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Freehold Royalties Estimates Reinstated By CIBC After Close Of Financing

 March 01, 2012 03:51 PM


CIBC World Markets Inc. analyst Adam Gill reinstated his estimates for Freehold Royalties Ltd. (TSE:FRU) following closing of financing. The brokerage maintained its "Sector Performer" rating and $22 price target on shares of FRU.

Gill said he is reinstating estimates following the closing of Freehold's financing, whereby the company issued 3.45 million common shares (including a 450,000 overallotment) at $20.50/share for gross proceeds of $70.725 million.

With the closing of this financing, the analyst believes Freehold is well poised to make further royalty acquisitions to bolster production in the coming years. 2012 D/CF is now 0.2 times, down from 0.8 times previously.

Gill said his core NAV decreases slightly to $13.11/share from $13.20/share previously. His 2012 CFPS decreases by 3% to $1.82/share. Freehold is expected to release its year-end results on March 14.

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Freehold trades at a premium to the group, with the company at 11.3 times 2012 EV/DACF versus the group at 7.8 times. However the analyst believes Freehold should trade at a premium to the group given its low capital requirements and strong balance sheet.

FRU is trading down 0.24% at $20.48 on Thursday.

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