XRN

Read as a REIT rather than an operating company, XRN's headline FY2025 net loss of -$6.88M is misleading. The MD&A shows the loss is driven almost entirely by non-cash charges: $44.0M depreciation, $15.0M amortization, and $13.0M of property impairments (two properties in Aurora, IL and Melbourne, FL written down to contractual sale prices). Strip those out and the business still generated $73.6M of operating cash flow (+5.1% YoY) on rental revenue of $147.7M (+6.8%). Approximate FFO (net loss + D&A + impairments ≈ $65M, ~$4.9/share) puts the stock near ~7-8x FFO and roughly 0.98x book (equity $510M vs. $503M market cap) — an undemanding valuation for a real-estate portfolio still carried at $1.2B.

That cheapness is the reason not to sell, but the deterioration is the reason not to buy. Net income has fallen every year since FY2023 ($21.7M → $6.69M → -$6.88M), and the culprits are structural, not one-off. Interest expense rose to $31.8M as market rates climbed on what the 10-K flags as 'unhedged floating-rate debt' from the Credit Facility; the company is directly exposed if rates stay high. Impairments are also becoming a pattern ($1.7M in 2024, then $13.0M in 2025) as the REIT sells assets below carrying value, hinting the $1.2B book may still be optimistic in places. Management did extend weighted-average debt term to 4.1 years (from 2.0) at a 3.74% rate — a genuine positive that de-risks near-term maturities.