Pure Industrial Real Estatetrust Trust (AAR.UN.TO)

(Market Call Minute.) He really likes the industrial markets. A long-term hold.

This had a secondary offering last week and it was well taken. This should digest the move that it has had, and then break into new highs.

(Market Call Minute.) This has industrial exposure across Canada. Look for some weakness in Alberta, but that will be balanced off by Ontario strength.

Continue to trade it. He is not a trader, however. The price they pay for assets has continually increased, but cash flows have not increased at the same rate so they are trading at more and more of a premium. It is not a long term investment. You can get a similar yield with less risk elsewhere.

(Market Call Minute.) If you want to be invested in industrial real estate, this is one of the “go to” names in Canada. This is small and is going to be able to Buy and grow.

An industrial REIT, well diversified across Canada. Has some Western Canada exposure where, if you look at the in-place rents, they are about 5% higher than the market rent, so there is going to be a bit of a negative headwind there. That is somewhat offset by strength in eastern Canada. The 80% payout ratio indicates that as “same property NOI” (net operating income) growth kicks higher in the next couple of years, especially given a lower Cdn$, you could get some dividend growth and capital appreciation potential. Trades at about a 10% discount to NAV.

Likes the REITs and is starting to build back his income positions in REITs, utilities and pipelines. This is not one he follows or has bought, but his company has it is a sector outperform with a $5.25 target. They have good exposure to single tenant properties, but he is just a little cautious about their ability to execute their growth.

He is a large shareholder. Trading at about 11% discount to NAV. A great name to hold, but his concern is the Western Canadian exposure. It looks like in-place rents are about 5% higher than market rents in Western Canada, and that is getting offset by some strength in Eastern Canada, so he feels that everything on balance is okay. If looking for a name that is a little bit cheaper in the industrial sector, you could look at Dream Industrial (DIR.UN-T), which is trading at about a 25% discount to NAV and also cheaper on other metrics. However, it is externally managed and does have a little more Western Canadian exposure, but that is fully reflected in the share price. He still holds Pure Industrial and thinks it is fine.

He likes the industrial space within the REITs and the fact that this company was buying individual buildings 1, 2 or 3 at a time, largely from private investors. They were getting 18%-18.5% cap rates, which is very attractive. Got a new CEO who changed the style of the company of what they were buying, so he exited his position.

Industrial markets are a great yield play and a great way to receive income. The kind of companies that lease will benefit overall from a weak Cdn$, as many of these industries are exporting to the US. They like to own the FedEx distribution centres, the truckers, etc., and if you think e-commerce is putting pressure on shopping malls, this is a company to buy. There will be strain on their Alberta portfolio, but the Ontario portfolio more than outweighs that. Likes this a lot.

You are getting a 7.34% yield to be buying a very stable portfolio of industrial properties. It has some Alberta exposure, but the vast majority of properties are in Ontario. A neat angle is that they are doing the developments for many FedEx hubs. If you are concerned about e-commerce and its effect on the retail market, this is a way to get around it. A very cheap stock.

They have some US assets lined up with FedEx distribution centers. They have Calgary exposure and there were issues there. They had to give concessions there, but they have an Ontario portfolio that makes up for it.

His company has this as a Sector Perform with a $5.25 target. He feels quite comfortable with this as an income payer. He wonders though if pension funds have to sell, will this be selling. A good income play and he would recommend it. Dividend yield of 7%.

(A Top Pick Sept 5/14. Up 2.9%.) This is the kind of blue-chip name he would go to for general exposure in the industrial markets. Because of that, it hasn’t collapsed as much. Has exposure to small bay, owner operator type of things and are now expanding into FedEx owned distribution centres. Very large developments. Still likes.

This has held up relatively well compared to the broader REIT Index. It has a valuation that is trading at a premium relative to the peer group. The balance sheet is fine. This is more of growth by acquisition, however it is internally managed. You should see some upside with occupancy gains and some rent growth materializing in 2016. However, the upside will be somewhat limited given that the broader real estate sector has sold off and there are better valuations in other parts of the market.