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Slate Office REIT is facing significant financial challenges, highlighted by over $900 million in debt and a cash flow that only reached $37 million over the past year. This situation is exacerbated by interest expenses amounting to $73 million, nearly double the cash flow, raising concerns about the company's financial health. Recent asset sales totaling $41 million may not be sufficient in the current commercial real estate environment, where it is not a seller's market. Furthermore, the company has had to have certain financial covenants waived, indicating potential risks ahead. The office sector is struggling due to changes in work habits and increased vacancy rates, particularly for non-trophy office buildings, leading to occupancy issues and the recent suspension of distributions.
A small Canadian office focused REIT in North America managed by the Slate Group. They announced a big distribution cut to re-invest the money into the portfolio. He thinks this is a chronic issue in the space and thinks they did the right thing. From here the downside is relatively protected. The discount to NAV can close in the next two years, but he is not sure what the catalyst would be. He would stay on the sidelines.
Slate Office REIT is a Canadian stock, trading under the symbol SOT.UN-T on the Toronto Stock Exchange (SOT.UN-CT). It is usually referred to as TSX:SOT.UN or SOT.UN-T
In the last year, 2 stock analysts published opinions about SOT.UN-T. 0 analysts recommended to BUY the stock. 2 analysts recommended to SELL the stock. The latest stock analyst recommendation is . Read the latest stock experts' ratings for Slate Office REIT.
Slate Office REIT was recommended as a Top Pick by on . Read the latest stock experts ratings for Slate Office REIT.
Earnings reports or recent company news can cause the stock price to drop. Read stock experts’ recommendations for help on deciding if you should buy, sell or hold the stock.
2 stock analysts on Stockchase covered Slate Office REIT In the last year. It is a trending stock that is worth watching.
On 2025-01-02, Slate Office REIT (SOT.UN-T) stock closed at a price of $0.52.
It is not looking good, considering more than $900M in debt and cash flow of only $37M in the last 12 months. Interest expenses were $73M, nearly twice cash flow. It does of course have assets, but it is not a seller's market right now, especially in commercial real estate. It sold $41M of assets in the first quarter, but this may not be enough. Some financial covenants were recently waived. Bloomberg default risk is 14.6%. A company sale of course is possible, but otherwise the convertibles might need to be dealt with by issuing stock and causing massive dilution. We would not really expect a turn here.
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