RioCan Real Estate Investment Trust T.REI.UN

RE:RE:RE:RE:RE:RE:The problem with the distribution cut was the timing

[SirCharlesV]

I'm just using BPY as an example, I haven't bought any shares yet. I'll decide in early January what to do with my REI shares. I'm not selling until next year because I already have significant capital gains this year from other holdings that I've sold. I may dump it if there are better opportunities in early January, or hold until it hits $24, which is a price I will definitely sell at. I'm not holding this once it hits current book value because the upside potential is limited and the distribution yield is inadequate.

Another good REIT most people have probably never heard of is True North Commercial Reit (TNT). They have lots of government tenants and a safe distribution currently yielding over 9%. A good option for those relying on their distributions for income. 

CANCDN wrote:

PS, Thier share price did not increase based on merit, it increases on BAM buying more shares before they take it in house.

 

SirCharlesV wrote: That's a very ignorant comment. Trying to get rich quick from BPY? Their share price has appreciated dramatically in the past 2 months. Investing in BPY is more about dividend safety than share price appreciation. I disagree that their dividend will be cut, they're backed by BAM, and if they didn't cut it the past 9 months, they're not going to cut now when you can see the light at the end of the pandemic tunnel. 

 

I know you're married to REI, but try to be objective for once. REI has horrible management, and the only REIT to cut their distribution this late after multiple vaccines have been released, and after the government announced rent subsidies for all affected business'. It's just horrible timing and completely unnecessary. They could easily have escaped this pandemic without cutting. I guarantee they'll be in no rush to raise the distribution anytime soon. There's just so many better opportunities out there after this cut. The distribution is no longer attractive for most investors, plain and simple. Especially for a REIT that is not taxed favourably in a non-registered account.     
 

CANCDN wrote:

Sonshine is a liar.. but this was the right choice after reflecting. In fact, until the 50 million pipeline is fully built out, they should never pay more tha  60% of FFO ever again. The NAV is going to dramatically increase over the next 5-10 years and you bring on high NOI properties, pay down debt monthly and then average annual property value increase.

your comments of BPY show you are not an investor but trying to get rich quick. BPY literally has the worst balance sheet of any REIT trading on the TSX by far. Without getting money funneling from BAM, they would be bankrupt. 

BPY is either going to cut dividend by 80% or will be taken private under BAM. Any other scenario doesn't make sense and you can already see grumbling from BAM shareholders on why we keep bailing out BPY. 

I am a former BPY holder and then read the Q2 results and was absolutely shocked at what is presented. They literally payout 175% of AFFO and were paying out 100%+ of AFFO before pandemic hit already.

 

SirCharlesV wrote: I personally don't believe they will raise the dividends anytime soon. Sonshine's word is clearly not reliable and he's not exactly a bastion of integrity. There was no reason to cut the distribution at this point, they could've continued paying it especially since the government is paying their tenants' rent until summer, and at that point the lockdowns will be over and a significant portion of the population will be vaccinated. 

I will see what opportunities exist in earlyJanuary. If there are better opportunities, like BPY, I'll switch over. If not, I'll wait until this hits $24 and will certainly exit at that point.   
 

 

gashole wrote: #3 when it hits nav I think they would have already started increasing the dividend again, I dont see $24 until late 2021. Rents will be back to normal before this in my opinion, likely summer 2021. When Sonshine is gone and dividend is increasing I think Nav starts going up also, I dont see a lot of sellers in that environment, perhaps after the last ex dividend date for the 12 cents though... maybe but I suspect that will not be a lot.. as I said the undertainty regarding the dividend is gone now, I suspect as long as something really bad with covid doenst happen, the shares are $19 by end of January. 

SirCharlesV wrote:

If REI cut the distribution between March-May like everyone else there wouldn't be so much uproar from shareholders. For those asking if SRU or other REITs will follow REI and cut their distribution? The answer is no. The time for cutting the distribution has long past. I don't believe any REITs have cut since May, but REI does it 7 months later, after all the vaccines have been announced. Does that make any sense? We're on the way to recovery, and the government is paying rent for all affected business' anyways. 

I know it's tough to ask yourself the tough questions as shareholders of a company you love and are heavily invested in, but it's in your interest to do so. 

As I mentioned earlier, pay close to executive compensation for REI in 2021. If they're using any part of that $150 million to give themselves a pay raise when they're already making millions a year would be wrong and unacceptable. Especially when they're giving shareholders a 33% pay cut. If they do give themselves a raise I would hope the shareholders let REI know how they feel about that. 

As for when shareholders will exit after the cut, there are 3 options:

1) Exit the morning after the announcement i.e. last Friday, which wasn't a very good move since everyone was rushing for the exits at the same time. 

2) Exit in early January after the last full distribution is paid. We should see another fairly large shareholder exit around then.

3) Exit when the unit price hits around NAV, or around $24. I'm sure many more will exit at that point when the upside potential is limited and the distribution yield remains below average. At this point there's very little reason to hold.