Morguard Real Estate Investment 5 25 convertible unsecured subordinated debentures T.MRT.DB.A

new debs, finally

[HermannHaller]

MRC buying $60mm of $150mm new issue.


https://www.newswire.ca/news-releases/morguard-reit-announces-150-million-offering-of-convertible-debentures-and-forthcoming-redemption-of-4-50-convertible-unsecured-subordinated-debentures-863920629.html

[Mrguillaume]

My quick take on the re-finance: I was disappointed to see a higher yield on the new debentures but given the negative street sentiment in this name the rate of 5.25% is what it is. No change in interest costs - $175M @ 4.5% = $150M @5.25 ($7.875M per year). The conversion price of $7.80 is a 40% premium to the current price but is 50% below NAV suggests that no major catalysts will show up

[flamingogold]

I believe they have the room to up the divy now to 3¢ ($0.36/yr) or 4¢ ($0.48/yr) so both your targets of $8 or $10.70 respectively are doable. And, in each case MRC can convert the debentures into trust units and come out ahead along with shareholders buying today.

[slst]

Perhaps I was expecting too much from management, and now have to wait and hope for the best. This is a stunning snub to outside shareholders and a show of weakness or likely some patronage to the financiers.  (So sorry if I sound cynical) The Current Book Value is $18 after Covid.  The previous conversion price was $20 set 5 years ago.  And now they give it away at $7.80!!! 

[Mrguillaume]

"Perhaps I was expecting too much from management" Yup, Morguard is a one man show with the patience of a monk. He controls all of it and doesn't need to own 100%. So, sit back and enjoy the income. The bottom looks to be in and an increase in the distribution is coming.

[HermannHaller]

I think you make a good point, but if I could just add: when the last deb was issued with a $20 conversion, the BV was probably well above $20. I'm not sure anyone, including Sahi, evers expect this to trade in-line with BV. as a unitholder, if this gets anywhere near the $7.80 conversion price, up 40% from today, I will be very happy.

[WEBuffettisbest]

The new debentures seem to be sold out at Rbc, still some available at TD

[Malpeque2]

It's the stunning snub.   Your right on.    RAI is greedy and doesn't care or want to share anything with his outside minority shareholders.      So this deal makes him look STUPID and GREEDY,  heh.    Yes he easily could have financed the debenture repurchase with an asset sale or two,  and or a mortgage on some unencumbered