RE:RE:Looking for some analysis from a REIT person
MTLfinecity wrote: Hi Jaybanks,
Sorry to hear your loss. CUF is a REIT that I follow quite closely, I still have option positions on this stock, although I own no physical share. Cominar is a textbook example of good assets with poor management team. They own assets in 3 vibrants cities , and i doubt we would see any material selloff from this level..
It's hard to set a target price for Cominar. Its assets are trading at big discount to private market valuations. However, as long as the management doesn't provide a clear guide about value creation. I would not make CUF a big position in my portfolio.
A strategic review that last so long and cost 1M to CUF owners during the Q1 alone is unacceptable to me. I think there are REITs with better management and similar discount to NAV on the canadian market.
I am not a tax specialist, but I believe the payout is based on net income. So if CUF had a net loss during FY 2020, then all distributions would be return of capital (no income, no capital gain, because the loss was so large) . So to predict any payout increase, I would recommend to track the net income .
I literally dont care about the payout ratio. For me, what counts is the NAV and AFFO. As long as the valuation makes sense+good management, I buy aggressively.
Good luck
I fully agree with the assets, years ago I looked up the property list and google mapped most of them and they were in healthy parts of the city's they were in, at the time they also had properties in other provinces including cities of Calgary and I believe a couple in Saskatoon, Winnipeg, and 1 building in Atlantic Canada I believe Halifax. Since then because of the fall of western Canada on the Oil crash they sold off all thier portolio outside of the 3 main areas now. That selloff I believe led to them having a little less than 1/2 the sqare footage of properties, but they were suppose to be stronger profitablity properties.
Management is a struggle to find info from, the more they have fallen in share price the more they throw out a ton of numbers every quarter and you sift through to find the meaningful ones. I also find that they spend a bunch of time justifying themselves on mildly meaningless areas that take your attention away from the more standard numbers, I find reading other REITS info much easier especially confernace calls.
I've been combing through and found last quarter that they say they earned AFFO of 20 cents per share, current dividend only costs 9 cents/quarter that equals your 45% payout number they give. To me they could double that to 18 cents a quarter and the AFFO covers that (and apparently is rising) and to my understanding that's with no ROC as AFFO is straight income generation. That said my understanding is that the ROC would come from depreciation/writedown of the assets and takes a small bite out of the AFFO normally on returning money to the share holders giving us the ROC mix.
Ill be interested to see the next quarterly which should come early August, I think after we pass through $11.50 I'll throw a stop at 50 cents lower. Optimally I'd like to see $13 again but at the current payout I think that's high hopes, we were rising above $15 when the pandemic hit, but at twice the payout. It was on the best and longest rise in over 6 years and started to look like we on solid ground.
I do like the debt restructuring as to my understanding Secured rates should be lower than Unsecured (secured rates are like your house mortgage or a loan tied to your property, unsecured is like credit cards or straight loans from the bank). There is like 1-3% differences in the borrowing rates of those. The fact that we have only 40 million drawn of the 400 million avalible is good, the rest of our debt is in the actually property mortgage agreements.
As you said they don't really mention how they are going to grow the portfolio value, everything I see is more damage control or shrinking the asset base. I haven't seen much acquisitions lately, none that I can remember, just smaller sell offs.