Sage alone can be a company maker (or two)The market is completely asleep where Sage Ranch is concerned. Sage Ranch alone, with only ONE NR, could more than justify each of GRB and PWR's current market caps. This NR, one that would announce a contract with the US Air Force, is strongly suggested in last week's NR. PWR is in
"advanced discussions with the US Air Force to lease the 1,042 units to the military for members and families of its civilian, military and contractor workforce at Edwards Air Force base and related facilities."
Not just this, the NR goes further by referring to a range of dollar values and explains the PWR raise as needed to complete engineering! A deal with the US Air Force would...
"if leased to the USAF in entirety, generate $850,000 to $1,700,000 per month in discretionary post tax cash flow for the JV"
Read that again because both GRB & PWR have market caps of approx $20m! This isn't revenue, it's NET of taxes, interest expenses, R&M, property taxes, property management, etc. I have calculated this "discretionary" or free CF for each of GRB and PWR using the low, high and midrange of PWR's numbers (I confirmed the numbers were in USD).
US $850,000 x 1.32 x12 / 2 = C$ 6.7 m per year for each partner
US $1.275m x 1.32 x 12 / 2 = C$10.1 m per year for each partner
US $1.700m x 1.32 x 12 / 2 = C$13.4 m per year for each partner
I think that the construction would take place in a couple or three phases. I think that assuming that construction begins in fall 2019 (my latest understanding, did not re confirm) that the 1,042 units should be completed about 4 years from now and very possibly less.
If I'm right on the build in phases approach (which was the idea months ago, makes total sense and I don't see why this would change) we would start receiving millions in revenues starting in about two years and these would increase as the last phase is completed in around 4 years.
We are talking long term leases; someone posted 20 years. (I don't know, I would think 5 to 10 plus 5 year option periods in perpetuity until the lease on the unit sounds is allowed to lapse based on my experience with long term leases would be reasonable). But we are definitely talking long term and I can absolutely envision many years of full or near full occupancy.
I'm talking 20 years and MORE , at the midrange over $200m in free CF in 25 years plus inflation. Not just that but as the big construction loans get paid off, interest expense is replaced by increased profits. I've written about the gang problems in communities closer the Edwards. I've mentioned the 2.4 million housing unit shortage in Ca.
But what about the coming devestation from man caused climate change? If you don't think people in low lying coastal cities aren't thinking about moving to higher ground today, that's fine but in 15 or 20 years... Then in Ca we've had so many brush fires that have become disasters, a place like Tehachapi gets you out of the brush areas and into a small affordable city,
Tehachapi on a mountain is cooler and way more comfortable than down at Edwards elevation, right on the border of the Mojave. Not saying it's going to be another Whistler lol, but it's a place that I think will get more popular in the long term.
Not giving investment advice, just talking my beliefs, my book too. The market is asleep about what Sage is just one NR away from being. Imo.
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