Net Lease Office Properties -- Strategic Liquidation and Value Realization | Alluvial Capital 2024 Q4

Efficient Asset Sales Amidst Challenging Office Market Conditions

Apr 13, 2025

Summary

Rapid reduction in property holdings and recourse debt.
Shares remain deeply discounted against asset value estimates.
Potential challenges in selling lower-quality properties.
Significant value in remaining contractual rent payments.
Realistic scenario valuation suggests substantial upside potential.

Alluvial Capital's Q4 2024 letter emphasizes Net Lease Office Properties as the fund's largest holding, focusing on its ongoing liquidation strategy. The company has impressively reduced its property portfolio and recourse debt, positioning itself to begin distributing proceeds to shareholders. Despite the challenging office market and slow decline in interest rates, Net Lease's ability to sell properties at favorable cash flow yields suggests a promising outlook for value realization.

"The speed with which Net Lease has sold off properties and paid down its debt is impressive... I expect the company’s remaining recourse debt to be extinguished this quarter or next, allowing the company to begin distributing the proceeds of its property sales to shareholders." — Dave Waters, Alluvial Capital Management, Q4 2024 Fund Letter

Read full letter at gurufocus Alluvial Capital 2024 Q4 page.

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