RE:TD down target priceThe value of the REIT is driven by assets. Therefore, to assess the value of the REIT, as TD has attempted, one should use the adjusted book value method. By taking the time to determine their own NAV (net asset value), they have essentially performed the valuation. One could make an argument that latent tax liability is not considered in the NAV, among other adjustments including minority discount, FMV adjustment of debt, etc. But 39% discount to their own calculation... laughable. To publicly go out of your way and publish your own NAV, to then make a conclusion so disconnected from your own analysis just shows that all these price targets represent are current price +/- a "reasonable range" directionally based on where they know actual value is...
My take aways from a report like this are as follows:
- TD thinks this is worth $13.50 / (1 - 39%) = $22 less present value of latent taxes, less minority discount, +/- FMV adjustment of debt;
- Latent taxes (liability) reduced after distribution of tax liability prior to SIB; and
- I highly doubt that TD has adjusted for the fair market value of the current debt... given interest on the debt is below market rates, the current fair market value of the debt is less than face value (positive NAV FMV adjustment)
- Big gap between TD calculated NAV and Dream calculated NAV.