Dream Impact 5 50 Convertible Unsecured Subordinated Debentures T.MPCT.DB

Masked $1.3 Billion Debt BOMB hidden under Equity Accounted

[Predator2018]

I have questioned why everyone always say that MPCT hadhuge debt load but I found it difficult to undetstand but after digging into it, most of the debts are masked under equity accounted investments and the assumed net assets is moved over to the balance sheet which basically hides that debt bomb.

Based on my calculation using data from recent financial report, the true picture of the total debt and liability is $1,27 Billion after including all the debts in the equity accounted investments. The total assets assumung the reported values of these assets is $1.7B. The real value of the assets is subject to interpretation as realized prize may be lower than assumed value.

So this huge land loan debt is not visible if you look only at the balance sheet. It is misleading. You have to dig deeper into the equity accounted investment to get a better picture of the debt. 

MPCT needs to be restructured with more equity financing as they ae currently selling cashflowing assets to pay interest on this debt bomg. even at 3% interest, you are paying almost $30 million yearly in interest.

 

[InvestSmarter]

Tell me you dont know what you are talking about, without telling me you dont know what you are talking about. Each EAI venture is just that, a venture. Its like MPCT owns a piece of each development, minimizing risk. There is very little risk in any EAI, as they are all A) low leverage with low financing risk, and B) very little recourse to MPCT if a single EAI project goes belly up. This is why

[Predator2018]

You are not addressing the debt bomb in the equity accounted investment and how they are masked in the balance sheet. My point is that if you look only at the balace sheet, you wouldnt understand why everyone say they have high debt leverage. When you see the total debt in the EAI, you have a better understanding as to why they keep saying it has high debt leverage exceeding 70% now. Just wanted

[Predator2018]

True Picture of Balance Sheet with Equity Accounted Inetsments  - Q2 2024         Assets 1,693,466       Debt 1,267,024 74.8 debt to asset (with equity accounted investments)  

[Predator2018]

Maybe this is how developers report EAI but it is not right.  Basically, the Net Asset of the EAI is carried over to the Balance Sheet thereby masking the huge risk that the realized asset value may be below the reported value. The best approach and more transparent approach would be to report all the debt in the balace sheet and not the Net Asset of the EAI. 

[InvestSmarter]

That is not how it works.  They are each their own investments with limited risk due to paid in capital and limited liability. It's an Equity Accounted Investment. It's similar to MPCT buying shares in a stock. If one goes belly up, the risk to the REIT is minimal (some risk depending on partnership but limited). As example, if Forma goes bankrupt, MPCT won't go bankrupt, but we

[InvestSmarter]

There is NO "debt bomb" anywhere. I can go line by line through EAI if that makes you a little more educated. Additionally, all EAI projects are partnered with the BEST developers in all of Toronto further reducing any risk.  Zibi Development - Recent news release regarding ZIBI land sales stated almost all land loans will be gone after the sale ( I posted the news release

[Predator2018]

The debt load explains why insiders are not jumping with trucks to buy lots of shares. Reminds me of Slate Office (SOT.UN) Insiders lack of interest in buying shares. As an investor, pay close attention to what insiders are doing. 

[InvestSmarter]

Again, you have no idea what you are talking about. Dream Unlimited is paying their employees CASH to management and develop MPCT's properties. Instead of taking CASH from MPCT for these services, they are taking units. They are not getting units at $4/share, they are taking units at $24 Full NAV! So they are performing millions in labor, for 1/6th the cash value in units. It costs money to

[eoim2]

Are you aware that many developers with huge land loans had entered bankruptcy in Scarborough and GTA. You are in euphoria.  These debts require servicing and interest payments. Not free money. $1 Billion at 3% is $30 million payable plus convertible debentures debt due in few years.

[InvestSmarter]

I am very aware. But the developers that Dream is partnered with are very solvent and are the best. The bankrupt developers you are referring to are not. Debentures will be repaid with the 120 Million in cash from 49 Ontario, or if not sold in the next year, reissued. This is normal operating practice and at the corporate level, the debt is very manageable. Especially with around 25 Million in NEW

[eoim2]

Thank you for this insight.  I was also confused why every analyst said it has high leverage of 74% debt to asset. 

[DJ441c]

one insider  just  bout  $50k  worth    FWIW      also  then   I would expect  rate cuts to  benefit  tremendously