Artis Real Estate Investment (AX.UN) AI Stock Analysis

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Artis Real Estate Investment

(TSX:AX.UN)

Rating:57Neutral

Price Target:

C$7.50

▲(3.16%Upside)

Artis Real Estate Investment's overall score is influenced primarily by its mixed financial performance, where stable cash flows are overshadowed by declining revenue and profitability challenges. Technical analysis points to moderate positive momentum, but valuation concerns persist due to the negative P/E ratio and high payout ratios. Positive guidance from the earnings call regarding debt reduction and strategic leasing initiatives adds some optimism.

Positive Factors

Occupancy Targets

Increasing visibility on 95% occupancy target.

Outlook Upgrade

Upgrading to BUY following raised outlook for the company.

Negative Factors

Earnings Performance

Q3/24 results disappoint; near-term headwinds persist.

M&A Activity

M&A Activity Drops to Multi- ; Q1/25: Slight miss.

Artis Real Estate Investment (AX.UN) vs. iShares MSCI Canada ETF (EWC)

Market Cap

$719.40M

Dividend Yield8.09%

Average Volume (3M)98.19K

Price to Earnings (P/E)―

Beta (1Y)1.09

Revenue Growth-13.42%

EPS Growth86.55%

CountryCA

Employees143

SectorReal Estate

Sector Strength66

IndustryREIT - Diversified

Share Statistics

EPS (TTM)0.08

Shares Outstanding98,143,950

10 Day Avg. Volume105,264

30 Day Avg. Volume98,185

Financial Highlights & Ratios

PEG Ratio-0.97

Price to Book (P/B)0.47

Price to Sales (P/S)0.00

P/FCF Ratio8.98

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$6.98

Price Target Upside-3.94% Downside

Rating ConsensusHold

Number of Analyst Covering1

Artis Real Estate Investment Business Overview & Revenue Model

Company DescriptionArtis is a diversified Canadian real estate investment trust investing in industrial and office properties in Canada and the United States. Since 2004, Artis has executed an aggressive but disciplined growth strategy, building a portfolio of commercial properties in select markets in Canada and the United States. As of September 30, 2020, Artis' commercial property comprises approximately 23.8 million square feet of leasable area.

How the Company Makes MoneyArtis REIT makes money primarily through the rental income generated from its diversified portfolio of commercial properties. This includes leasing office spaces, retail units, and industrial facilities to various tenants. The company also engages in property management activities to optimize occupancy rates and rental yields. Additionally, Artis REIT may realize gains from property sales or development projects and may benefit from strategic partnerships and joint ventures that enhance its portfolio's value or expand its geographic footprint.

Artis Real Estate Investment Earnings Call Summary

Earnings Call Date:May 08, 2025

(Q1-2025)

% Change Since: -0.53%|

Next Earnings Date:Jul 30, 2025

Earnings Call Sentiment Neutral

Artis REIT demonstrated solid progress in debt reduction and strategic leasing, enhancing its financial footing. However, challenges remain with high payout ratios and occupancy decline. The commitment to long-term value creation is evident, but short-term pressures persist.

Q1-2025 Updates

Positive Updates

Debt Reduction Success

Reduced overall leverage with a conservative debt to gross book value of 39.2% at March 31, down from 40.2% at December 31.

Strategic Dispositions

Sold two industrial and two retail properties for $70.5 million. An additional property was sold for $4.8 million in April, contributing to debt reduction.

Leasing Achievements

Signed significant new and renewal leases, including an 80,000 sq ft lease in Minnesota and a 99,000 sq ft renewal in Arizona, resulting in a 4% increase in lease renewals.

Increased Same Property NOI

Reported a 4.5% increase in same property net operating income (NOI).

Proactive Credit Management

Finalized new three-year senior secured credit facilities totaling $520 million, with strategic usage to manage debt obligations effectively.

Negative Updates

Slight Occupancy Decline

Occupancy, including commitments, fell slightly to 89.1% from 89.2% at December 31.

High Payout Ratios

Payout ratios were higher than desired, indicating challenges in covering dividends with current income.

Ongoing Cominar Investment Challenges

Continued efforts to resolve the Cominar investment situation, with the goal of settling outstanding senior and junior preferred units.

Company Guidance

In Artis Real Estate Investment Trust's first quarter 2025 results conference call, the company emphasized its ongoing focus on reducing leverage and strengthening its balance sheet. Artis reported a decrease in its debt to gross book value from 40.2% at the end of 2024 to 39.2% by March 31, 2025, following property sales totaling $70.5 million in Canada. The net asset value per unit slightly increased to $13.76 from $13.75. Occupancy, including commitments, was slightly down to 89.1% from 89.2%, with new leases and renewals contributing to a 4.5% rise in same property net operating income. Artis also discussed its $520 million credit facilities, highlighting the use of these funds to repay a $200 million debenture. Its NCIB program saw the repurchase of common and preferred units at a discount to NAV, reflecting the company's strategy to enhance unitholder value despite a higher payout ratio this quarter. Artis plans to further reduce leverage while focusing on growth opportunities that align with their long-term objectives of increasing net asset value per unit.

