RE:RE:Down 12 %Ladislav3 wrote: I think the dividend cut had already been priced in for the most part when we dropped from $1.50 to $1.00.
Looking at the Q3 results, I don't think the cut was due to the payout ratio, which was around 50%, but rather that they are biting the bullet and finally are going to address the debt instead of just shuffling assets to generate Slate management fees.
At the current price, assets are priced in at 75% of book value. That said, since the debt is 65% of assets, selling at 75% of book value wouldn't move the debt ratio much.
For example:
- They can sell 500 mil of assets at 90% of book value, this would reduce debt to book value to 56%.
- They can sell 500 mil of assets at 80% of book value, this would reduce debt to book value to 60%.
So, I believe they will need to sell closer to book value to lower the debt ratio, otherwise it doesn't make much sense to do it. If the assets put for sale have a value in proportion to its GLA, and they are targeting 40% of assets, then achieving sales at 90% of book value would result in a lower debt ratio of 49% after asset sales. I think 50% is probably the number they're thinking about and this resulted in approx 40% of GLA having to be sold. If they can achieve that, it would be good news for shareholders as it could justify a higher value for shares. Obviously, that's if they can regain shareholders confidence which has been eroded badly.