TSX:AX.PR.E - Post by User
Post by
HermannHalleron Jun 21, 2021 3:46pm
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Post# 33421699
CIBC raises target price
CIBC raises target price Monetization Of GTA Industrial Portfolio Surfaces Value
Our Conclusion
While we are not surprised to see a large industrial portfolio disposition (such is certainly in line with management’s guidance), the sub 3% effective cap rate achieved on the transaction was more favourable than we would have expected, and speaks to the extremely high demand for industrial assets at this time. Indeed the agreed upon sale price, which is 36% above the portfolio’s IFRS carrying value, would suggest that the remaining industrial assets (which would represent an estimated ~32% of pro-forma NOI) could also fetch a significant premium to their book value upon disposition (if they were so disposed, although not our base assumption). Our NAV estimate increases to $15.50 (from $14.50), primarily reflecting the $183MM net cash gain on the transaction (net proceeds of $734MM vs. IFRS value of $551MM). Our price target increases to $12.50 (from $12.00), and is based on a ~20% discount to NAV. While the current discount to NAV of 26% is indeed appealing, we remain Neutral rated on the notion that many investors may take a wait-and-see approach on the business transformation strategy, which may somewhat preclude valuation levels from expanding materially over the short to medium term.