Stockchase Opinions

Doren Quinton Artis Real Estate Investment Trust AX.UN-T TRADE Mar 19, 2008

(Guest Comment) Product focus is commercial real estate, in western Canada. Earnings per share have increased. Have done good things with money. Debt to market value is close to 40%. No liquidity risks.
$14.000

Stock price when the opinion was issued

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Curated by Michael O'Reilly since 2020.
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PAST TOP PICK
(A Top Pick Jan 26/23, Down 7.8%)Stockchase Research Editor: Michael O’Reilly

Our PAST TOP PICK with AX.UN has triggered its stop at $8.80.  To remain disciplined, we recommend covering the position at this time.  

PAST TOP PICK
(A Top Pick Jun 15/22, Down 37%)

Most unloved asset class. Don't throw in the towel. 1/3 of business is owned by insiders. Immense pressure to be privatized, which often carries a 20-30% premium to share price. He's dollar-cost averaged down. 

DON'T BUY

It is reflecting a lot of REIT's with the squeeze on returns. You should look at companies that are defensive. He would pass on Artis but has a couple of others to look at. For real estate in general he likes shopping centres, but stay away from residential.

WEAK BUY
Buy the preferred shares, repriced in September at BOC 5-year rate plus 3.3%?

Tempting. You'd get a yield of about 8% until the end of September, and 7.25% after that unless they call it back.  You could buy a 5-year GIC in a registered account, no risk, and a yield of 5.32%. Or buy a laddered group of preferreds with about 6%.

Pretty indebted, not the best credit rating, fairly illiquid. If he's going to take the risk, he really wants the reward. He doesn't love either, but the AX.UN common shares with a yield of 8.34% are a better bet right now.

PAST TOP PICK
(A Top Pick Oct 12/22, Down 28%)

Turnaround situation that got caught in a rising interest rate environment. Still likes it and is buying for new clients. Essentially, a creeping takeover. More upside than downside. Don't sell now, lots of positive catalysts.

DON'T BUY

Fell on hard times. Repositioning. Cut distribution. Exposure to office and retail. Leverage is too high, needing refinancing at higher levels. There's another chance of a downdraft in equity markets, so you want high quality.

DON'T BUY

Their office holdings will be in a tough spot, but their industrial ones are doing very well and will continue to. NAV is $14-15, but shares are only at $6. So, management will have to work hard to prove to investors that there's a lot more value here. Don't buy until you see that plan.

DON'T BUY
AX.UN vs. HR.UN

In the midst of trying to decide on its strategy. Strategic review. Outcome uncertain. Challenging market in which to sell non-trophy real estate. Show-me on execution. Higher risk.

He'd own HR.UN over this one.

COMMENT
The preferred shares, Series E

Has a rate reset spread at 330 basis points, and pays a dividend yield of 15%. Something happened to the dividend last August. Doesn't know this name well. They are selling some retail assets to add stability to the stock.

DON'T BUY

In transition, difficult to analyze. Not really covering its distribution. Investors hoping dividend won't be cut.