01.13
InnVest REIT (INN.UN) – $5.85 – Cyclical Torque; Ample Liquidity
Sector Perform, Above Average Risk, Price Target: $6.25 (prev $4.75)
At Q3/09, InnVest had liquidity of $49MM. This has been enhanced through the issuance of: i) $50MM of equity in October (12.7MM units at $3.95/unit); and, ii) $50MM of convertible debentures in December (6.75% coupon; Mar-16 maturity; $5.70 conversion price). Pro-forma, RBC CM estimates that InnVest’s liquidity is now exceeds $140MM. With the short-term “drag” of recently raised capital and slightly moderated RevPAR and profitability flow-through expectations, RBC CM has trimmed its 2010E/2011E by -$0.09/-$0.12 to $0.85/$0.93. RBC CM believes InnVest’s $0.50/unit distribution will be covered by 2009 AFFO. InnVest’s Net D/EV of ~68% still offers substantial torque to even modest improvements in NOI. RBC CM has increased its target to $6.25 From $4.75; Sector Perform, Above Average Risk Rating Reiterated.
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