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M.C.S. Steel Public Company Limited is a Thailand-based steel fabricating company. The principal activities of the Company and its subsidiaries are production and distribution of structural steel products for building construction, and residential development projects for sale. It is a large steel structure manufacturer, especially steel beams and columns for the construction of large high-rise... see more

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MCS Steel Non-Voting DR > CIBC Upgrade

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Post by retiredcf on May 11, 2016 8:56am

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Milestone Apartments REIT

Milestone Delivers Another Quarter Of Texas-sized Growth

What's Changed

Milestone's reported FFO of $19.4 mln. ($0.25/unit, or $0.29 excluding the impact of one-time mortgage prepayment and non- cash expenses) compared to $16.4 mln. ($0.27/unit) in Q1/15 and our $19.6 mln. ($0.28/unit) estimate. MST's reported AFFO of $0.24/unit was slightly above our $0.23/unit estimate. Results were driven by +7.9% SP-NOI growth, boosted by +5.5% SP-revenue growth and higher total NOI margins of 57.1%, up 220 bps from Q1/15. Average Q1/16 occupancy was 95.4%, down 40 bps Y/Y. Average occupied monthly rent/suite increased to $917 in Q1/16, up from $879 in Q4/15 and $820 at Q1/15. SP-rents increased from an average of $830 in Q1/15 to $883 in Q1/16.

In January, MST completed the Landmark acquisition with Starwood Capital, acquiring 15 residential properties for $493.5 mln. at a cap rate of 6.1%. In January, MST sold four residential properties in Houston, Atlanta, and DFW for gross proceeds of $111.0 mln. Subsequent to the quarter, MST acquired a 295-unit multi-family apartment property in Dallas for $34.0 mln. at a cap rate of 6.7%.

D/GBV assets was 49.9% at Q1/16, down from 51.6% in Q1/15 and below the REIT's limit of 60.0%. MST's cash balance was $21.0 mln.

Implications

Our 2016E FFO and AFFO estimates are $1.15/unit and 1.04/unit, respectively, from $1.18 and $1.00 based on the results in the quarter. Likewise, our 2017E FFO and AFFO estimates increase to $1.25/unit and $1.12/unit, respectively, from $1.24 and $1.09. Our NAV estimate increases to $15.00/unit (from $14.00/unit) at a 6.25% cap rate (from 6.40%) to reflect recent market transactions impacted by rising demand for high-quality apartment properties.

Valuation

At C$18.00, Milestone trades at ~12.1x our 2016E FFO (F/X adjusted), an 8% discount to our C$20.00/unit FX-adjusted NAV estimate (from C$18.50), and yields 4.0%. Our 12- to 18-month price target is C$20.00 (from C$18.50) or ~13.0x-13.5x 2016E FFO (F/X adjusted). We rate Milestone Sector Outperformer.