There have been a number of changes (sale of assets and contract cancellation) SRZ management has provided us with data about remaining assets and their earning capability.
What we have here is that the remaining properties of SRZ have an operating profit of close to 120 million (per quarter) and we can expect a yearly operating profit of 120 x 4 = 480 million.Assuming there are other expenses (for new communities being built as well as over head expenses) of 90% of earnings we can still expect SRZ to report conservatively 10% profit of 48 million. ie Assuming 432 million of overhead expenses. (link)
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As reported by SRZ the 21 communities sold to BKD had contributed 13.9 million of net loss for 9 months ended Sept 2009. The sale would net SRZ 50 million in cash. (link) So the 21 community sale will really help SRZ as it reduces debt by approximately 130 million and also nets 50 million in cash.
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What we have here, is a corporation that was taking advantage of the past positive factors by agressive growth, which is now adjusting itself to the new reality of conservative financing and de-leveraging its balance sheet.
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If one takes a pot shot at BKD (which has close to 2 billion dollars of debt in its books) and a market cap of 1.95 billion. I would say within 1-2 years we can expect SRZ to overtake BKD in market capitalization as BKD still has lot of Debt which will unfold in the coming years. (I expect BKD market Cap to fall below 1 billion and SRZ's market cap to rise above 1 billion
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