TSX:NXR.UN - Post by User
Post by
anon314on Aug 24, 2021 10:00pm
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Post# 33759344
Desjardins Research Report
Desjardins Research ReportBy Kyle Stanley, Michael Markidis and Alex Leon
he Desjardins Takeaway
We are resuming coverage following NXR’s C$112m equity offering. The proposed acquisition of ~C$359m of industrial assets highlights management’s ability to source off-market opportunities to accretively grow the portfolio. The 29% increase in public float should enhance trading liquidity, an issue for some institutional investors; industrial exposure (percentage of NOI) increases to ~80% (from ~73% previously). We are increasing our target to C$13.25 (was C$13.00).
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Estimate revisions. Our 2022 and 2023 FFO outlook improve ~5% and ~3%, respectively. Notwithstanding the significant progress made on the transition toward a pure-play industrial REIT, NXR’s pro forma leverage increases only modestly to 8.3x D/EBITDA (8.1x previously). NAV revisions were immaterial.
Valuation
NXR trades at a 5.6% implied cap rate (4% premium to our NAV). Our C$13.25 target is based on a 10–15% NAV premium and equates to ~15x our 2022 FFO estimate.
Recommendation
We reiterate our Buy rating.