"Offer due by" prospects and pie in the sky valuations

[Daniel Wheeler]

So I have my first prospect being sold with "offers due by" a certain date. Next size up deal for me. How do you guys play these? The appraisals that came with the supporting documentation are way out of line with what the net can service debt wise. All three prospects are stabilized. 2 class B and one class A. Without an asking price, it's tougher to gauge whether an offer is even worth it. I know where the break even with the income is at. I know what I want to discount from it and from the replacement cost...but the appraisal is slightly more than twice that for all 3. I have an equity partner to get the deal done, but going beyond what the income operations can service by much will lengthen the time for their takeout, limit the refinance room (to still be serviced by the income) and will generally close the margin of safety. General thoughts? Do these attract more institutional buyers by nature? For deals like these do you just take an interest only refi, for the partner takeout, to lengthen the time horizon with a longer call? Do it more than once? That seems like a less than ideal way to get into these...But these are prospects with pretty rock solid profiles. Sort of like Coca Cola in your stock portfolio...but in better markets. I'm mostly just feeling you guys out as my thoughts aren't dialed in to more specific questions for the board at the moment.

[Diane G.]

I think MFH are extremely risky at current valuation.... those who pay at these level will be crying soon... if you ask me...