net $1.5M. Annual escalators are common in industrial real estate so rents would likely increase yearly. Leasing a different building would entail additional costs for moving, improvements, etc.
At this stage the Board has presented a compelling rebuttal to the proposals. If further details are forthcoming from GC, and they are convincing, his proposals may be worthy of consideration. Until then, he does not have my support. However, he should be commended for highlighting the hidden value.