TSXV:FRO.UN

Stock Analysis Report

Fronsac Real Estate Investment Trust

Executive Summary

Fronsac Real Estate Investment Trust is an open-ended trust that acquires and owns high quality triple net and management-free commercial real estate properties.

Rewards

Trading at 41.9% below its fair value

Revenue is forecast to grow 29.61% per year

Risk Analysis

Unstable dividend track record

Large one-off items impacting financial results

Profit margins (11.6%) are lower than last year (68.7%)

Shareholders have been diluted in the past year

+ 1 more risk


Snowflake Analysis

Slightly overvalued with limited growth.

Share Price & News

How has Fronsac Real Estate Investment Trust's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: FRO.UN has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-1.4%

FRO.UN

3.5%

CA REITs

1.6%

CA Market


1 Year Return

19.3%

FRO.UN

16.4%

CA REITs

10.0%

CA Market

Return vs Industry: FRO.UN exceeded the Canadian REITs industry which returned 13.2% over the past year.

Return vs Market: FRO.UN exceeded the Canadian Market which returned 10.4% over the past year.


Shareholder returns

FRO.UNIndustryMarket
7 Day-1.4%3.5%1.6%
30 Day1.5%3.4%2.7%
90 Day-1.4%2.9%6.4%
1 Year23.6%19.3%22.3%16.4%13.5%10.0%
3 Year32.8%19.3%43.7%21.6%17.5%6.8%
5 Year137.4%100.0%58.6%19.4%36.6%16.5%

Price Volatility Vs. Market

How volatile is Fronsac Real Estate Investment Trust's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Fronsac Real Estate Investment Trust undervalued compared to its fair value and its price relative to the market?

41.8%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: FRO.UN (CA$0.68) is trading below our estimate of fair value (CA$1.17)

Significantly Below Fair Value: FRO.UN is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: FRO.UN is poor value based on its PE Ratio (73.5x) compared to the REITs industry average (10.7x).

PE vs Market: FRO.UN is poor value based on its PE Ratio (73.5x) compared to the Canadian market (15.8x).


Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate FRO.UN's PEG Ratio to determine if it is good value.


Price to Book Ratio

PB vs Industry: FRO.UN is overvalued based on its PB Ratio (1.5x) compared to the CA REITs industry average (1.1x).


Next Steps

Future Growth

How is Fronsac Real Estate Investment Trust forecast to perform in the next 1 to 3 years based on estimates from 2 analysts?

29.6%

Forecasted annual revenue growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: Insufficient data to determine if FRO.UN's forecast earnings growth is above the savings rate (1.4%).

Earnings vs Market: Insufficient data to determine if FRO.UN's earnings are forecast to grow faster than the Canadian market

High Growth Earnings: Insufficient data to determine if earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: FRO.UN's revenue (29.6% per year) is forecast to grow faster than the Canadian market (5% per year).

High Growth Revenue: FRO.UN's revenue (29.6% per year) is forecast to grow faster than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if FRO.UN's Return on Equity is forecast to be high in 3 years time


Next Steps

Past Performance

How has Fronsac Real Estate Investment Trust performed over the past 5 years?

1.7%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: FRO.UN has a large one-off loss of CA$3.0M impacting its September 30 2019 financial results.

Growing Profit Margin: FRO.UN's current net profit margins (11.6%) are lower than last year (68.7%).


Past Earnings Growth Analysis

Earnings Trend: FRO.UN's earnings have grown by 1.7% per year over the past 5 years.

Accelerating Growth: FRO.UN's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: FRO.UN had negative earnings growth (-75.4%) over the past year, making it difficult to compare to the REITs industry average (4.8%).


Return on Equity

High ROE: FRO.UN's Return on Equity (1.9%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Fronsac Real Estate Investment Trust's financial position? (This company is analysed differently as a bank or financial institution)


Financial Position Analysis


Debt to Equity History and Analysis


Balance Sheet

Inventory Level: FRO.UN has a high level of physical assets or inventory.

Debt Coverage by Assets: FRO.UN's debt is not covered by short term assets (assets are 0x debt).


Financial Institutions Analysis

Asset Level: FRO.UN's level of assets compared to its equity is low.

Allowance for Bad Loans: Insufficient data to determine if FRO.UN has a sufficient allowance for bad loans.

Low Risk Liabilities: FRO.UN reports no customer deposits, loans are made up entirely of externally borrowed funds.

Loan Level: Insufficient data to determine if FRO.UN has an acceptable proportion of non-loan assets held.

Low Risk Deposits: FRO.UN has advanced significantly more loans than the customer deposits it holds.

Level of Bad Loans: Insufficient data to determine if FRO.UN has an appropriate level of bad loans.


Next Steps

Dividend

What is Fronsac Real Estate Investment Trust's current dividend yield, its reliability and sustainability?

3.26%

Current Dividend Yield


Upcoming Dividend Payment

Purchase Fronsac Real Estate Investment Trust before the 'Buy Limit' to receive their next dividend payment.


Dividend Yield vs Market

company3.3%marketbottom25%1.9%markettop25%5.4%industryaverage4.6%forecastin3Years4.4%

Current dividend yield vs market & industry

Notable Dividend: FRO.UN's dividend (3.26%) is higher than the bottom 25% of dividend payers in the Canadian market (1.88%).

High Dividend: FRO.UN's dividend (3.26%) is low compared to the top 25% of dividend payers in the Canadian market (5.48%).


Stability and Growth of Payments

Stable Dividend: Whilst dividend payments have been stable, FRO.UN has been paying a dividend for less than 10 years.

