The “New” Asphalt Plant #12: Who is Driving (Part-2)

frankhui

(

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 ~

[url=https://qpublic.schneidercorp.com/Application.aspx?AppID=1027&LayerID=21667&ampageTypeID=4&ampageID=9230&Q=1670185180&KeyValue=161+++001]

$1.5M

[/url]

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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Frank Hui 许宁

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