Artis Real Estate Investment Pref Shs Series E T.AX.PR.E

RE:RE:RE:RE:RE:RE:Bought More

[Frankie10]

It's not binary. I agree and have beat the debt issue to death - the credit that costs us prime + 0.7% should be the focus.

That said, assuming you were about to finally clean up the balance sheet (dear baby Jesus, let me be right) and the oppertunity to buyback our units with an implied cap rate of say 8.7% (per my calc at $8 per unit) was about to vanish forever... one would want to allocate capital to that oppertunity, responsibly*

I say responsibly, because this only makes sense if you in fact clean up the balance sheet *for the love of god!*

Therefore, does $100M towards buying back 10% of the total outstanding make sense... I think so based on the following:

Estimated Cash Inflows for Q2 exlcuding operating income:

Cash interest income on pref shares (120M x 18%/4)	5.4
Distributions from Dream Office & FCR	3.8
Dream Office SIB proceeds	33.9
FCR sales (Q1 subsequent event note)	35.0
CDN asset sales closed during Q2	80.0
US asset sales closed during Q2	37.7
CDN asset sales to close during Q2 (June)	42.1
US asset sales to close during Q2 (June)	115.3
Finance proceeds (mrtg on residential and industrial property)	171.9
Possibly:
Additional FCR sales	20.0
IRIS pref redemptions	10.0
Additional asset sales	20.0
	575.1

  
Less: Estimated Cash Outflows for Q2 exlcuding development, reno, inducements, and distributions on common and prefs:

Buybacks of common and pref units (NCIB)	(37.0)
Mortages on assets sold & non-cash component of sales (estimated - 50%)	(147.6)
	(184.56)

Leaving us with estimated free cash flow, exlcuding cash flow from normal operating activities of $390M (assume operating cash flow used to pay distributions, development, renos, and inducements)... I think $100M to SIB, $250M to fixed debt maturing later this year, and $50M to pay down credit facilities *assuming continued asset sales where proceeds directly go to paying down credit facililities makes a lot of sense.