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Analyze And Dump The BlackBerry REIT

On January 21, 2014, BlackBerry (NASDAQ:BBRY) announced that it would sell off more than 3 million square feet of its commercial real estate in Canada. BlackBerry also pledged to remain headquartered in Canada, although the transactions would amount to divestments in the majority of company property. Shareholders were clearly pleased with this turn of events, as BlackBerry stock spiked from $9.08 to $10.45, for a 15.1% gain in price between the Friday, January 17 close and January 22.

The torrid love affair between BlackBerry CEO John Chen and Wall Street may continue into the immediate future. John Chen, who was named interim CEO on November 4, has largely overseen the building blocks of a strategy that has already helped BlackBerry stock nearly double off its December 10 $5.44 multi year low. Long imitation diamond ring cartier term investors, however, may be wary of buying into BlackBerry stock. The company is simply floating the note and buying time with the help of financial engineering. The de facto BlackBerry real estate investment trust may still remain a nonfactor in mobile.

Commercial real estate broker CBRE (NYSE:CBG) has already issued a detailed flyer to advertise BlackBerry real estate as an investment opportunity. CBRE classified BlackBerry properties according to Waterloo, Mississauga, and Ottawa portfolios. The Waterloo portfolio was further subdivided according to University, Northfield, and Cambridge campuses. The primary University headquarters sit adjacent and directly to the east of Waterloo University. The newer Northfield Campus occupies land largely situated between the 2200 and 2300 block of University Avenue on the outskirts of Waterloo and abutting 500 acre RIM Park. Lastly, the Cambridge campus is actually twelve miles southeast of Waterloo. Cambridge does allow for immediate access to The 401 Macdonald Cartier Freeway. Ontario Highway 401 is often cited as North America's most heavily trafficked freeway, as it makes connections between Detroit, Windsor, Toronto, and Montreal (via Quebec Autoroute 20).

Calculating cost estimates for the BlackBerry real estate portfolio, of course, would begin with comparable listings. The divestment transactions may actually close at more than a 10% discount off comparables, at best, after informed cartier ring replica buyers realize that BlackBerry is operating from a position of weakness. BlackBerry is also the largest employer in Waterloo, Ontario. Certainly, the rounds of layoffs, in conjunction with the massive bloc of BlackBerry space immediately up for sale, will devastate the local real estate market. Be advised that investor Eddie imitation ring cartier Lampert's original plans to sell off Sears Holdings (NASDAQ:SHLD) real estate never quite materialized into a real turnaround at the retailer. Commercial real estate is highly illiquid. dollars. At the time of this writing, 1 CAN$ = 0.89 US$ and 1 US$=1.12CAN$. Office and warehouse real estate in the Waterloo area is now up for sale at roughly $150 and $65 per square foot, respectively, including the surrounding acreage. BlackBerry may also offer $50,000 per acre of vacant land at the University and Northfield campuses, on average. BlackBerry also has properties available for sale at Mississauga (Toronto) and Ottawa, which are both located on the outskirts of two of Canada's most important cities. BlackBerry may offer $65 per square foot and $15,000 per acre to unload these satellite locations. In all, CBRE and BlackBerry may open up listings for the commercial real estate near a combined $510 million. From here, the partners and prospective buyers are likely to negotiate prices down towards $300 million, over the next year. To sweeten the deal, BlackBerry could also offer to sell offices and lease space back at $10 per square foot, per month.

Excitement surrounding BlackBerry real estate liquidation may obscure the idea that these Ontario offices were actually built to manage a telecommunications business. Often times, of course, speculators fail to see the maple leaf trees from the forest. Ironically, BlackBerry was shut out of the mobile market, after haughtily mocking Apple (NASDAQ:AAPL) as "amateur hour" in 2010. In recent months, Chen has fired R diva Alicia Keys as BlackBerry's creative director, while working to rehabilitate the image of a brand associated with the greatest flop of 2013. According to Peter Nowak and CBC News, the BlackBerry 10 was initially pitched as the "savior" of Canadian technology, but may have actually hammered the "nail in the coffin" to BlackBerry as an ongoing business concern at Waterloo. smartphone subscriber market share. The title of the report is somewhat misleading, as comScore statisticians have calculated and presented averages for the quarterly period spanning between September 2013 and November 2013. A quick review of the comScore information will reflect a winner take all Apple iOS Google (NASDAQ:GOOG) Android duopoly above the telecommunications market. subscriber smartphones through this latest quarter. The duopoly actually consolidated upon its own strength over the past year. subscriber smartphone market, which was a 50 basis point decline from the prior period. Information out of International Data Corporation has also confirmed that BlackBerry has been all but irrelevant within the tablet market.

Microsoft's acquisition of Nokia (NYSE:NOK) is scheduled to close by cartier ring copy the end of this quarter. Intel, as somewhat of an adjunct to this deal, has been hell bent upon emerging as a player within the mobile market. Certainly, Intel will make aggressive bids to replace the ARM Holdings (ARM) and Qualcomm (NASDAQ:QCOM) alliance as the primary engine driving the Windows mobile machine. In any event, the competition between these rival firms is likely to help firmly establish Windows as a third wheel alternative to iOS and Android, at the ultimate expense of BlackBerry. For now, speculators remain hopeful that financial engineering can carry the day at BlackBerry, until the company can gain sales traction with real production.

Again, well timed sales of the BlackBerry real estate portfolio may deliver $300 million to the coffers at Waterloo. In exchange, BlackBerry could close out weak divisions, consolidate space, and lease out offices for $10 million per month. The real estate deals would obviously free up cash at BlackBerry to either better prepare the company for a break up, or reinvest capital back into the company, in hopes of releasing a game changing product. BlackBerry did close out its latest Q3 2014 ended December 20, 2013 with $3.2 billion in cash and investments on the books. BlackBerry's $3.3 billion in liabilities did include $699 million in deferred revenue, which will ultimately be recognized on the income statement. For now, BlackBerry carries $4 billion worth of balance sheet shareholder equity to effectively back $5.1 billion in market capitalization.

Still, liquidity will remain a concern at BlackBerry. BlackBerry slogged through $4.4 billion in net losses during its latest quarter, after actually applying $624 million in tax credits. $2.7 billion worth of asset write downs accounted for the majority of losses. Be advised that BlackBerry quarterly revenue did collapse from $2.7 billion to $1.1 billion upon a year over year basis. The BlackBerry cash reserve figure may also be somewhat of an illusion. BlackBerry did collect upon $1.2 billion in receivables over the past nine months. Cash and investments on hand actually grew by a relatively meager $317 million through the same time frame. Be advised that a consortium led by Fairfax Financial loaned BlackBerry an additional $250 million ($1.25 billion total convertible bonds) earlier this January. Going forward, BlackBerry may start hemorrhaging cash, if the company fails to collect upon receivables, attract creditors, and unload property.

Conservative investors who were fortunate enough to get in near the $5.44 ground floor should consider immediately selling BlackBerry stock and taking profits. The BlackBerry business model may have degenerated into one part commercial REIT alongside two parts Las Vegas casino.

Disclosure: I am long AAPL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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