Canadian Apartment Properties (CAR.UN.TO)

Likes the apartment space in general because of the supply/demand fundamentals. They have done a really good job over the last couple of years and have delivered above average growth in their net operating income. Stable balance sheet and a sustainable dividend yield. Made a series of acquisitions over the last couple of years to diversify their portfolio. Made their 1^st international acquisition in Dublin last year, which will be a growth platform for them. Trading at about a 14% discount to NAV. A good place to be.

Great company. Has received a little bit of pressure from its market, mostly GTA apartment buildings. As the condo bubble in Toronto is hitting its peak, many people who bought condos as an investment, hoping to flip it, are finding they can’t flip. So they have dumped it all on the rental market, which is affecting companies like this, which has depressed the price a little. On weaknesses like this, this is when you should be buying.

(Market Call Minute) High Quality portfolio. Apartment market was beat up.

(A Top Pick June 6/12. Down 6.14%.) Feels apartment REITs space is quite good in terms of supply/demand fundamentals. This one has been doing everything right and they continue to deliver Have a number of cost efficiencies that they are continuing to bring out of their numbers so their net operating income growth has been quite good. Starting increasing distributions in 2012 and feels that this will continue. Trading at about a 20% discount to its NAV.

Has been buying over the last 3-4 years as he saw a fair bit of capital being put in to the apartment assets. Management has done very well in bringing down leverage and increasing free cash flow. Management made a couple of questionable moves in the last 6 months. Purchased assets in Ireland, which surprised him. Also, raised equity recently. They’ll continue to pay a stable yield but be aware that management decisions do have an effect on the stock. He would prefer others.

(Market Call Minute.) Apartment REIT and mostly focused in Eastern Canada. Now starting to look at Europe where there are some pretty good buying opportunities. Good dividend growth potential.

(A Top Pick Nov 14/12. Down 8.16%.) They’ve made a couple of acquisitions in Ireland and recently from Killam Properties (KMP-T) in the Maritimes, so they are doing all the right things. Thinks it is a Hold going forward because the selloff was a little bit overdone and you are getting a 5.5% yield, and the way they are going, you are going to get 4%-5% growth, so you have 10% to lean into higher rates. Trading at a discount to NAV.

Within the real estate sector, we need to see a correction for people’s ability to pay for homes. Yields have been low and because of that, people have been buying homes that they probably won’t be able to afford at higher rates. The other issue is that once inflation kicks in, you are going to get the reverse.

(Market Call Minute) He has warmed up due to the recent sell off. They announced they will make an acquisition in Europe so watch it.

(Market Call Minute.) He still has a hard time liking the GTA apartment buildings.

Very good name. Multi-residential. Some of the issues that have crept up recently is diversification initiatives that management has implemented. Bought some US assets and entered into long-term management agreements and there is speculation that they bought some assets in Ireland. All in all, the portfolio is rock solid. Have made tremendous progress in the last 5 years by bringing the payout ratio down and improving the quality of the assets and diversifying the portfolio. Probably worth $26-$27.

(Top Pick Jan 10/13, Up 0.02%)

Offers a 10%-12% total return from these levels. Likes it, but owns enough that he wouldn’t want to add much more at this point unless it was in the $24 range. Have been very acquisitive and shifting their portfolio away from the GTA and Eastern Canada and into Western Canada. Management has been very effective at finding new ways to grow in the last couple of years.

He has exited all the REITs. But there is not a lot of downside to the well managed REITs which this is. He is looking for more growth.

Apartment REIT with mobile home communities, which are very strong cash flowing vehicles. They spent the last 2 or 3 years putting a lot of capital into assets and acquisitions that resulted in increased cash flow per unit. Payout ratio has come down from over 100% into the 80’s. First distribution increases last year for many years. 3-6% cash flow growth going forward. 4.5% yield. They plan on yearly distribution increases going forward.