Artis Investment Trust may not be commenting about reports its selling property in Calgary, but it did confirm its holdings within the oilpatch count a lot less money that they was once.
The Winnipeg-based REIT said Tuesday it will likely be going for a $288-million writedown on its Calgary office portfolio, a move that comes amid rumours it is selling a number of its properties in Western Canada.
Sources indicate the organization has already established hardly any curiosity about its office holdings at the price that was given to the market. A company spokesperson did not return calls.
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In a research note, Raymond James analyst Ken Avalos noted the REIT’s Calgary office occupancy was down 3.1 percentage points in the fourth quarter from a year, reaching 83 per cent. He noted leases with rents commencing in 2016 brings committed occupancy to 91 percent in 2016.
“Artis has about 580 million sq ft rolling in their Calgary office portfolio over the next two years, ” said the analyst, adding that could occupancy could drop to 68 per cent, net operating could fall $10 million and the pay out ratio could increase by five per cent.
Overall, Avalos says the REIT’s Calgary office portfolio taken into account 15 per cent of net operating income within the fourth quarter, or about $50 million annualized..
He says the entire Artis portfolio may be worth $5.1 billion even as the market values it a $4.6 billion according to its unit price.
“Regardless of the headwinds, there’s substantial value in the stock given the sentiment on Calgary office at the moment,” says Avalos. “We would be buyers of the stock at these levels.”
gmarr@nationalpost.com
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