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Cominar Real Estate Investment Trust Unit T.CUF.UN


Primary Symbol: CMLEF

Cominar Real Estate Investment Trust is a Canadian REIT involved in the ownership and management of properties throughout the Canadian provinces. Cominar's real estate portfolio comprises a mix of office, retail, and industrial and mixed-use properties. While industrial and mixed-use assets are the most numerous and command the most square footage in the company's portfolio, office and retail locations combined represent the vast majority of the portfolio's total value. Most of Cominar's properties are located in the Greater Quebec City and Montreal areas. The company derives nearly all of its revenue from rental income from its investment properties. The source of this revenue is largely split between Cominar's office and retail locations.


OTCPK:CMLEF - Post by User

Post by incomedreamer11on May 07, 2021 10:35am
217 Views
Post# 33151824

More update from Scotia after conference

More update from Scotia after conferenceCominar REIT We See an Interesting Short-Term Trade

OUR TAKE: Neutral.

We maintain our SP rating, increasing our TP and Current NAVPU by $0.50 and $0.25 (+0.25x Target Multiple) despite a sluggish Q1 print (Exhibits 1-2 = key estimate changes).

CUF gave up most of its recent gains yesterday (-3.5% vs. -0.7% for sector; now relatively flat vs. Sector in the past week) as CUF didn't beat consensus FFOPU nor did the Strategic Review conclude; it had been helped by the "risk-on" trade. That said, it sounds like "the end is near" on the Review, which we still view as a positive catalyst on the margin (with some benefit of the doubt).

We view a Positive outcome including the sale of Enclosed Malls with newly zoned residential upside (i.e., low-cap rate sales = FFOPU growth AND less debt) or an SIB. Doesn't fit our Growth preference, but worth a short-term look below $10.00. CUF ranks 4th quartile with 3.8% NTM NAVPU growth (vs. 6.2% sector avg.), but so does its 19% discount to our NAV (-36% vs. $15.12 IFRS NAVPU).
We are shorterterm buyers as we believe there is more upside than downside coming out of the Strategic Review, below $10.00/un.

KEY POINTS Capital recycling quiet pending strategic review. CUF Q1/21 assets HFS = $0 although it is marketing 110 O'Conner in Ottawa (vacant 0.2Msf Office building). A strategic buyer is still interested in a ~$200M Montreal Office building, but still needs government financing. That said, CUF Q1 liquidity of $381M is well above a min. threshold of $200M , incl. an est. $120M spend in 2021 on development ($30M, incl. at Centropolis), capex, leasing, etc. While leverage is high , post-pandemic EBITDA stabilization should help. Net-net, we attach a low risk of forced asset sales at poor pricing or dilutive equity issuance at this stage. CUF is still one of the cheapest REITs on a (NAV) mean-reversion basis, while AFFO spread to sector also looks good.

CUF is trading 17% worse than historical avg. vs. the Sector on NAV , with Allied, FCR and REI (last two based on consensus) in the same ball-park. CUF 7x discount to Sector on NTM AFFO is 5.6x higher than avg. or 2.6 STDEVs . Lots of moving parts, but occupancy and SPNOI should improve in 2021.
We commend CUF's disclosure of "one-time" items in the Q1 press release; there were lots ). CUF sees lower bad debt expense  and ~100bp higher Retail and Industrial occupancy by Q4 (flat Office).
The growth + 5%-10% recent positive lease renewal spreads (led by Industrial at ~20%), drives our NAVPU growt
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