Artis Real Estate Investment Trust (AX.UN.TO)

Western Canada is growing faster than the East. Fell into hard times with the taper talk. It trades fairly cheaply. Doesn’t see a problem with maintaining the dividend. US exposure as well and growing. Currency should help them too. They want to grow at 30%.

Diversified REIT with most of its assets in Canada, but about 20% of its assets in the US. Have done a very good job of acquiring assets, bringing down leverage and, most importantly, bringing down payout ratios. They haven’t got enough credit for this. Still trading at a below average multiple. 7.5% distribution.

Has this been stymied because of the floods in Calgary earlier this year? Doesn’t feel this was affected in any significant way. He has been a little concerned with the Calgary portfolio in their office exposure. This has suburban offices, which he feels is more at risk to the amount of development that is going on. Has been out of this for some time but this is reaching a price point that is very attractive and they are showing very nice internal growth numbers, especially from the US portfolios. He is warming to this one.

(Market Call Minute.) All REITs have been whacked 10%-15% because interest rates went up. If interest rates are not going up, this is now a fairly reasonable time to get in.

Because of the size and potential overall consolidation in this space, it could be a candidate for a takeout. Pretty good company and has good assets. For income it is great, but make sure you don’t have 40% of your portfolio in REITs. Feels the 5.7% yield is secure.

Recently has moved into the US and likes their payout ratio on the US side. For example, they have moved into Arizona and Denver, which are very fine moves. He is a little more concerned about the Canadian side as it has a lot of tenant exposure. The move into the US will provide limited risks as well as new income sources going forward. 7.51% yield.

REITs. He has been selling REITs over the last year and is adding back right now. You can nibble away here but they will not go up to new highs here. If you can get 6% from yield and 4% from growth you will do well here.

It represents pretty good value. He was always critical of the high payout. But now they have a low multiple and good US exposure. Lower quality portfolio, however. Occupancy rates go up later in the cycle and it has not materialized for them yet.

Likes that their payout ratio is about 77%. His company has it as an outperform. Yield of 7.8%.

(Market Call Minute.) Has come off, but there is a chance they could get taken out or the numbers will turn better.

A diversified REIT. Entered into the US. A couple of headwinds have impacted this company. Moved a material amount of their balance sheet into variable rate debt so as the 10 year backed up on both sides of the border, people have expressed concern about what that means for their cost of capital. Have also been very, very acquisitive so they issued a lot of equity in the last couple of years. Probably worth $18-$19. 7.5% yield.

(A top pick June 17/13. Down 5.21%.) You are looking at secondary assets in general. These are assets that he thinks may have a little bit more difficulty since you are focusing on the Canadian market. Feels there are some leasing risks while waiting for the US economy to spill into the Canadian economy. Would prefer it at $13-$13.50.

Not his favourite REIT but if you are using this as a source of income, you will be fine. In the office market, as the economy does well, owners in central business districts increase their rents substantially, which ultimately spills over into suburban office space. 7.2% dividend yield.

(A Top Pick April 4/13. Down 4.59%.) This has been one of the harder hit names. A diversified REIT. Have recently been talking about increasing their exposure in the US, up to 30%. Have brought down the leverage and their payout ratio but the market doesn’t seem to want to give them credit. Still likes. 7.2% dividend yield.

Diversified REIT, focused out west, office, retail and industrial. Also, in Minnesota. They are good at finding cheap retain in the US. 7% yield, 90% payout. 13 times price to AFFO, which isn’t too extreme. Likes the properties and the management. Could get taken out some day. It probably goes up from here.