SmartCentres Real Estate Investment Trust T.SRU.UN

RE:RE:RE:RE:RE:Results look fine

[logicandinertia]

You can see the conundrum that Mitch faces, and what drives this frustration.  He has a number of very exciting projects that could potentially be quite accretive for shareholders.  However, these development projects require lots of capital, which is funded by a combination of equity and debt.   Given that there is typically leverage limits to all REITs (and especially retail and office exposed in this Covid world), it is ideal when the share price is trading above NAV, as raises are accretive and then allow more debt to be issued.  In January 2019, SmartCentres issued over $200 million in equity at $31.25 per share, north of NAV at the time and accretive.  

The longer that the share price languishes well below NAV, it makes things tougher, as they don't want to issue dilutive equity, but that may be a pre-requisite to be allowed to issue more debt, given linkage between debt/equity ratios attached to debt convenants.  

This is an issue facing many REITs, as this dynamic raises their blended (debt and equity) cost of capital, a key variable determining the appeal of projects.  

I am a long term supporter and holder of SmartCentre stock, but this one may require some patience...