Retrocom Real Estate Investment Trust announced today a deal to acquire nine commercial properties for $179 million including $44 million financed thru a bought deal. Retrocom REIT (RMM) closed the day at $4.50 and the bought deal price is $4.30 per share. Based on Retrocom REITs 4 cent per month distribution, this places the distribution yield of RMM at 11.16% at the bought deal price. Compared to peers like RioCan (5.16%), Calloway (5.90%), Choice Properties (6.07%), and CT REIT (5.79%). RMM’s higher yield implies higher risk.
A closer look at the nine properties shows RMM purchased some poorly positioned assets in tertiary markets. Rockland, Napanee and Kapuskasing, Magog, Gander, Orillia, and Simcoe are each smaller centres with fewer growth prospects. Investors can use Google Maps to view the specific locations. Calloway REIT was counter-party to most of these property sales. Retrocom may have got bigger, but a larger balance sheet does not always help equity unit-holders, although it may give management something to boast about.
