A more realistic version of what to expect versus the non-sensical, speculatice thoughts of our very own village clown (Snakey) - if I say the other word, this post will be flagged. I believe Samir's focus has shifted to the debt, as evidenced by recent quarter sales of Dream (SIB) and FCR (Q1 dispositions and subsequent event note).
Firstly, it's important to understand Artis' debt. The mortgages (weighted average) and senior secured debt are manageable at rates at or below 5.6%. The problem rests with the credit facilities which cost us prime+0.7% or 7.6% per annum. As I state later in this post, this specific tranche of debt no longer makes sense in our cap table, given where we have marked the value of our assets (cap rates used to determine IFRS values).
I believe the game plan, with respect to the debt, is to roll the mortgages that come due, repay the 3.8% senior secured debt coming due later this year or roll it at a rate lower than our credit facilities at 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 rates needs to be > the marginal borrowing rate... at ~7.6% (prime +0.7%), it's very compelling to sell our less profitable/desirable assets for an implied cap rate below our 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 make sense and THEN we can contemplate a SIB on the commons or buying another REIT. Impossible to say now 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%)... I expect to watch this number disintegrate over the next couple quarters.
Cheers.