Artis Real Estate Investment Pref Shs Series E T.AX.PR.E

Preffered shares I

[incomedreamer11]

They didn't redeem preffered  sharesand increase  distribution yeld to 8.337%

Looks like no more distribution increase and less power for shares buyback

They have some problem with debt service

[Frankie10]

I view the prefs as debt, not equity - and this is very expensive debt - wow. This is not a good sign with respect to the health of the business. If you're rolling debt above marked cap rates - I don't want to say it. I'm honestly puzzled. We just locked that in for 5 years - just wow. The prefs own our asses now. They must not have sold FCR. If this is the case, I'd like to just

[EstevanOutsider]

They said on CC they would use cash for near term mortgage debt. Never aluded to Pref redemption Also some more shorter term extensions which I assume is because Artis is planning asset sales? Prefs can still be bought back anyhow as business conditions improve and assets are sold?

[Frankie10]

No, the prefs cannot be bought back - not meaningfully anyway. We will need to wait 5 years to fully redeem those prefs. If you're here for yield, the prefs just became very attractive. Higher yield than common units, higher up the cap table (if you're scared of the debt), however no capital appreciation upside (other than the interest).

[EstevanOutsider]

you sure? can't he buy back 10% per year!? i am not here for yield. i think artis is goign to complete diispositions and we'll see significant gains plus yield on the common units. my avg is $8.43. a large position. the conference call stated he'd use the cash from recent dispositions to reduce mortgage debt maturing (22% buying back common units is better then retiring floating

[EstevanOutsider]

also it appears the new prefs are floating rate dependent on the 90 day canada t-bill. so if rates go down as expected as they are, these are unlikely to be much more expensive then the existing 6% yields in the next year based on current yield curve. j series prefs were fixed to 6%. makes no sense to redeem them in my view. seems some on here may be short sellers artis has alot of short

[Frankie10]

Yes you are correct J will be floating (with a fixed floor of 6%) vs. Series I, which was fixed at 6%. Series J will be: The distribution rate will be reset on April 30, 2023 and every five years thereafter at a rate equal to the greater of (i) the sum of the then five-year Government of Canada bond yield and 3.93% and (ii) 6.00%. Having variable debt with a fixed floor of 6% seems like

[Frankie10]

FYI - current 5YR is 3.02 + 3.93 = 6.95 not 8% - I guess the prefs trade at a discount and therefore yield is higher. Just hit me - if the prefs trade at a disocunt, then it makes sense to not buy them back at par and rather just continue to buy them back at the market at a discount. Similar to Saylor buying back his own debt for a 20% disocunt. Will hold opinion until Q1 results. have a

[EstevanOutsider]

i do appreciate your transparency on being short. i wouldn't be surprised if snakeyboy is also short. my avg is $8.43. i think you got help from the forced etf liquidiations and negative sentiment overall the short interest likely gives longs some ammo. i was a bit early but very optimistic here. not redeeming the prefs was the prudent thing to do in my view. expedited asset sales likely

[DZtrader]

Haa, had a good little chuckle. I truly didn't think you were as long the stock as you suggested, but if I am being honest didn't really think you were short either. Not sure why you wouldn't have come out and said you were short, not sure many would care. Even more doubtful a place like this forum moves the needle in the slightest. As for getting rich on 10k shares, ummmmm ok, guess

[DZtrader]

I would also guess, if you were smart, you would have covered on this last dip as she probably gets a bit more interesting down here, risk managemeant and all. Never hurts to have close to covid low puts though for the right price if you were early enough. Heck, you might even get "rich"!  Cheers, DZ

[Reece1986b]

It will be interesting to see where Artis goes from here. Has Artis recognized the importance of having liquidity at this time or does Artis think there are such bargains right now in public markets that they can't be bothered with such things as redeeming preferreds? 

[Frankie10]

DZ, I was being sarcastic. I share every buy with you guys in real-time. 9.5k shares @ 8.90. Same boat as you. Similar entry thesis re timing the new NCIB at a depressed valuation. We pulled back the layers here together including the disaster that is Cominar/Iris. Hope you read my last post which rationalizes why the management rolled the prefs and the fact the J will currently cost the trust 7

[DZtrader]

Hey Frankie, good on ya Bra. I will admit I was quite confused because rarely can people genuinely enjoy price destruction (within reason) after initiating positions and keep a straight face. Being short, while obviously the smart money as of late, didn't quite compute either. I hadn't really suggested you had taken a victory lap at any others expense for what its worth but refreshing to

[rad10]

Alternatively - rather than redeeming them at par...  they can buy them discounted through an NCIB or SIB.  Isn't the secured debt the priority?  

[Frankie10]

Prefs are essentially secured debt. They have an interest cost and are above commons in the cap table, therefore they are secured by the equity of the trust. The priority, in an ideal world where capital is not tight, is the LEAST attractive debt. In my opinion variable debt with a fixed 6% floor is about the LEAST attractive debt I've ever seen a REIT carry. It appears you've read

[rad10]

The discount is almost 20% isn't it? Theres all sorts of stuff they can do to increase that discount.  A couple of negative press releases, slash the divi on the common and give impression preferred although cumulative is at risk.  (Aimia playbook) etc etc. Preferreds have been a good place to hang out as a retail investor. I try not to churn my holdings, so I was pleased they didn

[rad10]

I see the "I "s got run up to near parity by the speculators.  The discount will come back.  They won't stay at that level - especially with another interest rate rise. I'll kick the tires again when the dust settles.

[DZtrader]

Had they any alternative options they would have obviously taken them. When you reference worst of both worlds with a floor at 6 you gotta know who is in the drivers seat here, thus the outsized concerned with the huge debt wall they are facing. Admitedly, I am not as familiar with the nuances of some of these debt structures or facilities but just enough to know when to worry. Purely from a