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

Primary Symbol: T.AD.DB.A Alternate Symbol(s): ADLRF

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 > RBC

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Post by retiredcf on Apr 28, 2023 9:41am

RBC

April 27, 2023

Alaris Equity Partners Income Trust
Announces US$36.5MM investment in Federal Management Partners

TSX: AD-U | CAD 17.05 | Sector Perform | Price Target CAD 19.00

Sentiment: Neutral

Summary: Alaris announced a US$36.5MM investment in Federal Management Partners ("FMP") consisting of US$30.5MM in preferred equity and US$6.0MM in common equity. If FMP achieves certain financial targets, Alaris would invest an additional US $3.5MM into FMP's preferred equity under the same terms as the initial investment.

Alaris indicated the US$30.5MM of preferred equity should generate an annualized distribution of US$4.3MM (14% yield), of which FMP can elect to defer distributing up to 3% of the distribution yield (US$0.9MM in the first year). The deferred distribution would compound at the distribution yield. The preferred equity has an annual reset based on gross revenue growth and capped at 7%. Alaris indicated FMP is expected to have an earnings coverage ratio between 1.2x - 1.5x.

Following the investment, Alaris estimates it would have a run-rate payout ratio between 65% - 70%, excluding potential dividends from the investment in FMP common equity.

Our view: Given Alaris' investment track record, we view additional capital deployment as incrementally positive for the share price. While we have concerns on the potential impact that the uncertain macro environment may have on Alaris' various businesses, we think the increased size and diversification of Alaris' investment portfolio puts the Company in a better position vs. prior cycles.

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