Post by
logicandinertia on Mar 25, 2021 7:40pm
Part of a bigger plan at Slate
Interesting transaction. Parent co buying the commerical real estate division from Annaly for $2.3B, and then selling the grocery anchored assets to the SLATE GROCERY division, hence the need for the fairness opinion and independent committee.
At the 7.8% cap rate, US$30 million in NOI, and servicing costs of the assumed debt of US$300 is US$12.6 million + cost associated with dilutive effects of issuing equity (11.4 million units), so yes, should be accretive out of the gate.
Doing subscription receipts interesting. given the closing date of the transaction and inherent closing risk, this allows instiutional investors to put in an order, but if deal fails to close, they get money back. Until deal closes, they will accrue paid dividends to the common. when acquisition closes successfully, the sub receipts convert to common. May improve the appeal of the deal, after the last deal (bought deal) wasn't well received and traded below offer for some time.
increases size of real estate portfolio by a whopping 31%. as the market cap grows, should start to get on radar screen of more insitutions. The response to this deal will be something of a litmus test, in terms of how receptive accounts are to traditional retail (albeit grocery) and the pace at which the US is exiting the quasi-closed Covid economy.
i'm staying long, as likelihood of higher distribution is now arguably greater than the opposite (which many market participants had been guessing, based on what yield this thing trades at). New class of shareholders can only be a positive for SLATE GROCERY. Stock will obviously pull back in the morning, with deal overhang, so buying opportunity IMO.
Good luck...