Artis Real Estate Investment Pref Shs Series E T.AX.PR.E

Artis Office Assets

[SNAKEYBOY]

Can anyone pull any data that can tell whether selling office assets individually is possible in the US at this time, and at what cap rate? I dont think us guys here know the liquidity of such things.  I assume they derive their 7.2% cap rate for office based on recent transactions.

On another note, I expect since the 10 year moved up to 4.5% that further writedowns are coming for the REIT sector.  I can see artis reporting $14.90 or something like that, and Manji is he magically squeezed out a $11ish sale looks like a mission accomplished

[SNAKEYBOY]

I believe getting $ for some office buildings is what will make or break the success of the review.  Can't have 1.5b tied up in illiquid assets....

[Reece1986b]

The office assets are probably realistically worth at least $500 million less than Artis has them on the books for (e.g. more like $ 1 billion versus $1.5B). If that is correct, the $500 million difference represents around $4.50 of NAV (e.g. $4.50 NAV/unit x 110 million units = $500 million) which simply does not exist. NAV is listed as $16.28 on page 6 of the Artis Q2 2023 MD&A. If we

[SNAKEYBOY]

"realistically worth at least $500 million less than Artis" sounds reasonable but can you back it up? I mean, are US office assets class A transacting at 8% cap rate, 9% cap rate, 10% cap rate? I dont expect the office assets to be sold in bulk fashion, but hey you sell 1 or 2 a quarter especially if the buildings are decent and well leased, its $ on the books that can redeployed to

[Reece1986b]

We are seeing weaker office assets transact at $100/foot. Artis obviously has many that are of higher quality than this. There are so few transactions that all anyone is doing (including IFRS) is making their best guess rather than providing anything objective however the Artis office properties likely can't be sold in volume for more than $150/foot because of how badly even 25% of properties

[Catchtherally]

nav 16.28   40% industrial is $6.51 12.5% retail is 2.01 46% office is $7.48   Applying 15% discount to retail and industrial gives us $7.22 per share.    Applying 50% on office is 3.75 a share    Total $11 a share at pretty Reasonable discounts. Doesn’t include equity investments in fcr,D, cominar

[Catchtherally]

Sorry the NAV does include equity investments. That is just rough math but it seems like industrial / retail are close to todays share price. Joyce/sandpiper should take it private, sell retail and industrial at the same time and run off with office for close to free 99

[EstevanOutsider]

It my conservative assumptions, I get around $10.50. That number assumes Cominar equity is worthless and only factors in the note; public securities at face value; office at nearly 50% off, industrial & retail at book value and the ability to buyback preferred securities at current discount.

[Catchtherally]

Thanks. They actually have a lot of nice offices if you take the time to go through them. If Samir still believes in selling in demand assets and buying out of favor ones then it's a good time for it.