Opinions
Jerome Hass
Boulevard Industrial REIT
BVD.UN-X
COMMENT
Oct 21, 2014
$0.160
Stock price when the opinion was issued
0
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The industrial space is his favourite sector in the REITs, and this is his favourite play in that. At the end of the day, it first comes down to the business model and secondly to management. He likes this because it is very similar to the early days of industrial REITs, where instead of buying large portfolios, they are able to cherry pick and buy individual buildings. As a consequence, the cap rates that they get have been higher. The first buildings that they brought in had a cap rate of 9.5% and their borrowing rates are less than 4% giving you a very wide margin between those. They have a lot of ambitious growth plans. Good management.
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Still likes this. Likes the industrial REIT space and its predictability. They are getting attractive cap rates within the sector, so they can make attractive acquisitions at 8%-9% cap rates and borrowing at 4%. If you have long-term lock-in leases at 9% and you are borrowing at 5%, the 500 basis point margin is very attractive. In industrial REITs, there are virtually zero costs to property owners. Feels this is going to be a growth stock going forward.