Canadian Apartment Properties Real Estate Investment Trust T.CAR.UN

RE:RE:RE:RE:RE:More BNS

[AlwaysLong683]

My views:

1) I believe I significantly low-balled the 25% premium ask price over and above the current unit price for a takeout of CAR.UN. I think management realizes that CAR.UN is trading at a price signficantly below its full value right now. Typically, if you're executives / board members of company with coveted properties that are currently undervalued, you first want your unit price to recover to what you believe is full value (mid-60s or perhaps higher. in CAR.UN's case..?) before you'd even contemplate a sale. Then you'd likely want a 20-25% premium on top of that price before you'd consider a buyout. However, I think all of this is moot because, the more I think about it, the less likely I think this will happen in the foreseeable future.

2) As indicated in a graphic around the 6:00 mark of the interview with CAR.UN CEO Mark Kenney I referenced in a post a couple of days ago, over 99% of CAR.UN's mortgage portfolio has a fixed interest rate of 2.50%, so CAR.UN should not be affected by rising rates. Also, if memory serves, I either saw or read a while back (maybe it was a previous interview with Mark Kenney?) that CAR.UN has long term-to-maturies on their debt, with little to none coming due anytime soon.

3) Depending on the province and their rental rules, inflation is not such a bad thing for residential REITs as they can typically raise rents on tennants upon renewals or new leases to offset a good chunk of inflation. Inflation can also raise the value of their real estate holdings as well.