The timing of the transformation of TOT from a debt free investment in IAP to owning 3 buildings with 30% gearing could not have been worst...
Going back to the HY22 report: Building 1 - Cremorne VIC - no mention of rent review...
Building 2 - Brisbane - 3% rental reviews - would have preferred CPI Single tenant - Michael Hill whose share price has dropped 33% YTD. With cost of living rising there is expectation that people cut discretionary spending - jewellery at the top of the list.
Building 3 - Canberra - 55% government tenant with annual rent review at 3.5%.
Another unknown are the terms for the 90M$ debt TOT has taken for the acquisition. Can the div be maintained? If the buildings remains 100% occupied (risk of recession?) and the rent reviews compensate for the interest rate rise on the debt then yes. But that's a lot of "if".
With bond yield rising, the current discount of ~33% to NTA is quite justified considering all the unknown.
TOT Price at posting:
78.5¢ Sentiment: Hold Disclosure: Held
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