A comment on a recent post asked whether we’d considered the value of Eastman Kodak’s(EK) real estate. It’s not something we’d given much thought to, but we’re friendly folk and so we proceeded to do a bit of digging. Our first stop was Kodak’s most recent 10K. While some companies provide detail on their real estate holdings, Kodak provides a bare minimum. Kodak lists $1.037 billion in Property, Plant, and Equipment, $664 million in the United States, and $337 million abroad. It’s reasonable to assume this long held property is held on Kodak’s books at a significant discount. The most significant piece of real estate we were able to find is the 1200 acre Eastman Business Park in Rochester. The park has 300 greenfield acres resulting from the demolition of 44 buildings. There are still over 100 buildings remaining, and 14 have already been sold to other firms, including the largest, a 2.1 million square foot building sold for $11 million in 2008.
Kodak is also nearing a deal to sell some space to Monroe Community College. The college plans on spending $75 million to purchase and renovate the buildings. Kodak’s real estate holdings are impressively large, and given the luxury of time the company could conceivably raise upwards of $2 billion by selling them, but it would be difficult to realize a fraction of that in the compressed time frame the company is working on. Similar to the patents, which I believe have been the subject of overly optimistic valuations, the real estate will take time to see its full value realized. Any attempt to move the real estate quickly will result in lower sale prices. It’s possible that if the company can monetize some real estate and some intellectual property quickly, that bankruptcy can be staved off for the time being. However, management will still be faced with a company bleeding money that they have not been able to staunch.
Please share any further information you have about Kodak’s real estate holdings so that we can continue to refine our valuation estimates.
Disclosure: The author holds no position in any stock mentioned.
