RE:RE:"I expect the strongest financials we have published in YEAR Correct. Every balance sheet ratio will improve as the capital you outlined is focused on debt management. This is now clearly Samir's #1 priority.
Income statement will improve on a per unit basis due to using sale proceeds to:
a) buy back units (implied cap rate on common unit purchases > implied cap rate on property sales);
b) repay debt (marginal borrowing rate being credit facilities at prime plus 0.7% > implied cap rate on property sales);
Also, industrial properties came online in Q1 (Blaine and Park Lucero) - full quarter of revenue for leases that were 100% occupied upon completion, and hopefully the commited % moves to occupied and we start collecting rent on those leases as well.
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I believe the game plan is to roll the mortgages that come due, repay the 3.8% senior secured coming due later this year or roll it at a rate lower rate than credit facilities of prime + 0.7% (likely the latter), and repay all or the majority of the $870M+ credit facilities.
We are in the real estate game folks, for debt to make sense, cap rate needs to be > borrowing rate... at ~7.6% (prime +0.7%), it's very compelling to sell your less profitable/desirable assets for an implied cap rate below your marginal borrowing rate, strengthing the balance sheet and income statement simultaneously.
Once the credit facilities are repaid, selling assets to repay debt will no longer makes sense and THEN we can contemplate a SIB on the commons or buying another REIT. Impossible to say which option will be more beneficial until that time comes - take what the market gives you.
As at the end of Q1 there was $871M of work to do (credit facilities at prime+0.7%)... watch this number disintegrate as Samir and Frankie do the Thanos snap on the credit facilities.
Hope you all had an enjoyable long weekend.