RE:RE:Business UPDATE NR from AX.UN = Copy
Down 45% from March high ... this is where I see a large disconnect in sp. For comparison, industrial reits like Granite have been holding their own: Granite trading only 10% off its high. This is understandable: 98% of rent received in May, along with anticipated strong future demand for industrial space. And yesterday they announced a bought deal of 252m. Companies typically raise funds, and dilute shareholder base, when sp is strong. So the optics, and the underlying business model seem healthy.
For Artis, industrial space comprises 35% of portfolio, office 47%, retail 18%. They are collecting near 90% of rent for May and stating that most outstanding rent will be collected. As strong as Granite? Not presently. But still strong. And while the future is never crystal clear, the world, Canada and the US in particular, are re-opening for business. I'm betting there will not be a second closing simply because the financial cost would be too high: governments will make a cold calculation and accept the risk of more illness/death rather than close down again. Meaning that, eventually, we will return to a pre-pandemic business environment and all rents, or nearly all, will be collected. Add to this the fact that the CEO has bought more than 600k worth of shares this month, and the company continues to buyback and cancel shares ... actions that telegraph (1) current cash flow is strong and (2) outlook is strong. For Artis, and several other REITs, its only a matter of time before returning to pre-pandemic share price. As for the possible downside, there is nothing to suggest a dividend cut given payout ratio and using cash to buyback shares. While share price itself is always an unknown, yesterdays sp run shows what will happen once there is continued reporting of increased percentage of rent collected. For now, I sit and wait, and buy when sp down, and collect monthly dividend. GLTA