Boardwalk REIT (BEI.UN.TO)

The are focused on multi-family buildings in Western Canada (60% Alberta, 10% Saskatchewan). The stock has appreciated significantly over the past year, reflecting the improvement in the Alberta economy. They are now offering smaller move-in incentives because demand has improved. Over the long run, what will drive this stock will be the economy of Alberta, and so an investor should buy the stock (or not) based on their opinion of the Alberta economy’s future. The company is well-managed but its yield is only about 2%. She sees the stock as fully valued, with a yield that is too low for an income investor. Yield 2%.

Yields just under 2% so not being rewarded to hold stock if it moves down. Has broken out from a lid since 2016, which is a bullish indicator. It is probably over bought. It may pull back a bit.

Has room to run. As in 2016, it saw a sharp uptrend, then a consolidation as the market needed time to digest that move, before it pushed higher. All bond proxies are starting to move up after a downtrend.

(Past Top Pick, January 23, 2017, Up 2%) He's looking closely at this after selling it. It's a good derivatives trade on oil improving and money returning to Alberta. The only problem is there hasn't been an absorption of new properties in Alberta yet though we likely will later this year.

(A Top Pick Sept 20/16. Down 15%.) Continues to like this because it is a relatively defensive asset class, lower income Housing. Western Canada has been particularly challenged given the downturn in energy. The market has been a little overreacting to the downturn. The benefit is that it has a relatively short lease term. Trades at a significant discount to NAV. Continue to Hold if you own. Dividend yield of 5.6%.

Missed very big last quarter. One problem is that most assets are in Calgary, Edmonton and Saskatchewan, and the rental market there has been incredibly weak. There are signs of stabilization. The trouble is they are competing with condos, and they have large buildings. Last quarter, they came out with a significant amount of capital expenditures they have to put into their buildings. The positive is that they have a balance sheet that allows them to do CapX spending. Fantastic management and they are the biggest shareholder. Getting closer to the bottom and there is some stabilization. If you own, stick with it, but don’t buy it. Distribution yield is 5.7%, which he thinks is pretty safe.

He does not own any of the REITs. He backed away because of rising interest rates. He worries about commercial REITs in light of what AMZN-Q is doing. BEI.UN-T is in Calgary and he thinks that area will lift again.

A controversial call, because somebody downgraded it recently, which took the stock down a little. The yield is good and he likes management. A pristine balance sheet. Real estate is a laggard area, and he expects that part of the market to improve. Next 2 quarters are probably not going to be great and he is expecting a trough in Q2, which is when you really want to be in this, but you have to be 6 months ahead of that because the market is already looking for this. There is a 20% Short interest on this out of the US. Dividend yield of 4.70%. (Analysts’ price target is $46.68.)

This is entirely about the Alberta economy and oil exposure. There are no other problems in this REIT. There was so much overheating in the oil economy in Alberta and Regina, and it weighed on this REIT. It is going to continue to disappoint. He owns a very small piece.

Trades at a huge discount to replacement value, which he pegs at around $65. Apartments are a defensive asset class and this is a good example. If you are worried about house prices declining in Western Canada, people are going to rent instead of buy. You should see occupancy go up in low income Housing, which is where this company really benefits. 80% of the Net Operating Income comes from Alberta and Saskatchewan, which is why it trades at a sizable discount. Exceptional management team which owns 25% of the company. Dividend yield of 4.5%.

(Market Call Minute.) Calgary apartments. If you are a long term holder, maybe just wait. Stay on the sidelines for a little while. They may have a write-down in the future.

(Top Pick Nov 26/15, Up 12.38%) Largest apartment REIT in Canada. There have been some concerns about lowering rents and marginally decreasing occupancy. There was noise from Fort McMurray. Net asset value is $66. They had a special dividend last year. They have a big short position. It is an extremely well run company and he is buying on weakness.

(Market Call Minute) There was an overreaction when oil got below $40. It will be a challenge to figure out if they will stabilize occupancy by lowering rents.

Apartments, a lot of them in Western Canada including Fort McMurray. Dipped, but has recovered with the whole group. He would wait a quarter to see if they’ve overcome Fort McMurray and the Alberta exposure.

(Market Call Minute.)