Dream Office Real Estate Investment Trust T.D.UN

valuation model

[MTLfinecity]

NOI 110M 

asset value : 

cap rate of 8=1375M

cap rate of 7=1571M

cap rate of  9=1222M

cap rate of 6= 1833M

cap rate of 4.5=2444M

 

total debt 1300M 

 

number of DIR units: 13,539,307.  =185M market cap 

total number of units 37,857,031 = 443M market cap (11.7/share) 

 

Trading price: 

if cap rate of 7 : 271+185=456M   (12.04$/share) 

if cap rate of 6 : 533+185=718M  (19$ per share) 

if cap rate of 4.5: 2444-1300+185=1285M (34$ per share) 

[SNAKEYBOY]

So what I'm hearing is their nav is 100% fake and we're worth about 12 bucks.  Well cr@p. 

[MTLfinecity]

Both the management and the public market are right.  In the short run, the cap rate could indeed be 7% or more IF a private transaction occurs.  However, in the long run, premium Toronto office buildings deserve a 5% cap rate+ density potential.   It's all about interest rate my friend and weather buying an office building makes business sense in the current environment

[colombuss]

This post has been removed in accordance with Community Policy

[MTLfinecity]

Good comments, and I can feel your bullishness.  I agree with you on your comments on my valuation and the future potential on some assets. However, as a conservative investor, I tend to write off anything that is not generating cashflow at the moment. I perfer to not factor in any upside from development and future density. Actually, a cap rate of 4.5%-5% incorporate some of the non cash

[Frankie10]

You can't explain away error and call it being conservative... you can't just value the assets at $0 to be conservative. they spent money and that investment has value.  "The real problem for me here is the interest rate and the cap rate." - debt is fixed and the entity is well capitalized to refinance and sell assets (inv properties and/or DIR) - implied cap rate is 8.7%.

[MTLfinecity]

Hi Frankie, I appreciate your thoughts. Let me explain why I made those mistakes. I understand very well why you use stabilized noi for valuation and put what seems to be a reasonable valuation on future density . You are computing liquidation value. And I respect that. However, in my many years of investing experience, this valuation model never gave the valuation below which the stock simply

[Frankie10]

the model assumes going concern, therefore the valuation method is adjusted cost base and not liquidation approach. I think you mean to say, my model calculated implied current valuation and you run a proforma to assess downside risk. Nothing wrong with that at all... The asset values per the financials are actually calculated used discount cash flow basis - there are many REITs that provide

[Frankie10]

Incredibly well written. Thank you for sharing your thoughts.

[Frankie10]

With D @ $11.8 and DIR @ 13.65 - implied cap is 8.68% (based on stabalized NOI)