TSX:CAR.UN - Post by User
Comment by
AlwaysLong683on Jul 14, 2022 5:06pm
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Post# 34825329
RE:Mark Kenny video interview w/ Jenny Ma, BMO analyst
RE:Mark Kenny video interview w/ Jenny Ma, BMO analyst Really appreciate your written summary of the interview Meph.
I agree with Mark on all points.
Downsizing the portfolio by selling older (and larger) buildings and using the proceeds to either buy back shares or purchase newer properties is the smart way to go if this is in fact part of the plan. Remember, it's not how big a company is - it's how profitable it is, and in the case of REITs, their AFFO, debt levels, and the terms of that debt (ie, maturity dates, interest rate, fixed or variable rate, etc.).
Like I mentioned in a previous post, the much smaller HOM.UN did what I described above between 2019 and 2021. They called it a "Capital Recycling Program":
- Sold 39 properties (8,136 apartment units) for proceeds of $760M.
- Used proceeds to purchase a smaller number of newer buildings in the suburbs of rapidly-growing markets (Austin, Houston, Dallas).
- Reduced weighted-average age of the portfolio from 29 years to 11 years, thus reducing capex spending.
CAR.UN appears to have started doing something similar:
Recent Press Release: TORONTO, June 21, 2022 (GLOBE NEWSWIRE) --
Canadian Apartment Properties Real Estate Investment Trust (“CAPREIT”) (TSX:CAR.UN) announced today that it has completed the sale of two properties in Scarborough, Ontario and two properties in Ottawa, Ontario totaling 793 apartment suites. The two portfolios were sold for total consideration of $200.1 million, well above current IFRS values. Existing mortgages on the sold properties totaling approximately $57.8 million were either repaid or assumed by the purchasers.
CAPREIT also announced today that on May 4, 2022 it acquired a brand-new, luxury property containing 36 apartment suites and 76 townhomes in Kanata, Ontario, a major suburb close to Ottawa with immediate access to the Trans-Canada Highway. Occupancy at the property was 98.2% at closing. CAPREIT paid $43.7 million for the property, funded by the assumption of an existing 2-year $26.5 million mortgage incurring an attractive 2.4% interest rate, with the balance funded by CAPREIT’s Acquisition and Operating Facility.