Diversified Royalty Corp T.DIV

RE:As it looks right now…

[nedstar71]

JayBanks wrote:

So these are some rough napkin numbers to look over, but take them with a grain of salt or accuracy...

Last quarter we ended with 143.4 million shares outstanding, the private placement adds 20.3 million, add in approximately .3 from the DRIP that will give us about 164 million shares... the private placement = 12.4% of the final total for dilution... It was upsized but I don't think it's finalized so that may change going forward...

In Q3 we recorded 9.1M in distributable income on the 143.4M shares = 6.37 cents per share or 25.48 cents per year. (I used more rounded numbers here which conflicts with the 25.52 which are likely more exact I mentioned on November 8th)

That 9.1M divided by the current projected shares of 164 million now = 5.57 cents per share or 22.28 cents per year.

Interesting to see, but not really that useable as there are moving parts. So DON'T freak out that it's way over the payout ratio.

Q4 numbers that are upcoming will be calculated on the shares before this placement, and I expect to see a distributable income number that rises likely between 9.5 & 10M and show around 6.5 cents per share. Which again, will be interesting to look at, but useless going forward for the same reasons as the above.

The next big data point for us currently, won't be until Q1 (3 months from now) where as these shares are calculated into the numbers. At that time Q1 should feature increased rates on a couple royalties, increased store royalty pools, lower interest expenses, amongst other things I'm not thinking of right now... Currently it looks like the payout ratio will be extreamly close to 100% maybe over temporarily (on paper). It's really hard to project those numbers that far out, but they may have distributable income in the 10-11M range at that time which would be about 6.1-6.7 cents per share (6.25 is 100% coverage on 25 cents).


How I would use this for a target share value if you believe my numbers above and how I've attempted to value things before. On 10M distributable income in Q1 that equals 6.1 cents per share (24.4 cents per year) @:
2.50 = 9.76% (distributable income per share yeild)
2.60 = 9.38%
2.70 = 9.04%
2.80 = 8.71%
2.90 = 8.41%
3.00 = 8.13%
3.10 = 7.87%
3.20 = 7.63%
3.30 = 7.39%
3.40 = 7.18%
3.50 = 6.97%

Based on Dividend yeild averages the past several years I've stated what I see as a 'fair value' is in the range of 8.1-7.25%, but what I've just calculated is based on 'distributable income', so at 100% payout ratio these are equal, but I'm sure most of us would like to see extra coverage so I would shoot a little lower to create a value. Previously a good target range to shoot for was likely $3.09-3.45, currently on a very rough estimate, $2.95-3.30 likely is a good target range of value with this private placement of shares taken into consideration. So I would say the needle only moved about 15 cents lower in my eyes, not pleased about it, but not that worried either.

Of course this is thrown out the window if we make anouther acquisition, and will need to be revisited after the Q1 release and we have ACTUAL figures to use rather than my 'maybes & ifs' which are up for debate on accuracy
 

Are you missing that Q3 didn't include BarBurrito?  Q4 and moving forward should have approx $2 to 2.1 million more royalty income from Barburrito.