TSX:AX.P.E - Post by User
Post by
garyreinson Oct 14, 2023 7:28pm
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Post# 35684019
Option E
Option EThese numbers are arbitrary but its basically just taking out office into its own reit. While it sounds dumb at face value, if they put the emphasis on this office REIT has having very low leverage, with a healthy payout ratio, it could hold up better than TNT/SOT/Dream office. Looking at PMZ as the model.
- Office REIT with 30-35% debt to GBV. 9% yield with AFFO payout ratio of 60%.
- Book value: $8, trades at $4 or 50% which is what office reits trade at.
- Retail/Industrial REIT- more levered with 55% debt to GBV. 7% yield with AFFO payout ratio of 80%.
- Book value $8, trades at $5 since it contains no office.
Total value between both REITS after split is $9.
This model somewhat worked for HR REIT when they spinned off PMZ.
Obviously Manji cannot know what the reits will trade at but there is a case to be made that they may be valued better as pure plays, emphasizing the office reit has having a pristine metrics and balance sheet so it wont sink like a stone.
GLTA
-Gary Reins