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

(Top Pick Jul 15/14, Up 4.66%) He has liked the industrial market for some time. They have internalized management and have a capable management team. It is still a good name.

(Top Pick Jun 13/14, Up 8.70%) This one is doing what he wants it to do. He expected a slightly higher return and there seems to be some pressure across industrial stocks in general. He thinks the market will eventually catch on to this one.

(A Top Pick June 13/14. Up 10.48%.) (Derek was not on June 17/14, so I’m just using BNN’s figures. Bill.) They are expanding in one of the largest industrial developments in Canada for FedEx (FDX-N) as their core tenant. Their payout is very stable and they put up good earnings.

The industrial market is doing very well. We are seeing rent growth in the GTA, its core markets. He continues to like the name. Not cheap anymore, but he continues to like it as a Hold.

This is a play on industrial space, which at some point in time can be great to own, but at other times not. However, this is trying to focus and grow more into the US. Good managers. Distribution is safe as they only pay out around 70%-80% of their income coming in. At the late cycle that we are in, he would probably avoid this.

Management team brought down the leverage by about 500 basis points, but have maintained free cash flow per share. Doing that in such a short period of time is very impressive. They just got added to the index which will create demand for shares in the short term. The majority of their assets are in Ontario, and he thinks they will benefit from demand for industrial real estate.

One of his favourites. Last year didn’t do so well, but year-to-date has done very, very well. Industrial markets are fine. They are in very good condition even in Calgary and Edmonton, but the other dynamic is that they are right on the border of whether they can go into the TSX or not. That would create a lot of volume and a lot of interest in the stock.

Likes the industrial sector in general. There has been very little supply growth. Has averaged less than 1.5% in the last few years, so you don’t have to really worry about that excess supply. Also, the lower Cdn$ should benefit the manufacturing sector in eastern Canada, which should create more industrial demand. Broadly speaking, if you look at the industrial subsector within real estate, occupancy has been in the mid-90s. If you see occupancy get pushed up above the mid-90s, then you should really see significant rent growth, and accompanying this will be cash flow growth, and hopefully a dividend bump. Balance sheet is in good shape. This tends to be more of a growth by acquisition REIT, so down the road you can see some some equity issue to gobble up some more assets.

(Top Pick Dec 17/13, Up 5.46%) His call to go industrial did not work out as well as he thought it would.

It is very unlikely that you will see a dividend increase in this anytime soon. The payout ratio is pretty high. Thinks there is some Canadian Western exposure here, and he would stay away from it. 7.2% dividend yield.

(A Top Pick Nov 13/13. Up 4.88%.) Still good value. Sees this as still being cheap. The value is there. On a US
theme, a stronger US means more shipping to the US, meaning more logistics, which all implies using the industrial properties like this company has.

He is one of the largest shareholders in this one. You can’t go wrong

Likes it because of good quality and industrial properties. There is good demand and vacancy is going down.

Last year we had rising rates and real estate underperformed. He does not think rates will go up much and not that fast. The board is made up of people on other boards and that to him is a conflict. He would prefer the team do only one thing and do it well.

It just looks even cheaper now as the fundamentals look very strong. FedEx centers across the US. Does not think there is a lot of risk of diluting through share issue.