Growing Dividend: FRO.UN's dividend payments have increased, but the company has only paid a dividend for 8 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (54.6%), FRO.UN's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: Insufficient data to determine if a dividend will be paid in 3 years and that it will be covered by earnings.


Next Steps

Management

What is the CEO of Fronsac Real Estate Investment Trust's salary, the management and board of directors tenure and is there insider trading?

3.8yrs

Average board tenure


CEO

Jason Parravano 0

2.8yrs

Tenure

CA$147,000

Compensation

Mr. Jason Parravano has been Chief Executive Officer and President of Fronsac Real Estate Investment Trust since March 15, 2017 and serves as its Trustee since May 24, 2019. Mr. Parravano has an extensive  ...


CEO Compensation Analysis

Compensation vs Market: Jason's total compensation ($USD112.51K) is below average for companies of similar size in the Canadian market ($USD165.67K).

Compensation vs Earnings: Jason's compensation has been consistent with company performance over the past year.


Board Age and Tenure

3.8yrs

Average Tenure

75yo

Average Age

Experienced Board: FRO.UN's board of directors are considered experienced (3.8 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

BuyCA$750,00021 May 19
Guy Laframboise
EntityIndividual
Role
Member of the Board of Directors
Independent Trustee
Shares1,363,637
Max PriceCA$0.55
BuyCA$500,00021 May 19
Michael Zakuta
EntityIndividual
Role
Member of the Board of Directors
Independent Trustee
Shares909,091
Max PriceCA$0.55
BuyCA$1,000,00021 May 19
Michel Trudeau
EntityIndividual
Role
Member of the Board of Directors
Independent Trustee
Shares1,818,182
Max PriceCA$0.55
BuyCA$52,14321 May 19
Jason Parravano
EntityIndividual
Role
Chief Executive Officer
President
Shares94,805
Max PriceCA$0.55
BuyCA$82,50021 May 19
Francois-Olivier Laplante
EntityIndividual
Role
Member of the Board of Directors
Independent Trustee
Shares150,000
Max PriceCA$0.55
BuyCA$5,70022 Mar 19
Michel Trudeau
EntityIndividual
Role
Member of the Board of Directors
Independent Trustee
Shares10,000
Max PriceCA$0.57
BuyCA$5,70022 Mar 19
Michael Zakuta
EntityIndividual
Role
Member of the Board of Directors
Independent Trustee
Shares10,000
Max PriceCA$0.57
BuyCA$17,10022 Mar 19
Kevin Henley
EntityIndividual
Role
Chief Financial Officer
CFO & Assistant Secretary
Shares30,000
Max PriceCA$0.57
BuyCA$7,98022 Mar 19
Guy Laframboise
EntityIndividual
Role
Member of the Board of Directors
Independent Trustee
Shares14,000
Max PriceCA$0.57
BuyCA$5,70022 Mar 19
Martin Grimard
EntityIndividual
Shares10,000
Max PriceCA$0.57
BuyCA$159,00001 Feb 19
Michel Trudeau
EntityIndividual
Role
Member of the Board of Directors
Independent Trustee
Shares300,000
Max PriceCA$0.53

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 26.6%.


Management Team

  • Jason Parravano

    President

    • Tenure: 2.8yrs
    • Compensation: CA$147.00k
  • Kevin Henley

    CFO & Assistant Secretary

    • Tenure: 2.2yrs
    • Compensation: CA$61.00k
  • Ben Gazith

    Controller


    Board Members

    • Michael Zakuta (59yo)

      Independent Trustee

      • Tenure: 7.7yrs
    • Michel Trudeau

      Independent Trustee

      • Tenure: 1.7yrs
    • Michel Lassonde (77yo)

      Chairman of the Board of Trustees

      • Tenure: 8.5yrs
      • Compensation: CA$30.00k
    • Katia Marquier

      Independent Trustee

      • Tenure: 2.3yrs
    • Guy Dancosse (75yo)

      Independent Trustee

      • Tenure: 3.8yrs
      • Compensation: CA$5.00k
    • Guy Laframboise

      Independent Trustee

      • Tenure: 5.3yrs
    • Jason Parravano

      President

      • Tenure: 2.8yrs
      • Compensation: CA$147.00k
    • Francois-Olivier Laplante

      Independent Trustee

      • Tenure: 3.8yrs

    Company Information

    Fronsac Real Estate Investment Trust's company bio, employee growth, exchange listings and data sources


    Key Information

    • Name: Fronsac Real Estate Investment Trust
    • Ticker: FRO.UN
    • Exchange: TSXV
    • Founded:
    • Industry: Diversified REITs
    • Sector: Real Estate
    • Market Cap: CA$79.834m
    • Shares outstanding: 117.40m
    • Website: https://www.en.fronsacreit.com

    Location

    • Fronsac Real Estate Investment Trust
    • 106 Gun Avenue
    • Pointe-Claire
    • Quebec City
    • Quebec
    • H9R 3X3
    • Canada

    Listings

    TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
    FRO.UNTSXV (TSX Venture Exchange)YesTrust UnitsCACADAug 2008

    Biography

    Fronsac Real Estate Investment Trust is an open-ended trust that acquires and owns high quality triple net and management-free commercial real estate properties. 


    Company Analysis and Financial Data Status

    All financial data provided by Standard & Poor's Capital IQ.
    DataLast Updated (UTC time)
    Company Analysis2020/01/19 00:14
    End of Day Share Price2020/01/17 00:00
    Earnings2019/09/30
    Annual Earnings2018/12/31


    Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.