Sir Royalty Income Fund T.SRV.UN

Alternate Symbol(s): SIRZF

Financial Services Asset Management

SIR Royalty Income Fund (the Fund) holds investment in SIR Corp (SIR). The Funds' investment, SIR is engaged in the business of owning and operating full-service restaurants in Canada. SIR has concept restaurant brands, including Jack Astor’s Bar and Grill, Scaddabush Italian Kitchen & Bar, and Canyon Creek Chop House, signature restaurant brands, such as Reds Wine Tavern, Reds Midtown Tavern, Reds Square One, and The Loose Moose, which are used by SIR under a license agreement with SIR Royalty Limited Partnership (the Partnership. The Fund receives distribution income from its investment in the Partnership and interest income from the SIR Loan. The Fund indirectly participates in the revenues generated under the License and Royalty Agreement through its Investment in the Partnership.

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Sir Royalty Income Fund > Will a resumption of dividend sink the SP?

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Comment by BlueJay2020on Jul 05, 2021 2:09pm

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Post# 33493446

RE:RE:RE:RE:RE:Will a resumption of dividend sink the SP?

Hi

You've completely misunderstood me and I completely agree with you. My point was to respond to the post that said the SP would drop if the dividend was not restored to near pandemic levels. If it was restored to such, the SP would be $17. The current SP of circa $8 assumes an annual distribution of circa 55-60 cents at a 7 per cent yield. In other words, a much reduced distribution is already (effectively) baked into the price.

I believe that any reinstatement of the dividend will have a significant positive impact on the SP, not negative. Especially with the added bonus of back-pay from the last 15 months.

Lazaros wrote:

BlueJay2020 wrote: Nonsense.

A $1.20 dividend, assuming a yield of 7% would imply a SP of circa $17.

jcw604 wrote:
The SP is almost at the same level as pre-pendamic. It need to be not too far away from the original dividend.

Respectfully BJ, a $1.20 is extremely unlikely in my opinion. That is almost at the same level as pre-COVID - and even then it was unsustainable with the declining SSS trends; hence the falling share price at the time. SIR has also closed quite a few locations and will have fewer locations to generate the cash for the distribution. It will be very hard for them to generate that same level of cash for some time, barring any inflationary gains.

Call me a pessimist, but I would budget for a $0.36-$0.60 dividend to start ($0.03-$0.05 monthly) until we have more clarity as to the longer term outlook. Even the other royalty trusts have not returned to their original distributions and have had less onerous SSS issues. If we could get to $0.08, I would consider that a victory.

Also, their disclosures are also pointing to a much reduced distribution. However, I hope I am missing something and you're the one who's correct - I'd rather make $1.20 per fund unit.