Check investors presentation for all the information on Income support and vacnt properties. Below are few highlights from Investors presenttion:
“As on December 31, 2023. Income Support in Candor TechSpace N2 (2% Effective Economic Occupancy) is expiring in Q4 FY2024 and Candor TechSpace G1 (6% Effective
Economic Occupancy) is until June 30, 2025 on 1.2 MSF of vacant area”
The yield table below gives the values of REITS and Invits, if you had bought at closing price of today 8/8 (all the Q1 numbers are updated to reflect the latest DPU additions…as always, I calculate these based on running 4 Qtr numbers
they have again proposed to raise 35,000 Millions with QIP with their presentation, creating downward pressure on price yet again. Distributions also haven’t risen since the last QIP round.
Can any brave soul attend the Video Conference and ask those geniuses why you need to raise capital so frequently and effectively reducing our interest in favour of your big institutional buddies?
Apologise for my language but this is quite agonizing since they have adequate room for raising debt but they keep diluting our holdings for seemingly no reason ?
Disc. Invested & feeling stupid.
Raising of 3500 Cr Equity at Rs 290 per share, to reduce debt, when NAV stands at Rs 343, looks like value destruction for current owners,.
However, the voting for the resolution was passed with majority. I am surprised that no questions were raised on this move, no resistance from Promoters , institutional investors or Retail shareholders.
Am I the only one who see this kind of fund raising as huge concern? @dd1474 Can you please share your views?
The issue price is actually at a deeper discount of Rs. 274. This is the second time, Brookfield has done a placement at a deep discount to the issue price. The last time they did this in May 2023, the unit price took more than a year to recover from the damage. If you go through the company’s recent concall, the management had assured that they were just taking approval for an enabling resolution and that they would do the QIP only if they get any acquisition opportunities. Reducing leverage was not mentioned anywhere. Clearly the management lied to the investors to get their consent. What puzzles me is their aversion to a fairer forms of fundraising like rights issue when the unit is trading at such a deep discount to the NAV.
Actually I talked over email to the Reit investor compliance officer or something like that. They said they have internal target of keeping debt to equity at 30-40%, to keep their AAA rating. hence they do these qips to optimise their balance sheet, and there are alot of opportunities to acquire.
instead of benefiting for higher rating lower interest rate they are hyper focus on keep that rating in first place.
Which is fair imo, mind you this is the most aggressive REIT so whole sector is like that.
Thanks for your views. However, my opinion differ because of following reasons:
Debt / Equity ratio was high, because lot more debt was used than required in past acquisition. Ideally, those acquisitions shouldn’t have been done, if they were not comfortable with higher debt to equity ratio.
If they want to reduce debt (which is not bad idea, in principal), they should not dilute equity at any price.
Brookfield REIT market price (Rs 275) is at substiantial discount (25%) to its NAV (Rs 350). Raising equity at this price does not makes sense.
In fact at this price they should be doing buyback, by diverting funds that they pay as distributions to unitholders.
What is sensible at one price is foolish at another
Retail REIT owners have to bear these value destroying actuvities.
Happy to discuss if you have counter views.
Amit
Disclosure - Invested and may sell anytime, as I am not positive after this development
your opinion doesn’t differ from mine cause that’s exactly my opinion too, maybe I should’ve used quotes.
However, QIP doesn’t have anything to do with how much NAV you have, and REITs aren’t allowed to do buyback, even if they were it would be counterproductive.
Alot of it comes to that commercial real estate isn’t in favour rn and it reflects in market price. Even the best REITs in US ( for example reality ticker ‘O’) are facing the headwinds and raising more capital to acquire properties as they think they are getting best prices.
Disc. Invested.
Brookfield payout bumped up by 10% to 5.25 this quarter. Hope this is sustainable. Stock reacted positively by 2.8%. Anyone analyzed results.
