Opinions

Paul Gardner, CFA BTB Real Estate Investment Trust BTB.UN-T SELL May 16, 2019

REIT that specializes in eastern Ontario and Quebec. He initiated the position in 2010. When you do the math he made 13.5% annualized. Problem is they are over distributing. They got to a point f exhaustion. It is a great exit point.

Paul Gardner, CFA

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$4.890

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DON'T BUY

He used to own this. It had B- level properties instead of A-. You can hold this, but other REITs perform better. A sleepy company with OK assets but will move sideways. Collect the dividend only.

SELL

He recently got out about three months ago. They bought is in 2012 at much lower levels. Their assets are focused in Eastern Ontario and Quebec. He feels they are over distributing -- over 100% payout. That is okay for while, but it is not sustainable. Industry wide payouts are down to 80%. Their properties are getting better with some recent selling of non-core assets. They yield may be vulnerable. He would be a seller.

DON'T BUY

Owned this for 6 years, but couldn't understand why the 8.2% yield was so high. If there's a bump (a bad earnings report), he worries what would protect this. He means 120% in over-distributing. Great properties in eastern Ontario and Quebec, but it's hard for them to grow.

DON'T BUY

Over time it will be challenging to grow their net operating income. Their high distribution yield is probably pretty tight in terms of coverage.

COMMENT

Dividend safe? He owned BTB.UN a few years ago as they held light industrial and commercial real estate around Montreal. The issue going back 3-4 years ago was they had issues meeting financial metrics, which he feels was due to them over distributing earnings. He would prefer to hold WPT and GRT.UN.

DON'T BUY

It is a diversified REIT focused in the Quebec secondary markets. It is retail and office. He is concerned about the distribution.

DON'T BUY

Got out because risk/return was not in his favour. His concern was over-distribution, quality of assets, liquidity issues because it's smaller. Still struggling to grow. Doesn't fit his themes right now. Yield is 7.1%.

HOLD

Smaller cap. Income focused, with a yield around 8.5%. 50% office, 25% retail, 20% industrial. Goal is 60% industrial over 4-5 years. Issue will be having to sell assets to get there. Office space is difficult right now, both operationally and to sell. 25% discount to NAV. Pretty safe.

BUY

Most exposure is in Quebec. Lots of office space exposure. But could see a business turnaround. Would recommend buying and holding.

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Paul Gardner, CFA BTB Real Estate Investment Trust BTB.UN-T SELL May 16, 2019

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