Q: Hello 5i, Could you explain the current news release on ERE.UN as to what it means
for a small shareholder ? Also your opinion as to Buy, Sell or Hold
for a small shareholder ? Also your opinion as to Buy, Sell or Hold
5i Research Answer:
ERE.UN is selling assets, and paying out some of the proceeds as special dividend. But it is also reducing its regular distribution by 50%. The balance sheet improves a bit, but the company becomes much smaller and yet remains risky. By paying out the special dividend, its ability to grow will be impaired, at a time when interest rates may finally start to improve the sector overall. We think the company should have kept the proceeds, kept the distribution as before, and looked to new growth opportunities.