Canadian Apartment Properties (CAR.UN.TO)

Great company. Has been on quite a run, so it is a little rich. Perhaps over the summer there will be a bit of a break, which will give you a better entry point. What he likes is that you are buying the GTA area of Toronto. High growth area with a lot of immigrant population and a lot of people needing apartments.

One of the largest apartment REITs in Canada. Have done a very, very good job of putting capital into their assets, which has driven cost savings and improved their margins. Have seen very strong same property net operating income growth and very strong cash flow growth. Payout ratio has come down. Haven’t had a problem because of energy, because the majority of their assets are in eastern Canada. Trading at a slight discount to NAV of around $20.50-$29.

Just did a new issue and are paying off their $35 million credit line, with the rest going to future acquisitions. Excellent company. Knocked the ball out of the park on their last earnings with a very strong same store growth. Thinks the Canadian apartment market is a very good place to be. If you are in for a long term hold, this is a good time to get in.

Had issues with their properties because it was GTA focused, but have done a lot to clean up the balance sheet, and has done a lot to expand out west. A problem he has is that a lot of their properties are under rent control, so if they have in inflation in negative territory or 0 or 1%, they can’t raise rents. Prefers the free and open market in Alberta. However, they do have more exposure out west and it has done well. With interest rates being lower, it means they get their funding incredibly cheap, and they can keep buying and renovating properties at very low costs. Dividend of around 4.5%. If you own, consider selling.

Low beta, safe dividend and a decent amount of growth going forward. The apartment market is a very safe market. Had a bit of a disappointing quarter this week, and had expected the stock would settle down a bit, but it hasn't. This would be a testament to the strength of the earnings. Thinks this could sell off a little bit, but he does like the company. It had a good run, so he is not as excited as he could be.

Interest rates have been falling, so REITs have been going higher. He personally thinks we are in an environment of pretty soft interest rates. Feels you can own this name. They have cost control and an occupancy rate of around 98%. They are starting to shift to building from acquisitions. They want to grow on some of their vacant land in Toronto and Vancouver. Trading in line with its five-year average, so it is not a bargain here. Payout ratio of about 81%.

Separate fundamentals from sentiment. If rates go back up they could pull back, but that would just make it a buying opportunity. Apartments are the best asset in the sector. They have the ability to increase rents. He really likes it and it would be amongst his top picks in Canada. He also likes BEI.UN-T.

Majority of assets are in Ontario (GTA) and Quebec. It has done alright, but he prefers apartments out west.

There is nothing safer than apartments. This is Ontario apartments and the Ontario economy is not great, but not bad either. Rent controls limit increases. High single digit returns. A good company, but it has run up a little. More exciting stories further west. Prefers Boardwalk.

One of the largest apartment owners in Canada with most assets in Ontario. Strong results over the last 6-8 quarters. Capital spent is now starting to bear fruits. They reduced their payout ratio although leverage has stayed stable. He sold because he prefers Boardwalk (BEI.UN-T) due to stronger assets and no international properties.

Great portfolio of apartments, and generates a lot of income. Every apartment REIT disappointed in the last quarter’s earnings because of weather, except for this. Had a monstrous quarter last quarter, and provides a good base for outperformance this year. 5.2% yield.

In general, she likes apartment REITs as they tend to be quite defensive. One of the benefits they have, in a rising interest rate environment, is the ability to raise rates on a monthly basis as new tenants come in. Trending quite a strong quarter. She has a slight preference for Boardwalk (BEI.UN-T) because of its position in Western Canada where there are stronger economic demographics.

Prefers owning in an area where there is growth and no rent controls. This got hit hard by the storm. Buildings are older and they have to put a lot of money into them. He has never liked the dynamic of having rental increases subjected to the government. However, they have some relatively high mortgages coming due, which will be at lower rates.

Like all REITs, this was damaged quite severely when the fed intimated they might be ending their bond buying programs, the tapering. Weather really hurt. 4^th quarter costs were out of line because of heating. Also, announced that the 5^th quarter will be weak. Good name to own. The yield is solid.

(Market Call Minute) Likes the prospects for multi-unit residential in the US and Canada.