quantative analysis...a port in the storm
Kip Reed, a successful residential developer, had hit a storm. In 2007 his business plan, the sale of mid-priced home and lot packages geared to retirees went from a monthly absorption of 5 to 6 units to an annual absorption of 3 units. Thankfully, Reed was not highly leveraged but nevertheless he began to look at a variety of solutions in an effort to weather the storm. Reed’s accountant had suggested that they look at the value of his unsold lot inventory relative to the book value of that inventory. His accountant suggested that he contact Redfish Advisors to provide an investment value of the unsold lots. Redfish analyzed the sales history of the project, researched the competitive set, analyzed the project costs, and forecasted the likely lot values, absorption, and the required carrying costs. This information was used to support a discounted investment valuation of the unsold lots which Reed in turn used to guide his investors and to support his tax planning. The storm rages but Reed continues to weather it by engaging his team of advisors and seeking all safe ports.
