One interesting question is what they are gonna do with Teravalis. In the next release, they will have to revalue Floreo -- this will be the first hint at Teravalis true value. I suspect it is much higher than its book value--that is how it is currently included in SOTP.
They have become a controlling partner a couple of months ago. Prior to that they accounted for it through equity method and will have to revalue it now and recognize a gain. They have a press release about it.
If hhh is successful with insurance and stocks, within 5 years the slow-moving real estate business may not matter. They should be interested in extracting as much capital from real estate as possible now, rather than keep developing Teravalis for decades.
Yes I realise nothing has changed at Teravalis - it’s just one of the oddities of most accounting systems that some assets are revalued and some are not. Always struck me as odd.
I absolutely agree with capturing fair value for real estate to capitalise insurance. I’d be less keen if they sacrifice fair value to capitalize insurance. I like the RE assets and think they provide decades of reinvestable cash flow.
For Teravalis, nothing has changed, so it is normal. I keep thinking they are working on some upside for Teravalis. Maybe data center with solar. Or maybe some JV with a deep pocketed investor like Berkshire. It is now one of the biggest construction companies and can facilitate the development. Teravalis is too huge and Phoenix grows very quickly.
One interesting question is what they are gonna do with Teravalis. In the next release, they will have to revalue Floreo -- this will be the first hint at Teravalis true value. I suspect it is much higher than its book value--that is how it is currently included in SOTP.
I agree 100%. I also suspect it is too young to attract a JV partner. I suspect it stays on the books and consumes cash for a while.
Why do you say they’ll have to revalue Floreo in the next release?
They have become a controlling partner a couple of months ago. Prior to that they accounted for it through equity method and will have to revalue it now and recognize a gain. They have a press release about it.
Nice. I missed that. Seems bizarre they have to revalue Floreo but not Teravalis, which they also control.
If hhh is successful with insurance and stocks, within 5 years the slow-moving real estate business may not matter. They should be interested in extracting as much capital from real estate as possible now, rather than keep developing Teravalis for decades.
Yes I realise nothing has changed at Teravalis - it’s just one of the oddities of most accounting systems that some assets are revalued and some are not. Always struck me as odd.
I absolutely agree with capturing fair value for real estate to capitalise insurance. I’d be less keen if they sacrifice fair value to capitalize insurance. I like the RE assets and think they provide decades of reinvestable cash flow.
For Teravalis, nothing has changed, so it is normal. I keep thinking they are working on some upside for Teravalis. Maybe data center with solar. Or maybe some JV with a deep pocketed investor like Berkshire. It is now one of the biggest construction companies and can facilitate the development. Teravalis is too huge and Phoenix grows very quickly.