Q: Hi - can you please give your perspective on why the shares have performed so poorly despite the company having such "sticky" tenants? I would have thought that the business would have been so predictable (due to the type of tenant) and therefore easy to "manage" into a reliable long term moderate growth company....but it hasn't. Going forward...do you think the sticky tenants offer a positive way forward for the company?
5i Research Answer:
Cash flow never materialized to the extent expected, and is expected to decline again this year. High debt combined with higher interest rates really bit into fundamentals. There is a large amount of preferred share obligations as well. The former distribution was simply too high, with payout running more or less at 100%, leaving little room for growth or debt paydown. The tenants are indeed sticky and with the lower distribution things are better. Lower interest rates when they occur should also help. But for now, we would like to see evidence of improvement instead of just assuming.