TSX:AD.DB - Post Discussion
Post by
retiredcf on Apr 04, 2022 9:08am
RBC
Outperform
TSX: AD-U; CAD 20.21
Price Target CAD 25.00
All values in CAD unless otherwise noted.
Priced as of prior trading day's market close, EST (unless otherwise noted).
Alaris Equity Partners Income Trust
Alaris announces redemption of its investment in Kimco for US$68.2MM
Sentiment: neutral
Our view: The redemption from Kimco was expected and we think Alaris can readily redeploy the capital into other investment opportunities. Alaris has been very active in capital deployment over the past year, which we think should help generate higher cash flows and, subsequently, distributions to unitholders.
Summary: Alaris announced its investment in Kimco was redeemed for gross proceeds of US$68.2MM following the sale of Kimco to a third party. The US$68.2MM payment consists of: (1) US$44.7MM for Alaris’ preferred equity stake; (2) US$13.7MM of deferred distributions to Alaris; and (3) US $9.8MM to repay promissory notes. In connection to the sale, Alaris will fund US$1.1MM into an escrow account to cover potential indemnification obligations plus an additional indemnification obligation up to a maximum of US$9MM.
The Kimco investment generated an unlevered IRR of ~13% over an 8 year period and US$52.1MM in total returns, of which US$21.6MM have not yet been recognized.
Following the redemption, Alaris will have C$137MM available for investments with pro forma total senior debt to ~EBITDA being 1.9x and the run-rate payout ratio remaining in the 60-65% range.
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