The simple answer is "not much".Assigning a dollar value depends...

The simple answer is "not much".

Assigning a dollar value depends on what, when and how you are valuing the assets.

For example, in their HY report (to 31 December 2020) they report net assets of around $33.6m (with no intangibles listed). But the elephant in the room are their lease liabilities (~$186m) and corresponding Right of Use (~$146m). A modest impairment to their RoU, without a sympathetic (and unlikely) offset to the liability could easily evaporate half of their reported net assets.

Then there's the cash burn. Commentary from management suggests they were still burning cash at HY cut-off, so there without an improvement on H1 they could potenially burn through another $10m. Maybe fixtures, fittings, and agreements with anchor tenants are still worth something, but I'd hazard a guess it's not enough to cover the liquidator's fees. If you're looking for a net-net, this ain't it.

Impairments aside, and as I mentioned above, there is a chance VOL won't recover in time (to out-run the cash burn, and their competitors). To put it bluntly, any value above zero depends on demand returning while containing costs.

Costs are somewhat within VOL's control. The great uncertainty is demand.

How do we estimate changes in demand?
Measuring changes in demand for a business like VOL is difficult. There are many ways we could do this. For example, seek to monitor the total number of businesses with an office address at a VOL location (and monitor this change over time), then estimate which level of service they are paying for and their rates. Sounds like a fair approach, but too many variables and room for error, not to mention these types of analysis often lead to overconfident (and plainly wrong) analysis.

An easier (and I would argue, in this case, a better) approach is to take a step back and focus on indicators of demand drivers, and the company response.In VOL's case this is very simple. At risk of stating the obvious, here are a few indicators that might be useful:

• Demand (using Victoria as an example): Melbourne's CBD isn't quite back to "normal", but the number of office workers is steadily increasing. It's hard to judge numbers, but in recent weeks CBD traffic has been tracking at 10% - 20% above 2019 levels and trains are beginning to fill up again. Applying these changes to a weighted average of (pre-COVID) surveys on how people travel to work suggests that somewhere between 70% - 80% of office workers have returned to the office. Discussions with those working in the Melbourne CBD estimate that based on the size of "crowds on the streets" and coffee/lunch order queues, the actual number feels to be toward the lower end of this range. Whether it's 70% or 80%, this change is dramatic. Key takeaway is that a significant portion of this rebound has happened in the last 4 - 6 weeks.
• Company response (again, using Victoria as an example): For the last 5 - 6 weeks Victory Offices have been advertising for staff to fill positions in their Melbourne (CBD), Box Hill and St Kilda offices. Much of this will be refilling positions that were terminated last year, but keep in mind the company's focus on cost management: Active hiring could be one indication the company is responding to a revival in demand.

There are a handful of other very simple proxies that give a sense of changes in demand and company responses.

On the matter of price and volume
One final comment, as it seems many (most) people seem more focused on the day-to-day price rather than the value (or moreso, potential value) of the business.Trade activity over recent weeks has been very interesting. A few weeks back we saw some large limit orders placed, soon followed with several days of relatively heavy trading. We soon learned (thanks to a Form 605) that most of the volume was Perennial selling down. Following the 605 they had around 2m shares left -- an insignificant quantity and, quite frankly, a level at which one would expect signals their intention to cut and run. I thought at the time that given the low volumes traded most days, a motivated seller with these volumes could create a good opportunity for prospective buyers (Note: It's not just Perennial dumping VOL, Regal actively wound down their position last year). Who knows if Perrenial has successfully unwound their position, but if/when they do, trade volumes could dry up significantly.

All the best.