Q: Hi 5i,
May I get your opinion on the CHP transaction to acquire $5.0B of First Capital REIT assets. Can you list some metrics that makes it attractive for CHP unit holders going forward?
Thank so much!
May I get your opinion on the CHP transaction to acquire $5.0B of First Capital REIT assets. Can you list some metrics that makes it attractive for CHP unit holders going forward?
Thank so much!
5i Research Answer:
CHP is larger than FCR and thus likely safer. Its portfolio is anchored by very stable tenants (primarily Loblaw). Yield is decent at 5.1% and there is some room for growth in the distribution. Valuation of 14x cash flow is reasonable. The acquisition we think makes sense, and CHP will be a bigger, more diversified company. We would be quite comfortable holding it. Payout ratio is OK at 88%.