PAY DOWN DEBT INSTEAD?Thanks to all the contributors here today, CANCDN especially.
I agree that this $15.50 price still represents an "underwater price" for most long term holders here.
Does not really move the needle for most but it may provide a much needed floor.
Concerns I see about this SIB...... (not against what Cooper trying to do here, who wouldnt want to see the shorts get burned!).
DIR closed at $14.64 today.
What if DIR drops down near this $14.20 level with 12.5M units now available for sale at this price?
Will it still close May 16 or will they need to drop the price further?
There needs to be some discount to DIR trading price to move that many shares in 2 wks.
If offering successful, just asking..... would it not make more sense to drop the $193.8M on the debt?
That would take the total debt from $1.268M (Q1) to $1.074M.
The market would perceive that as a huge win as you are paying down 15% of your total debt without having to sell any real estate assets that would affect your future rental income growth.
How many REITS are paying down that kind of debt in this market instead of struggling to refinace debt at much higher rates?
That would drop the net total debt to 45% of the Investment Properties Value only.
(does not include the value of the remaining DIR stake).
I believe they can get unit price up on that news, but more importantly, be better positioned for the future with the lower debt. As occupancy rates improve, distributions increase.
Its all about the debt in this business.
You could have the best properties in the best locations, but if you are highly leveraged, its a problem.
Reits are getting killed because of the worrisome debt levels.
The shorts are betting that a recession will lead to massive defaults (now happening in commercial real estate accross NA).
This is worse scenario than covid, as that period was a low interest rate environment and gov't assistance with the shutdowns was available for most.