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KEG Royalties Income Fund T.KEG.UN

Alternate Symbol(s):  KRIUF

The Keg Royalties Income Fund (the Fund) is a limited-purpose open-ended trust. The Fund’s objective is to provide consistent monthly distributions to unitholders at the highest sustainable level. The Fund, through its subsidiary The Keg Rights Limited Partnership (the Partnership), purchased The Keg trademarks and other related intellectual property (the Keg Rights) from Keg Restaurants Ltd. (KRL). The business of the Partnership is the ownership of the Keg Rights and, through a License and Royalty Agreement with KRL to exploit the use of the Keg Rights and the collection of the royalty payable under the License and Royalty Agreement equal to 4% of gross sales of Keg restaurants included in a specific pool (the Royalty Pool). KRL’s principal activity is the operation and franchising of Keg steakhouse and bar restaurants in Canada and the United States. The Keg GP Ltd. is the general partner of the partnership and administrator of the Fund.


TSX:KEG.UN - Post by User

Post by logicandinertiaon Oct 13, 2020 5:47pm
253 Views
Post# 31711360

Distribution increased 43%

Distribution increased 43%Keg bumped dividend by 43% to $0.60 per annum for next three months, despite Covid-related  closures in Quebec and Ontario just reinstituted.  So this brings the distribution to 52% of the level prior to Covid-19 shutting things down.

Stated that "should a surplus in cash arise over next three months, as a result of royalty fee income exceeding current expectations, a special distribution will be declared in December 2020 to resolve that issue."

Spoke to customers being "supportive", yet cautioned that Covid related closures offset that for the near-term.    

At current level, the bump takes yield to 7.7% based on today's close.   

DOn't really own this thing because of next three months, but encouraging bump.  Keg's stability and market position within CDN market makes it a survivor.  And the landscape should be well consolidated by mid-2021.   

My own assumptions:   assume that post Covid, Keg can get back to 80% of pre-Covid run rate levels by latter 2021, that would mean $0.92 in run rate distributions and at a 7% yield, a $13.15 unit price by Year end 2021.   A 68% capital return from current level and 7-10% in distribution yields, for 15 month return of 75-78%.    

Good luck.
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