Opinions
Dennis Mitchell, CFA
Choice Properties REIT
CHP.UN-T
COMMENT
Aug 02, 2013
Stock price when the opinion was issued
You might be interested:
Rent increases are fairly low, which Loblaw negotiated to help keep prices low. On the flipside, you get the stability of having Loblaw as the major tenant. Residential development opportunities on those sites, but that takes a while. Not exciting, but collect the dividend and sleep at night. Conservatively managed, very stable. Yield is ~5-5.5%.
He sees better opportunities in smaller-cap names.
CHP.UN is far more defensive. Great portfolio, with about 20% in industrial warehouse space (a sector he's quite bullish on). If you want defense, this is your better bet.
With CAR.UN, you have to think about affordability and how defensive is the tenant base and the cashflow from that base. Great portfolio, with higher concentration in Ontario -- something to keep in mind if you're concerned about tariffs and loss of manufacturing jobs in southwestern Ontario. See his Top Picks.
Brand new IPO that was spun out of Loblaw’s to hold the majority of their real estate. Better quality real estate than he anticipated, the payout ratio was excellent and the leverage was very low. Experienced management which he likes. Didn’t like some of the aspects of the strategic alliance agreement between Loblaw’s and this company. It limited some of their ability to create value and growth one forward. Also, in a rising interest rate environment, they are only going to generate 1.5% growth 5 years out from now.