TSX:SOT.DB - Post by User
Comment by
Roxy27on Nov 14, 2016 10:30am
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Post# 25456739
RE:What just happened
RE:What just happenedThere's a few reason's for sell-off;
- based on their presentation 2/3rds of their book is variable rate debt which means they could be getting dinged 15bps on borrowering costs. Add to that the back-up in bonds ~50bps means their forward borrowing costs are going up. The whole REIT sector is getting crushed on this change.
- The AFFO miss is an issue to me. It means the acquisitions this year are materailly not accretive. For the portfolio occupancy to go up and renewing leases at materially higher rents than current levels, and still lower AFFO???? Big disconnect.
- rumours they are looking at buying a portfolio of Calgary DT office towers. Personally, this is layering on additinal risk I'm not a fan of. They've hinted at this in the last quarter so I think its better than 50/50 its true. Mgm't has good history with Dundee and Dundee needs to sell so makes sense. Even assuming they buy at a big discount to cost, the Calgary office market is a disaster right now.
Good luck