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The “New” Asphalt Plant #12: Who is Driving (Part-2) [复制链接]

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(Continuing from #11)


According to the county record, the title of the 750-acre land has already been transferred to the new owner, SCARF FORSYTH GA LLC. SCARF has 2 businesses relevant to this New Asphalt Plant thing:

#1- Aggregate Reverses Fund: i.e. the quarry;
#2- Hedge Fund: i.e. to make quick bucks.

So what exactly had SCARF paid for with its cool $100M? With help from industry experts, here comes the ballpark estimation:

#1 - $45M: 350 acres Land-A, never to become a quarry due to limited demand;


#2 - $30M: 250 acres Land-B, the quarry staging area;


#3 - $10M: 150 acres Land-P, actual quarry pit and debris pile;


#4 - $15M: Aggreated quarry right value, capped by limited demand albeit a much larger reserve;

It is worth noticing, the value of the actual quarry operation is only about 15% of the total purchase price. It generates less than $500K/year in cash and covers less than 10% of the annual holding cost:

#1 - $5M+ / year cost of capital;
#2 - $1M+ / year property tax,

At $6M+ / year bleeding rate, SCARF will be pressured to cash in fast, by selling Land-A to developer ASAP. That is exactly one would have expected from a hedge fund, and hence this New Asphalt plant application in Sept 2019.

While what the developer will pay for the 350-acre trees is not yet public knowledge, ~ $60M should not be too far off. It may sound like a lot of money, but it is only peanuts compared to 10 x increase in value once fully developed.

With the recent change of hands of this 750-acre land, the motivation behind the New Asphalt Plant not only remains, but getting stronger by days, $16K/day stronger. While the old owner could afford to wait,  with the land acquired at ~$1.5M in 1988 and valued at less than $5M in 2019, the new owner simply could not and will not.

It will be interesting to see what is coming next.


(To be continued: more on the “Else” )

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