I believe in management and the long-term prospects of AP.un, so I want to hold on long-term.
On a couple of conference calls management has indicated there will be a large taxable event for unit holders because of the data center sale. I assume this will be a capital gain which may be a ROC of just a plain taxable capital gain. In any event, would it make sense to sell my units now resulting in a large capital loss and then buy the units back after 30 days. The loss will more than offset any gain the company would declare. If it’s a return on capital, I would use the loss to offset other gains in 2023. Your thoughts would be appreciated.
Do you anticipate much change in the unit price over the next 45 days? What do you think of this REIT long-term (3-5 years)?
Thanks for your opinion.
John
We think such a move could work for investors who can utilize losses, or want to carry them forward. REITs typically do not move that much, and it would be quite unusual we think for AP to move enough in a short period to offset tax benefits gleaned. That being said, it did have a monthly move of +26% in Nov 2020 and +15% in January of this year. AP is very cheap at 8X cash flow. We probably would have preferred that it keep the data centre, to offset its other sectors. Payout was 70% on a 12-month basis, but this will change with the sale. There is very little growth here, and debt is high (which is typical). Overall, with its small size, office exposure, and concentration in four cities, we can't say we are too excited by its prospects. But, this is reflected in the valuation.