RE:Masked $1.3 Billion Debt BOMB hidden under Equity Accounted Tell me you dont know what you are talking about, without telling me you dont know what you are talking about.
Each EAI venture is just that, a venture. Its like MPCT owns a piece of each development, minimizing risk. There is very little risk in any EAI, as they are all A) low leverage with low financing risk, and B) very little recourse to MPCT if a single EAI project goes belly up. This is why EAI is setup this way, to reduce risk. This is how a developer works, especially a minority developer.
If you do not understand how you can invest in large scale projects with limited risk to the parent, you do not understand MPCT or most large developers.
EAI are also not adjusted to fair market value. Most projects have a huge amount of Asset Value much greater than shown in the below example, which will not be adjusted to FMV until developments reach milestones, or the property is sold. A prime example is Scarborough junction.
MPCT does NOT need any restructuring. They just raised over $40M in capital through asset sales, with lots more coming (IE 49 Ontario, Scarborough Junction, ZIBI lands). They are doing exactly what they should be doing. Each project is self funded through CMHC or other financing at the EAI level. Cooper stated there is essentially no extra capital needed from MPCT to complete all the projects currently in development. If you listen to the quarterly calls, you would(should) understand this.
This is clearly not an investment you understand, so I suggest you educate yourself before investing or invest elsewhere.
Predator2018 wrote: I have questioned why everyone always say that MPCT hadhuge debt load but I found it difficult to undetstand but after digging into it, most of the debts are masked under equity accounted investments and the assumed net assets is moved over to the balance sheet which basically hides that debt bomb.
Based on my calculation using data from recent financial report, the true picture of the total debt and liability is $1,27 Billion after including all the debts in the equity accounted investments. The total assets assumung the reported values of these assets is $1.7B. The real value of the assets is subject to interpretation as realized prize may be lower than assumed value.
So this huge land loan debt is not visible if you look only at the balance sheet. It is misleading. You have to dig deeper into the equity accounted investment to get a better picture of the debt.
MPCT needs to be restructured with more equity financing as they ae currently selling cashflowing assets to pay interest on this debt bomg. even at 3% interest, you are paying almost $30 million yearly in interest.