True North Commercial REIT T.TNT.UN

RE:Maybe Inovalis is using the right approach

[lancebryant]

Mathamatically certain to be wrong.  Paying down debt is by far and away the worst possible allocation of capital at the current interest rate and renewal rates for the REIT.  In terms of a share holder result; buying shares leads to a 15% implied return on invested capital while the paying down of debt is approximatly a 5-7 percent return on invested capital. 

The idea that a 50-60% debt to equity ratio being a problem is a halfbanked nonsense founded in next to zero logic by people who don't understand the history of REITs, or want to mislead retail investors.

Facts: 50-60% debt to equity is without a doubt some of the lowest in history for most REITS or REIT LIKE investment vehicles.

Facts: Innovalis is by far and a way the worst REIT on the entire Canadian market in terms of total return and by definition management.  Its externally managed by a parent company with almost no direct ownership via leading members. TNT and INO are night and day difference in management structure and organization - despite having an all powerful parent company.

Facts:Some Office REITS have been hit far harder then others; and that isn't just in terms of balance sheet numbers its coming down most often to desire to TRUST/believe in leadership execution advantage.    Take a look at Artis; BTB, TNT, INO and look carefuly at how they have responded to this crisis.   Notice the percentage ownership of office compared to industrial in these and notice the outcomes.  

Facts: Vast majority of folks who invest in office REITS (80%+ of most of these reits above) are retail investors. They are not sophisticted, barely understand the debt cycle, barely understand finance at all and purchased these shares because of a dividend - nothing else.  Most of them are deep under water and continue to sell to eventually realize when its convienent for them.

Facts: This drawdown has very little to do with business strength and almost everything to do with weak hands and no institional involvement.