Thinking of re-entering this position. Seems like the distribution is well covered. Is the price in a good spot to get into given interest rates are elevated and perhaps increasing more in the near future?
NET.UN’s portfolio of properties is rented by high-quality, stable businesses such as Walmart, Loblaws, McDonalds, etc. and untis are now trading at 12.6x times' Forward EV/EBITDA (historical multiple ranges from 12.6x to 16.6x).
However, the balance sheet is heavily leveraged, with net debt of $174M. Total debt is around 14.8x times the trailing twelve-month cash flow of $11.7M. The company has a track record of consistently growing distribution and FFO per unit double-digit in the last few years.
We are comfortable with the name for income investors, but would keep in mind the leverage profile and the size risk here. Eventual falling interest rates should be good both for the business and the unit price.