Bulk sale falls over but 10% buyback announced - individual sales recommence - rents increasing 10% - activists on the register and still trades >50% discount to pretax NAV...
Might be time for another update. Assuming they achieve the US$150m targeted asset sales in 2024 (run-rating Feb-YTD sales exceeds this number), adjusting for mandatory debt repayment, transaction costs, negative FFO and $5m in buy-backs delivers c.13c of potential special distributions this calendar year with 2/3rds of the portfolio remaining (and probably still trading at a discount to NAV). Sensitising for a lower sale program and appreciating AUD still looks unusually attractive.
Hi thanks for the comment - agree if they achieve the 150m target less 12m selling costs - less debt repayment which is generally 55% so that leaves circa 62m USD - maybe another 5m FFO loss - so 57m USD leftover or 81m AUD at 70 FX cents to be conservative - 11.2 cps on my rough calc so different to your 13cps?
Of the 81m AUD - if 20m used for another 10% for buyback which maybe hard given the register will get pretty tight.
If expected though 61m AUD left to use round numbers and not adjusting for the shares bought back - leaves 8.4 cps for potential capital returns?
Agree looks attractive but the 150m target hasn’t changed my thesis.
I broadly assume they keep selling premium segment at book.
Workforce or 1/3rd the portfolio is the key swing factor. But at the current share price you have plenty of head room even when adjusting for selling costs.
So then it’s just a timing issue - currency risk yes and short and probably long term a bet on interest rates - provided they don’t collapse as a result of significant recession which changes the odds.
I’m less concerned about refinancing risk which would be well above 4% cost of debt today - maybe 8%? But with that locked for over two years - provides they hit the target that seems manageable.
Biggest issue for me is still the performance hurdle being too ambitious for brooksville - we would happily take 40 cps today but that would result in them not getting paid - I assume the RE is aware of this and could amend accordingly if such an option was presented.
Might be time for another update. Assuming they achieve the US$150m targeted asset sales in 2024 (run-rating Feb-YTD sales exceeds this number), adjusting for mandatory debt repayment, transaction costs, negative FFO and $5m in buy-backs delivers c.13c of potential special distributions this calendar year with 2/3rds of the portfolio remaining (and probably still trading at a discount to NAV). Sensitising for a lower sale program and appreciating AUD still looks unusually attractive.
Hi thanks for the comment - agree if they achieve the 150m target less 12m selling costs - less debt repayment which is generally 55% so that leaves circa 62m USD - maybe another 5m FFO loss - so 57m USD leftover or 81m AUD at 70 FX cents to be conservative - 11.2 cps on my rough calc so different to your 13cps?
Of the 81m AUD - if 20m used for another 10% for buyback which maybe hard given the register will get pretty tight.
If expected though 61m AUD left to use round numbers and not adjusting for the shares bought back - leaves 8.4 cps for potential capital returns?
Agree looks attractive but the 150m target hasn’t changed my thesis.
I broadly assume they keep selling premium segment at book.
Workforce or 1/3rd the portfolio is the key swing factor. But at the current share price you have plenty of head room even when adjusting for selling costs.
So then it’s just a timing issue - currency risk yes and short and probably long term a bet on interest rates - provided they don’t collapse as a result of significant recession which changes the odds.
I’m less concerned about refinancing risk which would be well above 4% cost of debt today - maybe 8%? But with that locked for over two years - provides they hit the target that seems manageable.
Biggest issue for me is still the performance hurdle being too ambitious for brooksville - we would happily take 40 cps today but that would result in them not getting paid - I assume the RE is aware of this and could amend accordingly if such an option was presented.
Amazing work!
Thanks