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Iron Mountain’s Restructuring Progress Improves Dividend’s Sustainability

Iron Mountain reported earnings on Wednesday and delivered better-than-feared results for the year. Sales in 2020 fell 3%, and adjusted EBITDA was flat. But the bigger story was management's guidance. Iron Mountain expects 2021 organic revenue and adjusted EBITDA to grow by 2-6% and 7-10%, respectively. If realized, this would mark the company's highest level of growth in a decade and nudge Iron Mountain's payout ratio and leverage closer to management's target levels. Based on the midpoint of guidance, the REIT's adjusted funds from operations (AFFO) payout ratio is projected to sit near 75% this year. That's down from 82% in 2019 and could reach the firm's long-term target (low to mid-60s) by 2023.

February 25th, 2021|

ET to Maintain Distribution Following Acquisition of Enable Midstream; Deleveraging on Track to Accelerate

Energy Transfer on Wednesday announced plans to acquire Enable Midstream in a $7 billion all-equity transaction. This deal will increase Energy Transfer's units outstanding by about 14%, but management plans to maintain the firm's current $0.61 per unit distribution. We estimate the combined company's distributable cash flow (DCF) payout ratio will remain practically unchanged from Energy Transfer's current projected level near 30%. Similarly, our analysis suggests that Energy Transfer's net debt-to-forward adjusted EBITDA leverage ratio will remain near 4.9x, ticking down less than 0.1x compared to Energy Transfer's standalone metrics. Management previously targeted a leverage range of 4.0x to 4.5x, so this acquisition does not immediately push Energy Transfer much closer to its goal.

February 17th, 2021|

AT&T to Provide Update on Leverage Goals Later This Quarter; Dividend Expected to Be Sustained

Investors will have to wait a little longer to find out how much AT&T spent in a recent record-setting auction for spectrum and how its deleveraging plans will be impacted. As part of its earnings report in late January, AT&T told investors it was still in the quiet period for the FCC's spectrum auction and could not comment on the details of its bids yet. The company will instead host an analyst day by the end of March to update investors on where its leverage ratio stands following the auction and provide goals for the future. The recently frozen dividend will remain part of the plan, with management "committed to sustaining our dividend at current levels" after finishing 2020 with a "payout ratio at [...]

February 15th, 2021|

Federal Realty Maintains Dividend Despite Expected Cash Flow Deficit Through Mid-2022

Federal Realty on Thursday reported fourth-quarter earnings and maintained its dividend as rent collections continued improving. The shopping center REIT collected 89% of the rent it billed during the fourth quarter, up from 85% in the third quarter and 72% in the second quarter. However, management expects 2021 to be another tough year. About 85% of Federal's property operating income comes from markets with some of the most restrictive government-imposed COVID laws in the country, including California, New York, and New Jersey. This has continued to hurt non-essential retailers. As you can see, rent collection rates remain especially weak across restaurants (15% of Federal's rent), health and beauty firms (5%), gyms (4%), and experiential retailers (2%).

February 12th, 2021|
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