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Investing With An Edge: Winthrop Realty


Winthrop is in liquidation.

Shares trade for a discount to liquidation value, which should wrap up in the next year.

Investors at today's prices should realize a solid IRR, with the potential for an even stronger return if their flagship property does well.

This is the latest in my "Investing with an Edge" series. For more on the series, please see here.

Company: Winthrop Realty Trust (NYSE:FUR). Reasons for opportunities: Liquidation, understated assets.

Winthrop is a REIT. However, it's not your typical REIT. Most REITs are focused on buying new properties and growing their dividend over time. Winthrop does none of those things; instead, the company last year announced they'd would liquidate (sell all of their assets and return the proceeds to shareholders).

The company currently trades for ~$14.40 per share. Because the company is in liquidation, they value their assets with their best estimate of how much they can sell them for and return to shareholders. As of their Q3 earnings, that liquidation estimate was $15.17 per share. That means shareholders are buying at >5% discount to the company's liquidation estimate. Liquidation rules mean the company must finish the liquidation by August 2016; while there are some ways the company could slightly extend that date, it seems likely that the liquidation or the vast majority of it will be completed by then based on management's comments and actions to date.

So the company is interesting based on just that math. A 5% discount to a liquidation less...