- Yield = 8.65%
- Price-to-book Ratio = 0.882
- Assets per unit = $0.775
- Debt per unit = $0.355 (including current liabilities)
- Gearing = 45.8%
Recently LMIR has been in the news for a few reasons. However, with all these news, the price hardly moves. Let's look at them in detail.
Firstly is the credit rating which is good news as they are now classified as Baa3 which is investment-grade. This will provide them with cheaper loans which they need to push our yield upwards when they refinance. This to me is good. (I am vested with 30,000 shares)
Secondly, they are making an acquisition (reflected in the statistics above). I have assumed that they are paying this with debt as they are still not clear whether they are issuing units. Yield is still at a strong 8.65% and its price-to-book ratio is still below 1. Gearing (including current liabilities) is at a high of 45.8%.
But what is strange is the third news. They announce a $200 million 6 month loan facility with an interest rate of about 3.5% with two banks. I wonder why they wanted such a short loan facility so I checked and they have a $200 million MTN due this month. This makes me ponder on why the loan has such a short tenor. Is it that they have issues finding funds to refinance or are they negotiating a bigger loan to include their recent acquisition? This is unusual and a bit worrying.
I am vested with 30,000 shares and I will be checking on the website closely to see how they manage their acquisition and refinancing. It may also be likely that they are raising cash (consideration units) to convince finance companies to provide them with more funds.
Firstly is the credit rating which is good news as they are now classified as Baa3 which is investment-grade. This will provide them with cheaper loans which they need to push our yield upwards when they refinance. This to me is good. (I am vested with 30,000 shares)
Secondly, they are making an acquisition (reflected in the statistics above). I have assumed that they are paying this with debt as they are still not clear whether they are issuing units. Yield is still at a strong 8.65% and its price-to-book ratio is still below 1. Gearing (including current liabilities) is at a high of 45.8%.
But what is strange is the third news. They announce a $200 million 6 month loan facility with an interest rate of about 3.5% with two banks. I wonder why they wanted such a short loan facility so I checked and they have a $200 million MTN due this month. This makes me ponder on why the loan has such a short tenor. Is it that they have issues finding funds to refinance or are they negotiating a bigger loan to include their recent acquisition? This is unusual and a bit worrying.
I am vested with 30,000 shares and I will be checking on the website closely to see how they manage their acquisition and refinancing. It may also be likely that they are raising cash (consideration units) to convince finance companies to provide them with more funds.
Hi,
ReplyDeleteI am new to REITs and have been following your blog.
1. "… (reflected in the statistics above)." The "statistics" is "Gearing Ratio"? There was an increase from 31.2% to 45.8%?
2. "… an interest rate of about 3.5% …" Typo error? Not 2.5%? => http://goo.gl/1f3fi1
Thanks.
ST
Hi, Here are my replies.
DeleteGearing ratio, I have included current liabilities which traditionally they don't include in their gearing. In my opinion, they are still liabilities so I include them.
Interest rate is 2.5% above SOR. SOR is currently hovering at 1% so 3.5% :-)
Hope it helps.
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Thanks for your update. I had been vested in LMIR in a small way due to attractive yield. My concerns are the transparency. Do you have any view on this?
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