Artis Real Estate Investment Financial Statement Overview

Summary

Artis Real Estate Investment shows a mixed financial position. While operational cash flows are stable and leverage is manageable, persistently negative net income and declining revenue are concerning. The company needs to focus on reversing revenue contraction and improving profitability to enhance its financial health.

Income Statement

Neutral

The income statement shows declining revenue over recent years, with a revenue drop from $458.9M in 2020 to $282.3M in TTM. Gross profit margin for TTM is 53.4%, which is respectable. However, the net profit margin is negative at -10.2% due to consistent net losses, indicating profitability challenges. The EBITDA margin is 25.0%, suggesting moderate operational efficiency, but the overall trend reflects a need for revenue stabilization and cost management.

Balance Sheet

Positive

The balance sheet is reasonably strong with a debt-to-equity ratio of 0.68 in TTM, indicating a balanced leverage. However, total assets have decreased from $4.9B in 2020 to $2.7B in TTM. The equity ratio stands at 57.5%, which is healthy and suggests a solid capital structure. Despite asset shrinkage, the company maintains a stable equity position.

Cash Flow

Neutral

Cash flow analysis reveals a stable operating cash flow with $79.7M in TTM, and free cash flow remains positive. However, there is a significant negative financing cash flow driven by high debt repayments, indicating potential liquidity pressures. The operating cash flow to net income ratio is negative due to net losses, suggesting difficulties translating cash operations into profits.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
282.25M	300.37M	335.84M	372.51M	419.50M	458.92M
	Gross Profit
150.84M	163.23M	184.02M	209.98M	237.78M	269.27M
	EBIT
107.93M	163.23M	109.83M	293.64M	237.78M	269.27M
	EBITDA
70.67M	53.88M	-217.19M	294.89M	232.92M	265.09M
	Net Income Common Stockholders
-28.87M	-47.41M	-332.07M	-5.29M	389.18M	21.54M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
26.29M	32.79M	28.94M	29.17M	221.47M	34.70M
	Total Assets
2.71B	2.80B	3.74B	4.55B	4.58B	4.86B
	Total Debt
1.07B	1.13B	1.91B	2.21B	1.97B	2.40B
	Net Debt
1.04B	1.10B	1.88B	2.19B	1.74B	2.36B
	Total Liabilities
1.15B	1.22B	2.02B	2.32B	2.12B	2.53B
	Stockholders Equity
1.56B	1.58B	1.72B	2.23B	2.46B	2.33B
Cash Flow		Free Cash Flow
79.33M	79.73M	79.59M	140.72M	202.28M	176.31M
	Operating Cash Flow
79.65M	80.14M	79.96M	140.74M	202.29M	176.33M
	Investing Cash Flow
725.18M	652.11M	298.39M	-288.99M	607.47M	165.96M
	Financing Cash Flow
-808.10M	-730.44M	-378.19M	-46.57M	-622.97M	-350.00M

Artis Real Estate Investment Technical Analysis

Technical Analysis Sentiment

Positive

Last Price7.27

Price Trends

50DMA

7.15

Positive

100DMA

7.28

Negative

200DMA

7.29

Negative

Market Momentum

MACD

0.02

Negative

RSI

54.02

Neutral

STOCH

77.95

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:AX.UN, the sentiment is Positive. The current price of 7.27 is above the 20-day moving average (MA) of 7.18, above the 50-day MA of 7.15, and below the 200-day MA of 7.29, indicating a neutral trend. The MACD of 0.02 indicates Negative momentum. The RSI at 54.02 is Neutral, neither overbought nor oversold. The STOCH value of 77.95 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:AX.UN.

Artis Real Estate Investment Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BTB.UN	78 Outperform	C$319.53M	8.20	8.03%	8.26%	3.34%	10.20%
PRV.UN	72 Outperform	C$328.03M	12.21	5.68%	8.32%	-1.07%	684.07%
CRR.UN	69 Neutral	C$2.74B	―	-0.49%	6.02%	6.96%	85.15%
Sector *	61 Neutral	$2.82B	10.88	0.42%	8438.92%	5.74%	-20.95%
MRT.UN	59 Neutral	C$380.93M	―	-3.77%	4.08%	0.18%	68.25%
HR.UN	58 Neutral	C$2.78B	―	-3.89%	5.67%	-6.43%	-35204.55%
AX.UN	57 Neutral	$719.40M	―	-1.80%	8.09%	-13.42%	86.55%

* Real Estate Sector Average

Performance Comparison

TSE:AX.UN

Artis Real Estate Investment

7.36

1.33

22.10%

TSE:BTB.UN

BTB REIT

3.62

0.66

22.30%

TSE:CRR.UN

Crombie Real Estate ate

14.84

2.95

24.81%

TSE:HR.UN

H&R Real Estate ate Staple

10.71

2.21

26.00%

TSE:MRT.UN

Morguard Real Estate ate

5.78

0.52

9.89%

TSE:PRV.UN

PRO Real Estate Investment

5.50

0.90

19.57%

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.