Artis Real Estate Investment Pref Shs Series E T.AX.PR.E

RE:Pls share your thoughts on NCIB

[houbahop]

First I must say I like NCIB when the company follows through on its intentions.
Taking out 10% of its shares year after year would eventually show up on the units price if it is done properly.

I took a few minutes to check the 24'Q3 report and compare with 23'Q3 numbers:

Assets : $2 844m vs $3 735, a $891m reduction
Liabilities: $ 1 230 vs $2 019 a $789m reduction
Unitholders Equity:$1 614m vs $1 716, a $112m reduction

In % of Assets we have:

Liabilities: 43% vs 54%
Unitholders: 57% vs 46%

If the BoD decides to stop the selling of assets while keeping the NCIB financed with some extra debt, at the end of 2025 we could be:

Assets : $2 844m vs $2 844, a $0 reduction
Liabilities: $ 1 310 vs $1 230 a $80m increase
Unitholders Equity:$1 534m vs $1 614, a $80m reduction

And the financial leverage becomes $1 310 / $ 2 844 : 46% vs 43%, still very much lower than the 54% in 23' Q3.

In an environment where interest rates are stable or decline, they could reduce by 10%/year the number of units yielding 8%+ distributions using increased debt yielding 6% interest without much impact in the financial costs. As long as units are bought back below $10 (6% yield), I see the NCIB as very positive giving the opportunity the market is pricing the units right now.

When the cycle turns positive in the real estate market, there will be much less AX units owning much desired assets.

For the long term holders, lets hope AX stays below $8 all year long, so the REIT can buyback as many shares as possible, while we collect a 8% distribution yield. The day will come when the unit price will rocket higher.