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almc's avatar

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.

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CSK Capital's avatar

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.

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James Gilliam's avatar

Amazing work!

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CSK Capital's avatar

Thanks

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