REITinvestor.ca confirms neutral #3 ranking and remains cautious on CSH.UN, but today has raised its three-month target from $5.00 to $5.80
Chartwell Seniors Housing REIT (CSH.UN - TSX) May 15, 2009 REITinvestor.ca confirms neutral #3 ranking and remains cautious on CSH.UN, but today has raised its three-month target from $5.00 to $5.80. REITinvestor.ca, a private subscriber-based independent rating & and ranking service, has maintained its neutral #3 ranking of CSH.UN, but today increased its target price to $5.80. In the short term, REITinvestor.ca TA got its expected CSH.UN pull to retest near $4.10 - $4.25, and is currently testing $5.00. A hold of $4.60 would likely start a new leg up to test $6.00. Alternatively, a fail to hold $4.60 would signal a retrace to $3.75- $4.00 ahead. Following a review of CSH.UN Q1-09 Report, REITinvestor.ca notes the following: - Chartwell reported that AFFO has increased 31% from $0.16 Q1-08 to $0.21 Q1-09. Assuming that this healthy move can be sustained, CSH.UN is no longer in excess of a 100% Payout Ratio. REITinvestor.ca estimates its 2009 AFFO to be $0.80, and its Payout Ratio to be 95%. - REITinvestor.ca estimates a slight improvement in total liquidity in Q1-09 to $77M in cash and undrawn lines. However, the liquidity-to-debt ratio remains on the low side at 3.9%. Liquidity could be further improved in 2009 with the repayment of mezzanine loans due. - Management reports that its operating line of $90M, which expires in June, is expected to be renewed. - Chartwell’s senior management has reduced its ownership in Spectrum, a developing partner. This relationship remains somewhat suspect to conflict of Interest. Chartwell reported $45.2M in mezzanine loans borrowed by Spectrum was secured by second mortgage loans against 30 seniors’ housing projects, with cross default and corporate guarantees from Spectrum. Chartwell reported that a portion of $4.8M due from Spectrum was past due. - REITinvestor.ca remains concerned that further difficulties with Spectrum and Groupe Melior will persist in the future, and may negatively affect the financial health of Chartwell. - Chartwell has no US mortgages coming due until 2013, and continues to have low interest access to CMHC-insured financing in Canada. - Chartwell lowered its distribution to unit holders by approximately 30% in March 2008, from $0.08875 to $0.06167. It currently has no plans to change distributions going forward. CSH.UN units closed on Friday, May 15, 2009 at $5.02 per unit on the TSX. For more information, visit REITinvestor.ca
DISCLOSURE: REITinvestor.ca maintains its own investment fund and currently is not holding units of CSH.UN. REITinvestor.ca does not provide investment advice nor does it recommend the purchase or sale of securities including any REIT units it covers. Please consult your personal professional advisor before investing.