RGN is a stock we’ve liked over the years.

It has been overpriced many times, at huge premiums to NAV (dependant obviously on what underlying FFO is doing, but still, it gives a sense).

Now the discounts are large.

Today’s forecast AFFO (adjusted funds from operations) is below street, which is closer to 14c for FY24.

The breakdown looks like this, all the NOI is eaten by the WACD (weighted average cost of debt).

REITs are generally defensive (people gotta pay rent, regardless of the cycle), but when interest costs are moving around, little errors (in an analysts DCF) that normally aren’t all that weighty or dramatic show through, e.g. hedge book assumptions for debt, and the resultant interest cost, that cause misses come results day.

So when a defensive, leveraged asset disappoints, the sell-off can be material, and that is more or less what’s been happening to the REITs.

Now, over the next year, there will be more pressure on AFFO, as WACD reprices, and hedges roll off.

Equally, that’s why you are now getting sizeable dividend yields out of the sector.

It was interesting that RGN are also pointing the finger at peers, who’s NAV marks might be a fraction generous.

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