The Jackson City Council approved the convention center hotel deal with Transcontinental Realty Investments (TCI) yesterday by a 5-0 vote. Ward 1 Councilman Quentin Whitwell did ask TCI Vice-President Al Cozier about the company's health. The Clarion-Ledger reported:
"Crozier told Whitwell some of Transcontinental's subsidiaries have had to file for bankruptcy in recent years, but the parent company is in good shape, with about $1.4 billion in assets.
He said all real estate firms have faced a downward trend.
"I think our outlook is bright," Crozier added."
One can only wonder if Mr. Crozier uses a braille Kindle as the future of TCI is anything but bright. Take a look at S&P's analysis of the company below. Read it carefully.
First thing that pops out is the share price: $2.54 per share. While some may argue REIT's have suffered, TCI performed worse than its peers as shown in the graph at the top of page 2. The company has a YTD return that is a NEGATIVE 62% while the industry has a positive 2.6% return on investment. The industry has actually outperformed the S&P 1500 this year. The one year return is a negative 75% while the industry was 1.1%. One figure jumps out from the chart: $10,000 invested with TCI five years ago is only worth $1,954 today while the industry is $7,218 and the S&P 1500 was $9,424.
Still think the future is bright? Take a look at the income:
2010: -76.1 million
2009: -81.9 million
2008: -30.3 million
2007: .93 million PROFIT
2006: 1.95 million PROFIT
2005: -17.2 million
2004: -11.2 million
2003: -27.7 million
2002: -36.9 million
2001: 29.8 million PROFIT
This company has turned a profit only three times in the last ten years. Its June 30, 2011 SEC 10-Q filings show the outlook for TCI is not getting any better. The consolidated balance indeed shows assets of $1.2 billion. but liabilities of 1.1 billion. In other words, the company is leveraged at nearly 100%. In contrast, Parkway Properties has assets of $2 billion and liabilities of $1.2 billion and is leveraged at 60%.
S&P's notes state (p.3): "Transcontinental Realty Investors Inc. announced unaudited consolidated earnings results for the second quarter and six months ended June 30, 2011. For the quarter, the company reported net loss of $40.83 million..
For the six months, the company reported net loss of $52.88 million...."
Tell me, does this future smell "bright" to you, Mr. Crozier? Did I mention the market cap for TCI is only $20.6 million dollars? Yup. Jackson is going to buy the land from TCI for the hotel at a price that is roughly three/fourths of what the company is worth.
Time to recap what we know about our new partner. The partner has lost $52 million this year and lost over $76 million each year for the last two years. The company has only earned a profit three times in the last ten years. It is leveraged at nearly 100% if one examines assets against liabilities. The share price has performed substantially worse than the industry average and is trading at around $2.50 per share. The company has been accused of committing mortgage fraud by at least three lenders in three separate lawsuits filed this year. A bankruptcy court in Texas twice this year threw out a TCI subsidiary's (FRE Real Estate) bankruptcy petition filed this year after lenders showed the court other TCI subsidiaries were transferring properties to FRE even though they were secured by nearly $100 million in loans provided by those lenders. Does this sound like a partner whose future is "bright"?
5-0 vote. Remember that, folks. 5-0 vote.
Calls to Mr. Whitwell were not returned.
Earlier post
Copy of resolution
17 comments:
I did not know Jackson wanted a beef plant downtown?
Thanks, KF, sharing to FB and Twitter.
Is "reported" the right word to use for what the Clarion Ledger is doing? How about "repeated."
Again, Quintin Whitwell has some explaining to do. Why did he vote for this? He is furiously Twittering nonsensical updates today, but nothing over the last two days regarding this very serious vote he took.
Wow. A part-time blogger can dig all this info up (I assume from his home computer) and the city attorneys and local newspaper "journalists" have no idea. In local matters, this website is the place for real journalism.
This game TCI plays moving their losses to "subsidiaries" is exactly what Scott Sullivan and Jeff Skilling did at Enron.
Sullivan's deception was different but we get your drift.
Why doesn't the city use one of its own bright spots, that being Parkway Properties to build and mangage a hotel/ commerical venture like it has been successfully doing for some time??? Its locally owned and operated, they are one of the few non government entities that employ tax paying citizens while servicing other private companies downtown. Seems like it would be playing favorites but with Jackson trying so hard to bring people and business back, you might just consider partnering with someone who is successful year after year, supports the local economy all while giving you the greatest chance to make one project actually work.
Calls to Mr. Whitwell were not returned.
No surprise. Whitwell is an empty suit. He'll carry as much water for the downtown crowd as they command him to shoulder.
Whitwell still has a number of votes to make to catch up to the level of antagonism Ben Allen showed for taxpayers but voting to loot Jackson's meager and dwindling resources to finance a boondoggle hotel the private sector won't touch puts him well on his way to closing the gap.
All city council members should resign over this and Gannett should replace the whole lot at Clarion Ledger. We have a crowd who either isn't smart enough to oversee the city's business or is too lazy to do the work that is necessary to Jackson's well being.
You're no molder of consensus Whitwell. You're a purveyor of bullshit who can't back up his RINO vote.
The City Council, and the Mayor, should all be imprisoned for this vote. Any public body that enters into a deal like this is responsible to check the financial stability of the private entity it is dealing with. Musgrove/Spell/McCoy and the Beef Plant taught that lesson to the legislature - in an afterthought - but evidently the City Council has not learned the lesson.
This vote shows full well what QW is worth - nothing. He has his 'feel good moments' in gating streets and putting taco stands downtown. But when the real money deals come around, he is right in there with Harvey and the other clowns. Guess his mentor, Ben Allen, won't let him loose with the real issues.
I still blame the CL. Politicians are going to be politicians. You have to have a legitimate, viable press to keep them honest. This site does a great job of that but, unfortunately, the people who would raise the most hell about this (old people), don't read blogs. How about some radio ads targeting the blue hairs? "Want to know where the news gets their news? Get your grandkids to show you Jackson Jambalaya on the Interweb. Plus, get them to show you how to push the 'refresh' button, and it's like getting a whole new paper every couple of hours - for FREE!" (Old people love free stuff.)
Radio is cheap, and I bet those ads during TV church services aren't too bad.
Bet you that the JFP has comments disabled on their piss-poor reporting.
No comments, just crickets.
From the November 4, 2008 minutes:
"ORDER authorizing the City of Jackson to loan said funds and the Mayor to execute and the City Clerk attest documents needed to close and consummate an additional Three Million Dollars ($3,000,000) loan to TCI-MS in accordance with HUD rules and regulations (Walker, O’Reilly-Evans, Melton) (11/04/08)"
November 18, 2008:
"ORDER authorizing the City to advance proceeds of the section 108 Loan to
TCI-MS in an amount not to exceed 80% of the appraised value of the property
for the project used as collateral of the loan for the acquisition of such property
and closing costs related thereto and to further provide funds for architectural and
engineering fees, planning costs, and legal fees directly related to the development of the project, subject to adequate documentation of any such costs and verification that such costs have been expended in accordance with HUD
rules and regulations, but otherwise in accordance with the prior order entered by
the City Council on September 17, 2007 (Walker, Holbrook, Melton) (11/18/08)
One has to wonder what was in it for them....
(As always, "follow the money".)
Looks like the Bugle is engaging in "revisionist" publishing. "Not my fault, I was out of town."
Got to love this quote from Margaret Barrett-Simon:
It's very difficult politically to be dealing with something like that if we are just getting details in ripples
It is funny how the Bugle celebrated the decision just the other day and now have done a complete 180 degree turn.
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