RE:Scotia comment on resultincomedreamer11 wrote:
Q4 Glance: In Line Q4 & 2023 Guidance; Internal Succession Plans Announced
OUR TAKE: Neutral. Reported FFOPU was .62. Ex. .7M of lease termination fees, we est. recurring FFOPU of ~.61 vs. .60 y/y (.61 q/q), consistent with our and consensus .61 (range = .60-.63), although capitalized G&A/Interest was ~.01 higher than our call. Disclosed AFFOPU was +5.8% y/y (Q3/22A = +1.3%; 2022A = 4.0%). Leased and Economic occupancy was flat q/q at 89.6% and 90.8% vs. +80bp (economic) and broader market ~85bp decline. SANOI for Urban Office and UDCs was -1.7% and +8.7% (Q3/22 = -1.7% and +4.4%) for a combined 0.2% (Q3/22 = -0.6%; 2022A = 0.4%).
IFRS NAVPU fell +.14 q/q (-0.3%; -1% annualized) to $50.96 (Q3 = +0.2% q/q).
Allied announced several management/board changes (see below), which we believe won’t be too surprising to the market given Allied’s “internal succession” plans launched in 2019, but could be a bit sooner than some may have anticipated, in our view.
Re: UDC portfolio sale process, limited new info other than it is listed in discontinued ops (IFRS = $1.3B; flat q/q) and AP does not expect to use any proceeds to fund acquisitions (no material acquisitions expected in 2023).
Full update post c/c set for tomorrow at 10 a.m. ET (1-800-599-2055).
AP announced several executive management/board changes (effective May 2023 AGM), including: Michael Emory stepping down as President and CEO to become Executive Chair. Cecilia Williams is promoted to President & CEO (from EVP and CFO), with Nanthini Mahalingam (currently SVP, Finance&Accounting) promoted to SVP and CFO. Tom Burns is stepping down as EVP & COO to become a Trustee and part-time consultant to Allied; no COO successor was announced. Jennifer Tory becomes Lead Trustee, with Gordon Cunningham (Chair since inception) and Gerald Connor retiring.
2023 Guidance mirrors 2022, is below “soft” guidance provided at the start of 2022, but is in-line with both us and consensus. AP is guiding to low- to mid-single-digit FFOPU, AFFOPU, and SPNOI growth (i.e., say 3.0%). That = a 2023E FFOPU of $2.51 vs. our $2.53 and $2.46 consensus (i.e., 1% short of us but 2% above consensus). Exhibit 1 compares 2023 and 2022 Guidance to 2022A growth. The guidance (i.e., say 3.0%) compares to our 2023E FFOPU, AFFOPU, and SPNOI growth of 4.8%, 4.7%, and 3.8%, respectively. Consensus 2023E FFOPU and AFFOPU are +1.6% and flat y/y. We think the guidance reflects 2H/23 development completions (i.e., really drives AFFOPU starting in early 2024); we suspect we’ll get clarity on occupancy and lease spread expectations on the call.
IFRS NAVPU of $50.96 is 23% above our $41.50 and 28% above consensus (~$39.70). FV loss of $42M vs. $18M loss q/q mainly on higher cap rates in Calgary (+33bp) and Vancouver (+22bp). Overall IFRS cap rate was +6bp q/q to 4.64% (Q3 = flat) vs. our ~5.0%. Potential incremental density was +0.4Msf q/q to 10.4Msf (vs. 10.0Msf current GLA; Q3 = flat q/q).
Economic occupancy flat q/q at 89.6% (Q3 = flat) as an 90bp uptick in Montreal (+110bp in Kitchener and +160bp in Calgary) was offset by a 150bp and 50bp drop in Toronto and Vancouver. Lease renewal spread was solid at 6.1% on yr.1 (Q3/22A = 7.3%; 2022A = 5.6%) and 15.6% over lease term (Q3 = 16.6%). We est. near-term market rent was flat q/q (Q3/22 was flat q/q). Sublet (as a % of portfolio) was +90bp q/q to 3.3% (Q3/22 = flat); each market was higher. We estimate sub-let space as a % of total vacancy = 37% vs. 26% q/q.
Leverage up a bit q/q. Debt/GBV was +130bp q/q to 35.6% (Q3 = +40bp) and Net Debt/EBITDA was +0.2x q/q at 9.8x (Q3 = flat). PUD as a % of GBV rose 50bp to 12.6% (Q3 = -70bp) q/q. AP noted $167M of liquidity (-$190M q/q; primarily construction loans and unsecured facility). Target development yields at The Well fell 10bp at midpoint to 5.1% (Q3 = -5bp), Adelaide/Duncan and KING Toronto fell 5bp at midpoint to 5.1% and 6.1%(Q3 = both flat); Breithaupt, QRC West Phase II, and 108 East 5th flat at 6.9%, 5.1%, and 4.2% respectively (Q3 = flat at Breithaupt and QRC; -10bp at 108 East); no major changes in expected completion timing (Q3 had Adelaide & Duncan and Breithaupt Phase III pushed back by one quarter).
Thanks mate. Picked some up at the $26 level. the Neutral rating from Scotia is fair when we consider the possible negatives and the debt ratio. that can change if they sell some assets which they have been rumored they might be so inclined. They are still about 45% belo precovid sp levels despite posting a similar Q report as q3 2020. I can see another $10 on the sp sometime in the next 6 months.