MPCT 2026 Forecast with Slide Presentation Images Looking towards 2026, we will start to see a materially transformed REIT, which has gone through many years of holding land to rezone them, to now being in development, and by 2026 most of those developments will be complete and generating income with little land holding costs remaining.
I wrote a list of the developments in progress and recently completed in the link below, if you would like to get some insight into the quality and quantity of the developments:
https://stockhouse.com/companies/bullboard?symbol=t.mpct.db&postid=36263654
The following slides were taken from the 2023 Dream Investor Day:
Slide 87
In Feb 2023, when interest rates were 4.50%, Dream Impact cut its distribution to 64 cents (adjusted to current post-split). Mr. Cooper made the comment that the distribution was sustainable based on $500 Million in development assets coming online and generating NOI of 2.5x $15M by 2026. This means by 2026, MPCT will grow the NOI from the 2023 amount of $15M, to $37M. A 64 cent distribution would only be $11M in Distributions paid out, resulting in a low, and sustainable distribution payout ratio.
1 year later, interest rates climbed to 5%, prompting MPCT out of an abundance of caution to suspend the distribution ""Suspension of Distribution Until Further Completion of Income Properties".
October 23rd we have a rate cut, that is expected to bring current rates from 4.25% to 3.75%, and further rate declines in 2025. At the same time our assets are coming online, 40M in assets were sold in Q2/Q3 that had minimal to no debt which will contribute to debt repayment, and reduced office holdings materially by 100,000 sq feet.
MPCT has materially de-risked and income is going to materially grow over the next 12 months.
Slide 87 Below shows the Q2 2023 Income, versus the 37M expected by 2026(added in red), and future growth to 2032 as our pipeline of properties in development and planning continues, with minimal to no large capital needed by Dream Impact to start and prepare the lands for development.
Slide 80
I mentioned previously that we do not adjust the NAV of assets on the books until they are sold, or until the assets have reached completion. Many assets have value much higher than is stated in the MD&A. Slide 75 shows what the NAV of MPCT would look like with reasonable adjustments to NAV based on assets which have already made milestones. Adjusted NAV in Q2 2023 was $31.70. The book NAV of ~$24 is low, and the assets are of high quality. There is a large margin of safety the true NAV of MPCT is in the $20's. Additionally this is from Q2 2023, which does not include the adjustment of Scarborough Junction, which has had a major rezoing in 2024.
Slide 81 and 83
Management believes the NAV growth will materially increase going forward. This is expected as development assets are built, and build to sell assets are completed (IE Forma, Brightwater Towns, Mason, Bridge House, etc). This further goes to show the underlying assets are not just stable, but have underlying hidden value which will be recognised in the future.
Slide 84
This illustration shows when MPCT was $9.46, and I added where we are sitting today in red. The projected increase NAV per unit, as well as income from the developments coming online, show a very attractive entry price today.
Slide 89
Lastely, in slide 89 we were shown a material catalysts expected to begin construction in mid 2025. The asset sale of 49 Ontario we will sell 75% of, and continue to own 25%. This is solely owned by MPCT currently. This will generate around $130M, which will go to repaying about half our corporate level debt. This is a very material catalyst.
Comments from FYE 2024
FYE 2024, a few comments were made below why the distribution was cut, showing they based their forecasts off interest rates being held at 5%, to be conservative. Next week we should see rates fall back to 3.75%, and continue to drop.
"With the liquidity from the various asset sales and the reduction in land loans and the decline in interest payments, in addition to the increase in completed income properties, the business will be almost all income properties and many of the income properties will be apartments. And once we get this all set up, we'll continually revisit our distribution policy at every meeting."
"We are running the business in uncertain times, and I think that sometimes it's lost just how significant it is for half of the new developments to be postponed and paying interest on projects that used to be 3% for holding land to potentially paying 8%. Although a lot of people believe interest rates are declining, and we would agree with the consensus, when we look at our projections for the business, we keep the interest rates basically where they are now just to be conservative."
Conclusion
In conclusion, in my opinion MPCT was greatly oversold due to its suspension of distribution, increase of interest rates causing land holding costs to rise, and lack of trading volume (Low trading liquidity). Now, we are on the edge of the exact opposite. Interest rates have fallen lower than 2023/24's rate, lands are being developed and some sold removing this carrying cost, income is increasing at a very fast rate as a plethora of large developments are leasing up, and the trading volume is low which means getting back into the REIT of any material size will be very difficult. I anticipate a 2H of 2025 distribution reinstatement, 49 Ontario Sale near term, and continued growth of income as our brand new development assets begin occupancy.
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Not investment advice. Do your own DD. I am just trying to help the community provide information I have found, since the MPCT PR team is non-existent. I do not suggest trading MPCT as the trading volume is too low. Buy to hold for 12-24 months only.