A manufacturer needs land and buildings to operate from. If owned, it has a dull asset on the balance sheet that can be borrowed against; if leased, it has a long term liability and certain cash outflow. Which is more attractive?
The Richlands Qld facility sale is ahead of a move to better premises. The Takanini NZ sale includes a 12 year lease back, so MXI is staying put.
Still, with a 5.3% gross yield (who pays outgoings, rent rises not revealed) MXI has cut a reasonable deal for an industrial property.
IMXI may simply be lining up its ducks ahead of the refinance of its $60m debt. $16m off that, even with an unused M&A tranche available, makes refinancing a lot easier and cheaper.
I suspect MXI is considering other merger opportunities, most likely in the truck parts sector as it builds out its national network.
Ash
MXI Price at posting:
32.0¢ Sentiment: Buy Disclosure: Held
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