RE:$52m debt is declining, and also covered by 2 properties Some further thoughts on relative values of SXP's Etobicoke and Montreal/ Lasalle properties.
If Etobicoke worth $26m, then Lasalle may be worth $30m, for a total of $56m ?
That works out to about $2.10 per share, and more than sufficient to pay off ST and LT debt, if properties were sold and leased back. Yes, rent would go up, but drop in interest charges should offset higher rent, and SXP's financial risk profile goes way down.
I appreciate that many buildings have unique characterstics, so this is simply trying to ball park values.
The relative values of 273 per sq ft GTA and 170 per sq ft Montreal in previous post (taken from CBRE website) may not be the final word on relative value for GTA vs Montreal.
Cushman Wakefield Marketbeats Industrial report indicates Montreal asking rents are $8.51 while GTA $11.06, meaning Montreal is about 77% of GTA.
So if assume that Etobicoke 96k sq ft property is worth about $26m, that implies the larger Montreal/ Lasalle 139k sq ft property is worth 77% x $26m x 139/96 = $30m (as compared to $24m using average per sq ft values from CBRE website).
So that would mean total value of 2 properties of about: $26m + $30m = $56m
Following quotes from Cushman Wakefield Marketbeat Report 2021Q3
Montreal:
"PRICING: No slowdown in sight The average net asking rent in the GMA remained relatively stable over the last three months, closing the quarter at $8.51 net per square foot (psf). Conditions remain landlord favorable as declining vacancy rates maintain substantial upwards pressure on rental rates in most submarkets. The average asking rate is expected to increase substantially as new product with asking rates quoted upwards of $10.00 psf is delivered over the next 24-48 months."
Toronto:
"PRICING: Asking Rents Push Higher The average asking rent has risen for 16 consecutive quarters since the fourth quarter of 2017. From a low of $6.29 per square foot (psf), the average rent increased by over 75% in the past four years to $11.06 psf this quarter for a quarterly average increase of 3.8%. The chronic demand-supply imbalance, recent shortage of construction supplies, spiking steel prices, soaring land costs, rising municipality development charges, approval process delays and higher labour costs are all expected to exert upward pressure on rents for the foreseeable future."