Paul Gardner, CFACanadian Apartment PropertiesCAR.UN.TOPAST TOP PICKNov 09, 2023

The lack of immigration has impacted them.  Also, tenants who signed higher-rent leases during Covid are exiting those leases now, which lowers the rent on those spaces. Let this play out. The PE is now attractive. It's a matter of time.

The sector has cooled off dramatically after Canada stopped admitting so many immigrants. We see this across the board in apartments and condos. This is on his radar. Is a yield play that's coming into a sweet spot, better than a year ago. He expects a better structure to immigration ahead and Canada will still grow dramatically.

He doesn't own real estate because of volatile interest rates. If the Bank of Canada raises rates later in the year, it would be a negative for the stock. The price is lower than the 200 day moving average so wait and see, Pays a 4 1/4% dividend.

Canada's condo market is awful with too many prices and falling rents. But in 3-4 years, the supply/demand dynamic will be very different. CAR trades at 0.75x NAV vs. 1x NAV. They have some properties achieving above market rents but 75% are below market rents. This is a cyclical business and this slump will pass. In a few years, the picture will be very different.

Ended up selling. Ontario government was going to revisit rent control, but then didn't. No point being in a sector when the underlying catalyst isn't there.

He sold since the premise changed with the government and the potential of higher rates. He thinks the whole sector is broken.

Typically does not own REITs. Doesn't like the current fundamentals for apartments -- still a lot of condo supply that competes with apartments. Rent control issues. Immigration reform. Still over-exuberance in the space. Be patient on this space; he's looking around the wreckage, but not willing to pick anything up yet.

Likes the underlying fundamentals, demographics, and long-term trend of the business. Not impressed with management a year ago, as their plan was to sell old assets and buy new. But there weren't any new buildings to buy.

Now more interesting because the stock's come off. Now at ~4% yield. As well, private rental space is struggling, so there's an opportunity to purchase distressed assets. Don't add more to a 5% position. If you don't own, worth a look for a long-term play. She's going to look at it more seriously.

The Canadian multi-family market is in a tough spot because immigration levels have come off but lots of new supply, especially in condos. Rents have fallen. CAP REIT management is doing a great job, such as buying back stock, but he avoids this sector.

Largest and most liquid of the apartment REITs, which is probably the most defensive REIT group. Concerns about rental market in Canada, with 13 consecutive months of rent decreasing. Headlines aren't great, but a quality name to own. Canada still has shortage of rental housing. 

Very good place to park your money. Yield is ~4%.

Disclosure: he bought it for a family member years ago.

Is stable, with apartments remaining strong with steady rent growth.

Decent dividend. He actually has 3 REIT positions (including XRE and NWH.UN) because they're value plays right now, all pay dividends, and are a bit overlooked. His view is that markets may be in for more volatility, so you want stocks with lower beta. Buy here at the bottom of its range, and it might go to the top ~$50 and then sell. Yield is 3.45%.

Biggest and most liquid apartment REIT in Canada, trades a little closer to NAV. Sold its mobile home segment. Exited Irish REIT this year. Big stake in a Dutch REIT that has been liquidating and return capital to shareholders. So it's been back to basics, concentrating on Canadian apartments.

Really good properties and management. Doesn't have the same rent growth in Ontario with rent control.

Most broadly balanced across the country, though it is more focused in Ontario. Largest, so it's the most liquid; very easy to get in and out of. Selling older properties with higher energy and maintenance costs. Loves the cycle of selling old, get the capital, pay down debt, buy newer properties. Buying back stock.  

Caveat: peak rents will be coming down. The number to watch for is the apartment turnover beyond the current 16%, and this should happen over the next couple of years. It's so cheap, no need to wait to dip in. Yield is 3.70%.

Owns it for income. Despite stock slide, demand for rental housing still outstrips supply. Government announced decreased immigration and international student numbers. Lots of condos coming onto the market, condo market's been very weak, and this is causing rental rates to soften. But CAR.UN tends to be outside urban areas and have larger apartments.

Rent control had an impact. Turnover was very low. Selling a lot of older, rent-controlled properties. Attractive, low-priced condo market should benefit them as people may feel they can now make the move to a condo. Nice yield just under 4%.