Would you buy a building with these tenant financials and 10 years remaining on lease?
[{"id": "eg21odm", "text": "Wow talk about not paying taxes. And are they growing like crazy? Tech/media company? Should rein in those receivables. Seems like they have good debt service coverage. But just wonder going forward whether they can continue to generate that sweet CF.", "replies": [{"id": "eg2p9ql", "text": "Rookie question- what do you mean by talk about not paying taxes? ", "replies": [{"id": "eg2r1y8", "text": "Look at income tax on PL. it\u2019s like 300k accrued for 2018. \n\nDon\u2019t think that\u2019s an issue though EBITDA is high but net income is low. Also looks like they took on a ton of leverage in last year so growth is likely fuels through an acquisition ", "replies": [{"id": "eg392y6", "text": "Yep, see it as $378k for the 2018 estimate. I\u2019m just not sure how to deduce from this P&amp;L that the merchant is potentially behind on their taxes. ", "replies": [{"id": "eg3bp8t", "text": "They\u2019d show an accrued tax liability on balance sheeet ", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "eg22gxv", "text": "They are a tech company. \n\n\u201cOur net income has dropped significantly due to the increase in amortization of goodwill and depreciation as a result of acquisitions. \u00a0These are noncash items (do not require payments of cash because already paid and financed in the debt - which I know you already know). I may not have reflected that separately in the FS I sent you. \u00a0That is why we use EBITDA.\u201d\t\t\t\r\n", "replies": [{"id": "eg245wy", "text": "I mean see if you're wholly dependent on that company and whether their rent is above/below market. Also, whether the location is super important to them. If it's key to generating their revenue (unlikely) then the lease might be considered higher priority than some of their debt. Otherwise you're kind of at the bottom of the pile.", "replies": [], "depth": 2}], "depth": 1}, {"id": "eg23dse", "text": "They are a tech company. They are writing off goodwill which may be their best asset. Are they losing a competitive advantage? \n\nAlso, LT debt terms, what are they? Lots of questions here...\n\nQuite frankly there is not enough information here to answer this question. But based on what I see it is not unreasonable to wonder about them making it 10 years. \n\nBut who cares, you have a lease. You have them on the hook. You have a contract. What are relevant terms? Would this space be easy to relet?", "replies": [{"id": "eg2boij", "text": "Goodwill is meaningless. It's just the excess purchase price over fair value. You can elect to amortize it or test it for impairment annually. That said impairment isnt a good thing but seems unlikely due to positive cash flow and growth.", "replies": [], "depth": 2}], "depth": 1}, {"id": "eg28bed", "text": "Pass.  I prefer tenants with tangible assets.  hard to recover Code for broken lease agreement and 10 year lease for a tech co.\n\nAverage life span for start up Tech Co. was 3- 5 years last i checked.  If they are established TEch Co.  = weak maybe, convince me.", "replies": [], "depth": 1}, {"id": "eg2bva3", "text": "Petty good cash flow. Why is interest expense doubling? Are they in default? ", "replies": [], "depth": 1}, {"id": "eg2cifm", "text": "It really depends on what the asking price is. You are taking on a very large risk and should be compensated for it in asking price.", "replies": [{"id": "eg2exgr", "text": "It\u2019s under contract at a 9 cap $4MM. ", "replies": [{"id": "eg2l7k9", "text": "That's a reasonable cap rate. ", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "eg2s405", "text": "No. I need at least 3 years to determine. \nIt appears their debt is rising and they had a rocky first year. Goodwill is rubbish. \n", "replies": [], "depth": 1}, {"id": "eg2zhib", "text": "Yes, I don\u2019t place a lot of value in their goodwill. ", "replies": [], "depth": 1}, {"id": "eg34uka", "text": "I'm sorry what is your risk tolerance? Is this a personal investment? Is this part of a core, core-plus, or value-add fund? Is this a class A building where you expect class A tenants or is this a shit class C building? Is this office or manufacturing? Would they be the only tenant?\n\nSo many questions\n\n\nSide note: Also what kind of order is the income statement in? Who puts the trailing 8 months, following by previous year last twelve months, followed by estimated end of year?", "replies": [{"id": "eg3nojb", "text": "1. Personal investment \n2. Class A for the location \n3. Office\n4. Single Tenant", "replies": [], "depth": 2}], "depth": 1}]