When large real estate companies make decisions, the effects can often be felt beyond their boardrooms. If it were us, we would pay attention to the opportunity, the market, and any trends occurring in the area of interest before following a formula to determine our exit strategy and offer price. That said, other major actors in a given market could be viewed as part of the market evaluation. So why bring up Anywhere Real Estate?
In an article from Nasdaq that breaks down concerns regarding said company’s debt, we are not herein making any declarations as to the health of the company although when we see more debt than assets, we find it is cause to look closer. In the Nasdaq article, it documents that Anywhere Real Estate is holding on to near-term due debt with far less in cash flow and assets available. If the company can cover its obligations through capital raises or increases in cash flow then all may be well. Everyone generally seeks to have enough cash flow to cover debt obligations but capital markets we have found historically to be fickle, which means investors can quickly change interest depending on the financial outlook. That said, any company in growth mode is likely to be in this position but it could also be seen as a more risky position. Cash flow is always king. As the old saying goes, just because you can buy it, doesn’t mean you can afford it. At a time when we are all looking for deals, we believe it pays to remember to know the market and the activity of other players in the market. If it were us, we would also keep in mind that a healthy balance sheet means a relatively strong cash flow source(s). Trouble? You decide. What do you think?
We can not and do NOT provide accounting, tax, financial, legal, nor investment advice, but in our opinion, you should always ask questions and follow the facts.