RE:Screaming Buy - Loss of sector interestwell i still dont' think it's overly compelling to dream office.
i went thru their properties closer again.
their top 3 properties (robert bourassa and the two gaspe properties in montreal) are incredibly difficult to sell in this enviornment. to like them you have to be wildly bullish on office/tech/hipster types
overall they value their portfolio using 4% cap rates and over $500 per square foot - their implied value today is around $324 psf if you factor in developments to come online by 2025E.
it's harder to gauge the smaller boutique-type properties in toronto, those are likely worth a lot of money and closer to allied's internal valuation gauge but small in scale...
well i am invested in a few office exposed reits and don't think it get smuch worse, i am not so sure with properties like allied has in montreal as they are large and in "hip" areas rather centralized in core d/t toronto next to metros as dream office.
allied looks good at an implied cap rate but i question the leasiability should tenants leave those huge buildings like robert bourassa (nearly 1mm square feet in montreal alone) ??
allied's approved zoning potential is probably worth around $400 million.
for the same implied price, or a bit cheaper, i can get dream office which has far more valuable lands in the most expensive commercial district in toronto plus also residential zoning rights (3 million square feet) off existing cre bases plus a condo jv in the works.
overall i dont think you will lose money on allied even without the distribution but i question what the catalyst will be for allied other than hoping for a broad based recovery??
$3.7 billion of debt is a lot and i am 100% sure their asset value & cap rates are not realistic...