Dolphin Capital DCI
July 26, 2011 - 10:48am EST by
2011 2012
Price: 0.35 EPS $0.00 $0.00
Shares Out. (in M): 627 P/E 0.0x 0.0x
Market Cap (in $M): 219 P/FCF 0.0x 0.0x
Net Debt (in $M): 397 EBIT 0 0
TEV ($): 616 TEV/EBIT 0.0x 0.0x

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Dolphin is only trading at about 20% of its NAV. If ever anyone wanted to hate a stock, this has something for everyone: Greece, second homes, resort properties, undeveloped land and capital intensity. As a result, shares are priced at extremely attractive levels.
Dolphin is a residential resort property development company that is focused primarily on Greece, Cyprus and other parts of the Eastern Mediterranean. The company is currently developing 14 projects in 6 countries which include 21 hotels, eight golf courses and five marinas in partnership some of the most well-known luxury brands in the world including Aman Resorts, Oberoi Hotels, Waldorf Astoria, Ritz-Carlton, Four Seasons, and Jack Nicklaus Design. Dolphin owns more than 63 million square meters of land, over 59 kilometers of coastline property and, according to the company, about 75% of the permitted high-end development property in Greece. Dolphin has almost no debt at the parent level (only a relatively small guarantee), subsidiary debt is non-recourse to the parent and overall debt / assets is only about 22%.
Dolphin is pursuing a novel strategy of bringing very high-end branded luxury second home resort communities to the Eastern Mediterranean where virtually none presently exist, despite very high levels of tourism. For example, at the time of Dolphin's founding in 2005, Greece had only five 18-hole golf courses. According to the company, during the first few years of Dolphin's existence, an enormous building boom in Spain and Portugal had driven coastal land prices in the Iberian Peninsula to €100 to €200 per square meter. By comparison, Dolphin has purchased prime coastal property in the Eastern Mediterranean for €2 to €20 per square meter.  Dolphin went public at 68p per share in 2005, floated a larger offering at 93p in 2006, and an even larger one, underwritten by Goldman Sachs and Morgan Stanley, at 170p in 2007.
As a result of the worldwide credit crisis and the Greek sovereign debt crisis, Dolphin shares have plummeted since 2007. During this time, the company engaged in a number of shareholder friendly activities.  In 2008, the company repurchased nearly 15% of its outstanding shares and sold a number of properties for well in excess of reported book value in aggregate. In 2009, the management team put up a substantial amount of their own net worth to tender for up to an additional 20% of the company for between 34p and 44p per share, ultimately purchasing about 5%. In September 2010, Dolphin sold a 14% stake in one of its properties at a 51% premium to book value, a price which valued this single property at about one-third of the company's current market capitalization.
The managing partner at Dolphin worked in real estate private equity at Goldman Sachs, was a founding partner of Soros Real Estate Partners and was a founder of Mapeley which went on to become the second largest real estate outsourcing company in the UK.
Dolphin's published net asset value ("NAV") is based on quarterly property valuations by Colliers International on an "as is condition and on an open market comparative basis."  Dolphin's most recently reported NAV is 171p per share. Viewed more conservatively, the company's invested capital-as adjusted for share buybacks and realized gains and losses on its properties-is approximately 119p per share.  This, of course, assumes that land purchases done at apparently favorable prices, extensive permitting and zoning approvals, planning, partnering, branding and other activities added no value to what was previously mostly agricultural land. At their current price of 34.5p, Dolphin's shares appear to have a substantial margin of safety and tantalizing upside potential.


 Property sales, project completions, share buybacks
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