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

(Preferred Shares 5.25%, Series C.) If the market has had a good run, you might want to hide a little in an alternative yield. These type of preferreds, reset to a rate plus an underlying government rate, usually the 5 year. This one has a very big reset yield. It is also in US$, so you might get a little positive with the US$. When this resets in 2018, you are actually going to be collecting 8.5% at current pricing, more than the 7.5% you are collecting now.

Trades at a huge discount relative to NAV. One of the cheapest diversified REITs in Canada. Payout ratio is relatively low, so you don’t have to worry about a dividend cut. There is probably $3-$4 of capital appreciation potential, especially if oil prices can sustain themselves at around $40. The big knock is that they have Western Canada exposure, about 30% of their portfolio, and rents in Western Canada, especially suburban office rents in Calgary, are really declining by 15%-25%, so there is going to be a pretty big hit that is going to happen, but to some extent that has been offset by the strength in this company’s US portfolio. He would Buy and bank on the 8.5% dividend yield.

Owns a little and is looking to add to it. This is a Western Canadian exposed REIT, so it has declined a lot. Trading at over a 30% discount to NAV. The nice thing about this is that you are getting about a 10% yield. Payout ratio is around 80%. Only about 25% of its net operating income comes from Western Canada.

What the market doesn’t appreciate about this company sometimes, is that they have a significant US portfolio which has done very well. Their retail component, even in Western Canada, has been very stable. There are rumours that they are putting a lot of their Calgary offices up for sale. He is sitting on the sidelines to see how the whole process works. The dividend is sustainable at this level. Dividend yield of 9.3%.

(Top Pick Jan 9/15, Down 10.64%) It is painted with a brush having Western Canada exposure even though it is less than 30%. Payout is below 80%. They are looking at getting rid of some of the Western Canadian holdings. This is a name you can buy and get the yield. You can benefit from the recovery.

Has a lot of Calgary office exposure, and there is uncertainty about the value of their properties. However, their retail and US portfolios have been performing quite well. This is the beauty of a diversified vehicle. If one party isn’t working, the other is. He is concerned about everything in Alberta, but is watching this because of its US exposure.

A lot of their performance has been affected by being associated with Alberta. They are not getting any credit for work or acquisitions done south of the boarder. They will continue to diversify away from their Alberta holdings. Hold or add to it here.

He is still on the sidelines. They have done well purchasing assets. Their US investments have equaled out their Calgary exposure. He is looking for the opportunity to get in in the numbers. You get your income and then a swing up when Calgary comes back.

Has always held this in high regards. Likes the management. Doesn’t own currently, but is one that he would buy back again. His company has this as a Sector Perform with a $15 target. His only concern is that a lot of their properties are out west in Alberta. They also have a US presence. If you are looking for a good REIT, this is one he would recommend.

Real estate has underperformed and this one was hit because of western assets. It has never been cheaper. It is reasonable now. It is overdone and the properties are good properties.

He sees only a 1% growth rate. Their dividend seems sustainable. Balance sheet is fair. US business mitigates their risk in Canada.

The exposure to Calgary is larger than their US exposure and so is dominating the name. As you see stabilization, it could do better. There is an overcapacity of buildings there and it will take time to go through it.

This has a momentum shift against it because of the Calgary exposure. However, their US portfolio has been doing very well. Have some interesting industrial in Minneapolis and an office in Arizona. If you are looking for a diversified name and high income, and you are able to wait, this is a fine entry point.

Thinks the yield is very sustainable. Payout ratio is well below 80%. This is a name you can buy and hope to see dividend growth out of, provided you get some cooperation out of the Western Canadian economy. Office exposure in Alberta represents about 20% of their NOI, so it is not that significant. However, it is B and C type quality office exposure, and there are going to be some concerns about their ability to sustain high occupancy and rent growth. The positive is that they have significant US exposure, which accounts for about 25% of their operating income. Yield of just under 9%.

If you bought it for its sustainable yield, should hold it. It is being tagged with its Calgary exposure. The market is ignoring their US exposure. Wait through the cycle.