MCS Steel Non-Voting DR MSTUF

TD

[retiredcf]

Also falling in line. GLTA

Milestone Apartment REIT

(MST.UN-T) C$21.30

Offering Priced Bumped $0.10 to $16.25/unit; Strong Q4 Results Event

This morning, Milestone announced a revised going-private transaction with Starwood, resulting in an increased offer price of $16.25/unit (from $16.15), along with several management concessions totalling approximately $8 million.

The REIT also reported Q4/16 FFO/unit (f.d.) of $0.31, a $0.05 increase versus Q4/15 and in line with our estimate. Consensus was $0.30. AFFO/unit (our calculation) of $0.26 was a penny ahead of our estimate.

Impact: MIXED

Revised Offering. Starwood increased its offering price by $0.10 to $16.25, representing an 8.0% premium to consensus NAV/unit (prior to the original offer) of $15.04 (C$19.93). Currently, the transaction has the support of 42% of unitholders through various lockups and agreements, with 662/3% required for the vote to pass. Proxy votes are due March 24 at 10:00 AM EDT with the vote by unitholders on March 28, 2017 at 10:00 AM EDT. Unitholders of record on March 31, 2017 will be entitled to receive the March 2017 distribution.

• For additional details on the offering, please see our January 19th publication.

• Q4 Results. Milestone reported in-line Q4 results highlighted by SPNOI growth of 8.2%. The strong y/y results were driven by a y/y 6.0% gain on SP AMR and a 140 bps increase in SPNOI margin.

  TD Investment Conclusion

  The $0.10/unit bump to the offer price results in an 8.0% premium to consensus NAV, a 50 bps increase from the premium implied by the initial January 2017 offering price. However, this premium still remains below the historic range for U.S. apartment REIT M&A transactions of 10%-15%, which is somewhat disappointing, in our view. We believe there is no longer any chance for a competing bid, and as a result, the odds now favour a successful vote. As such, we are changing our recommendation to TENDER from Hold and lowering our target price to C$21.75 from C$22.00 

[maypeters]

A sellout from the greedy management if I have ever seen one.  For all those talking that internalization is always better - this is an example of how the greedy folks can cash in. Amazing that there was no clause put in place for takeover stuff.  They would have made more money selling out all the apartments one by one.  Very disappointing but could be worse (bankrupt mining

[snewguy]

i got out already.  but its up 12% for the year to date, so still pretty good. u just have to find a new play.

[snewguy]

on the other hand, some of you guys just hang onto it til the bitter end!  lol

[maypeters]

The price was $21.31 in Aug 2016 ..  similar price excluding those months of dividends. Its a steal for Starwood who now save on the internalization since they were paying management fees on that deal they did together.  What was the point of increasing the dividend in January if they were planning to sell it anyways.  Surprised that Dynamic (1832 asset management) is getting

[snewguy]

did you consider if its no that the sp is not going to rise.  And if its yes, you get the current sp.  So, why did they change? cuz there is no big new offer and you lock in your gains and move on to another play.

[retiredcf]

I now think the deal is going to be approved so I'm hanging around for the US cash (not to mention additional dividends and commission savings). I also think there may be a bit of a market correction in store so this way, it will give me additional dry powder to use should this occur. To each his own. GLTA