Frank Voisin is the author of the popular value focused website Frankly Speaking, found at http://www.FrankVoisin.com
I recently came across a post at Journal of Value about Griffin Land & Nurseries, Inc (NASDAQ: GRIF) that alleged GRIF’s real estate had more value than GRIF’s enterprise value. This is quite a claim considering the company carries its real estate at $116.3 million and has an EV of $186 million, so I thought I would look into it further.
First, what does GRIF do? It has two lines of business: a real estate division which owns and operates commercial and industrial properties as well as develops residential subdivisions in Connecticut and Massachusetts, and a landscape nursery business that supplies independent garden centers and wholesalers. Interestingly, the company also owns a 4% interest in a magazine publisher in the UK.
The company has only a passing relationship with profitability and its free cash flow is weak. Furthermore, the company trades at a premium to book value and appears to utilize a fairly high level of debt for its performance (D/E of 0.6). I find none of this attractive, and would normally not spend a lot of time looking into this company. But then I came across the Journal of Value article, which showed the following data, taken from the company’s recent 10-K. First, the raw land holdings, which is land to be developed for residential use:
Second, we have land used for the nursery operations:
Finally, we have the company’s developed properties, which are for office and industrial uses: