Water Assets: PICO owns 100% of Vidler Water Company, Inc., which acquires and develops water resources and water storage operations in Nevada, Arizona, Colorado and New Mexico.
At September 30, 2016, PICO carried the tangible water assets at $42 million and the intangible water assets at $127 million, for total water assets of $169.353 million. The PICO 2014 Letter to Shareholders indicates that, “Considering market comparables, including all adjustments, and the current overall economic outlook in our markets, it is possible to arrive at a potential value for Vidler Water of approximately 2.2 times Vidler’s book value.”
Real Estate Assets: PICO owns 57.2% of UCP (NYSE: UCP), a homebuilder and land developer operating in California, Washington State, North Carolina, South Carolina and Tennessee. PICO formed UCP, LLC, the predecessor company to UCP, in 2007 to acquire finished and partially-developed residential lots in California and Washington State. In 2010, UCP, LLC formed Benchmark Communities, LLC to design, construct and sell single-family homes on lots owned by UCP, LLC.
On July 23, 2013, in an Initial Public Offering, UCP floated 42.8% of its shares at $15 per share, which left PICO with a 57.2% stake.
On April 10, 2014, UCP acquired Citizens Homes, Inc., a residential homebuilder in North Carolina, South Carolina and Tennessee. The purchase price was $14 million with $6 million in potential earnouts. According to PICO, the “Citizens Acquisition provides increased scale and presence in established markets with immediate revenue opportunities through an established backlog. Additional synergies are expected in the areas of purchasing leverage and integrating the best practices in operational effectiveness.”
The goodwill from the Citizens acquisition was written down in the third quarter of 2016.
Securities: PICO owns the following securities.
(1) Synthonics: PICO owns $2.2 million of preferred stock, representing an 18.3% voting interest, in Synthonics.
Kenneth J. Slepicka, a former PICO director, co-founded, and is currently the Chairman, Chief Executive Officer and acting Chief Financial Officer of Synthonics. During 2014, PICO extended a $450,000 line of credit, at 15% annual interest, to Synthonics. The outstanding balance and accrued interest was repaid in April 2015.
(2) Mindjet: At December 31, 2014 PICO owned 28.4% of the voting stock of Mindjet (comprised of common stock, several series of preferred stock, and convertible debt) and held one board seat out of six. Mindjet, of San Francisco, California, is a privately held company that provides business innovation software. Mindjet markets its products worldwide and has offices in the US, Germany, France, Japan, Australia, and the UK.
At December 31, 2014, PICO carried Mindjet at $25.1 million, with an “estimated fair value was $32.9 million.” In 2015, PICO recorded a $20.7 million impairment loss on the Mindjet investment, leaving $1.3 million in value on the books.