Bullboard - Stock Discussion Forum Alaris Equity Partners Income 6 25 Senior Unsecured Debentures T.AD.DB.A

Alternate Symbol(s): ADLRF | T.AD.UN

Alaris Equity Partners Income Trust (the Trust) is a Canada-based trust. The Trust’s operations consist of investments in private operating entities, typically in the form of preferred or common limited partnership interests, preferred or common interest in limited liability corporations in the United States, and loans receivable. The Trust’s Canadian investments are made through a wholly owned... see more

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TSX:AD.DB.A - Post Discussion

Alaris Equity Partners Income 6 25 Senior Unsecured Debentures > Scotia Comments on Redemption

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Post by SunsetGrill on Oct 27, 2021 5:15pm

Scotia Comments on Redemption

Rating Sector Perform 1-Yr.
Target C$21.00 A
D.UN-T C$18.62
1-Yr. Return 20.0%
Div. (NTM) $1.35
Div. (Curr.) $1.32
Yield (Curr.) 7.1%

As Expected, Alaris Announces ~$100M Redemption of Federal Resources OUR TAKE: Neutral. Alaris issued a press release announcing the expected redemption of Federal Resources (FED). The redemption amount of $102M (US$81M) was in line with our expectations, as well as management's recent estimate of US$80M that was communicated at the end of the second quarter. We see the finalization of one of the two larger redemptions management had signaled earlier this year positively as it helps Alaris pay down its debt given that the company had been funding its growth with higher leverage than it typically would. In addition, the transaction puts the company in a good position to deploy additional capital into new and existing partners. Aside from the FED redemption, management is also anticipating the redemption of Kimco for US$60M to US$70M, although the team is more uncertain about the timing around that investment. With record levels of capital deployed this year, we believe Alaris has already mitigated its reinvestment risk by "pre-spending" some of the capital it is set to receive from these redemptions. Maintaining our $21.00 target price and SP rating.

KEY POINTS

Alaris recorded a total return of US$76M (113%) from its investment in FED. This represents an unlevered IRR of over 19% over the course of the six-year partnership. The US$81M of redemption proceeds represent a ~21% gain above the company's invested capital of US$67M in the investment. With the redemption formalized, Alaris will have ~$260M drawn on its senior credit facility and $140M available for investment purposes. On a pro-forma basis, the company's total senior debt to EBITDA is now ~2.0x, with its payout ratio between 65% to 70%.

Alaris is scheduled to release its Q3/21 results after market close on November 9, with a conference call the following morning.

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