Sears Holdings Corporation (SHLD): It Takes Time to Unlock Hidden Real Estate Values

Reading International, Inc. (NASDAQ:RDI) is a much smaller company but shares similar characteristics of not so good business with undervalued high real estate value. The company operates or has an interest in 462 screens in 54 cinema complexes in the U.S., Australia and New Zealand. Based on net book value, around 29% of its assets were in the U.S., 53% in Australia and 18% in New Zealand. In 2012, it generated $254 million in revenue and produced a loss of $1 million, or $0.04 per share.

One of Reading’s shareholder, Capstone Equities has mentioned that Reading’s real estate, including four properties in Manhattan, was worth far more than its stated book value. According to Barron’s, in early 2012, Capstone has offered to buy two Manhattan properties, Cities Cinemas 1,2 & 3 in Third Avenue and Union Square Theater for $100 million, three times higher than its stated properties book value of $32 million. However, Reading did not accept the offer as it was “non acceptable.” Capstone thought that Reading International, Inc. (NASDAQ:RDI) should be worth around $12 – $14 per share.

At the current trading price of $5.60 per share, Reading is worth around $130.5 million. The market values Reading at 7.9 times EV/EBITDA and around its stated book value.

The Foolish bottom line

Sears Holdings Corporation (NASDAQ:SHLD) and Reading are clearly undervalued compared to their trading prices on the market. I personally think that some corporate restructures would be needed to unlock their huge potential real estate value.

The article It Takes Time to Unlock Hidden Real Estate Values originally appeared on Fool.com and is written by Anh HOANG.

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