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

Payout ratio is below 100% and the balance sheet is in really good shape. They have internalized management. Have some US exposure, which is about 20% of their net operating income, which should offset some of the weakness that we are seeing. He would be comfortable in picking it up here. Dividend is rock solid.

The stock price is looking pretty attractive. They have US assets that are performing very well. There is a bit of concern with a development in Houston and they have some Calgary office space. He would have liked to see them sell this at the peak of the market and they didn’t. The market is still giving them a hard time for it. If you are a yield investor then buy in and hold for a long time.

REITs sold off because of interest rate fears. The Canadian economy is not accelerating at the same rate as the US economy. Also, seasonally there tends to be some favouritism toward some of the interest sensitives over the summer. (See Top Picks.)

Price has dropped. When rates go up, that generally hurts real estate or REIT market. Very diversified and great managers of assets. Have most of their exposure in Manitoba, Saskatchewan and a little bit in Alberta. Also had diversified over the last 4-5 years getting into the US. In the last quarter their occupancy actually went up, partly due to the US exposure. The biggest concern is the West and its weakness. The office segment is not his favourite place to be. It is only trading at about 12X AFFO. He tends to like the apartment space better. This is cheap and he would probably be a buyer more than anything else.

The market is weighing on this one because of their Alberta exposure. Part of it is because they have suburban offices. The US portion of their portfolio has been doing very, very well. As soon as the market can get a little bit of comfort with Calgary, this is a name that you would want to jump in on. Very attractive and very sustainable yield.

He is underweight the stock, but does like the valuation. This is not hinging on the oil prices, so the question is, at what point does the market get over this.

He would be adding to it here. It was punished because of western Canada exposure but it is overblown. They also have 25% US exposure. This is a good entry point. 80% payout ratio.

NAV is close to $17. This has a very stable yield. Payout ratio has been brought down to about 85%. Investors are probably not giving them enough credit in that about a quarter of their assets are now in the US. Expects they will face some headwinds with respect to their Calgary office exposure. Yield of 7.31%.

This is something he has been spending a little bit more time on. Has been tarred with the Calgary brush. It has a large Calgary exposure with a lot of it in the suburban office or beltline office. There is a question that with the oil decline, how much this is going to affect Calgary. However, he is seeing the US portfolio is performing very well, and the stock is cheap. If you have a long-term view, you can get in now, otherwise you may hold off a bit.

The only concern is that a lot of the real estate is in Calgary, but they do have some pretty good leases in Calgary. The real question is how long we are going to be in the doldrums on oil prices. Has not added to his position, but has reduced when oil prices started coming down. Still too early to tell, but will be adding to this at some point.

Office and industrial out West, but is more in Manitoba. Really good management. Valuations are on the higher side. Have some assets in Minnesota which gives you a little more diversification. Management team adds a lot of value to the bottom line. Trades at about 15X price to AFFO. Has always been rumoured as a possible takeover target, but he doesn’t think that is going to happen for quite a while. Gives you a 7%+ yield.

A great buying opportunity. Trading at a 15% discount to NAV. Everyone is throwing up their arms saying there is an excess supply in Calgary and low commodity prices are really going to hurt them. If you drill down into the numbers, their Western Canada exposure is significant, but the Calgary office exposure is very limited, at less than 15% of their net operating income. The offshoot is that they have a whole bunch of US exposure, about 25% of their net operating income, which is really benefiting from the appreciation of the Cdn$. Payout ratio is about 85%. Internally managed. 7% yield.

Has been growing more in the US. Pulled off recently due to Western Canadian exposure. The portfolio continues to perform well and they are focusing on the US market to diminish the risk of Calgary. It is probably a good time to be getting in.

It is in Western Canada, which is getting sold off now, and it is offices, which are experiencing over supply now. These are being overdone, pushing the stock price to the down side.

Have a diversified portfolio in different sectors. There is a lot of Western Canadian focus. Have also been going into the US a lot. That is a strategy that could be hit/miss. Had expected better earnings
this last quarter. They are into development now in Texas. He always gets worried about a Canadian
that gets too get aggressive in a market that is not their home market. A safe company with a safe payout and a decent yield. Doesn't expect it will have as much upside growth.