Quote:
Originally Posted by ahnuld
RE: ARCP
you cant buy triple nets for 9% cap rates as far as I know. more like 6-7%
whats their debt/assets
whats p/nav?
Management has mentioned several times that they're buying triple net properties at 8.5-9% cap rates that are medium-term net leases. A lot of these deals are on properties off market, sourced internally with little to no competition. They did say on the longer-term net leases they're seeing ~7.5% cap rate.
Upon closing of the announced M&A transactions, debt/real estate (at cost) will be ~49%. Net debt to EBITDA will be ~7.4x, compared to the current Net debt to EBITDA of ~7.1x for Realty Income (O). They mentioned on their latest investor/analyst day that they're hesitant to use equity to raise capital to pay for acquisitions moving forward until their shares are priced at a multiple similar to their comp set, so it makes sense that on a pro forma basis, they plan to use more debt (and be more levered) in the short term in comparison to competitors.
As for P/NAV, they don't report what the current value of their real estate portfolio is, just their investments at cost as it is stated on their balance sheet...Can you explain why this is an important valuation metric in this scenario? Especially in the case of a company that will look completely different in a year? On a pro forma basis, they will have ~$9.5mm in real estate, ~$4.6mm in debt, and ~396,000 shares outstanding by the end of 2014. While this does not include cash and other assets, this would mean a NAV/share of $12.37, or a P/NAV of 1.18 today.