HermannHaller wrote: From NBF: Alaris Equity Partners Income Trust
Q3/21 Results: Partner performance YTD trending
Normalized EBITDA in line with our forecasts
Revenues were $42.9 million, beating guidance ($37.5 million), our forecast
($37.5 million) and consensus ($38.1 million) due in part to an additional US
$3.4 million in deferred distributions received in the quarter from Kimco.
Normalized EBITDA came to $33.3 million on 77.6% margins, in line with our
$33.1 million estimate (88.1%) and just below the Street's $34.5 million call
(90.6%). The EPU print of $0.97 beat both our $0.44 estimate and consensus
of $0.48 due primarily to a net unrealized gain on investments at fair value
of $26.1 million in the quarter.
2022 reset trending ahead of our forecast
Based on YTD partner performance levels, management expects a +2.0%
distribution reset in 2022, adding $2.6 million to revenue. This is nominally
ahead of our long-term assumption of an annual +1.5% reset, prompting a
slight upward revision in our 2022e revenue estimate.
Q4/21 guidance calls for $36.2 million in revenues
Following the redemption of FED in October (see our Note), run-rate revenue
is expected to hit $141.8 million including an assumed $3.2 million in
common dividends. Given guidance for $13 million in annual general and
admin expenses, and adjusting for interest and taxes, this results in a
company calculated run-rate payout ratio of 65-70%. We forecast a similar
68% payout ratio in 2022e, potentially supporting additional distribution
growth to Alaris unitholders in the quarters ahead.
Reiterate Outperform and maintain $27 target
We reiterate our Outperform rating as an in-line normalized Q3 with
non-recurring upside surprises supplements the recent FED redemption,
restocking Alaris's war chest: we calculate dry powder of ~$160 million pro
forma the US$80.9 million cash injection from FED. We remain confident
in management's ability to redeploy available funds to new and existing
partners in a timely manner and highlight a $260 million+ deployment hot
streak YTD. With fairly minor adjustments to our estimates, we maintain
our $27 target based on a long-term DCF analysis using a 12.5% discount rate
(was 12.6%). We may review our estimates following the conference call at
11:00 AM ET on Wednesday, November 10, 2021 (866-475-5449).