Cominar Real Estate Inv Tr (CUF.UN.TO)

The issue is Target walking away from 6 of the properties. Canadian Tire took 2, 2 are going to be carved up to get 35% more rent in 2018, and 2 others haven’t been figured out yet. Dividend coverage has dropped by about 95%. Management is going to hold the dividend because, as stores get rejigged they’ll come back and the dividend coverage by the end of 2018 will be 105%, which they can maintain. He believes that, so is nibbling at it. Dividend yield of 11.3%.

There are a lot of problems with this REIT. Their numbers came out and they missed badly. They basically own real estate mostly in Québec, and some Target stores that are repositioning. Their debt profile is soft, being BBB low. There is a good chance that they get downgraded to BB high which means they have to go for secured financing. Their execution has been poor.

A Québec based REIT that has expanded into parts of the Maritimes and Ontario. They went on a buying spree and their debt levels went up. The investment community knew they had to raise rates. They had to raise equity, probably at lower prices than what they actually cared to. Distribution is a little high and the payout ratio is a little high, so he doesn’t own this.

Their NOI dropped 3.7% in Q3. He models less than 1% growth over the next couple of years, versus its peers which are in a 2.5%. They have an all-in payout ratio of 114%. Making asset sales to bring down their balance sheet, which is good. Feels the fundamentals of Québec and Ontario are slightly better than what they have been. Trading at 11X. Probably not a bad place to be picking away, but it is not your highest quality REIT.

Feels the 3 top picks have probably lagged the market unfairly. He sees an improving Québec economy, and this is the largest landlord in Québec. Management has gone through some decisions over the last 2 years that were not great, when they tried to grow too aggressively. However, they have said they are done and are now focusing internally on the company. Payout ratio is a little high, but there is some visibility in the future leases that are signed but not yet economically contributing to the income statement. If you have a 3-year hold, buying in the $14 range is going to give you a very solid yield, and it will skate through over the next couple of years. Dividend yield of 10%. (Analysts’ price target is $15.)

The dividend is safe. The management team has historically done a very good job of development. There is now relatively highly indebtedness. Low occupancy and high debt and stagnancy in growth have impacted their valuation.

They did some things right such as really good asset sales and the balance sheet is a bit better. But debt to fair value is still a little high. The payout is relatively high, but with the drip all in it is closer to 80%. A dividend cut probably won’t need to happen. Fundamentals are continuing to gain some traction. They are growing at 0.8%. It is very cheap and you can expect better things.

Fairly well diversified. They own some office retail properties. It is mostly a Québec REIT. This used to be family run focusing on development, and then they went on a massive acquisition binge and overspent for a lot of properties. They leveraged up the balance sheet, so it is excessively indebted. There are better alternatives.

The dividend is sustainable. You have to go back to a couple of years ago when they were Quebec centric. Quebec city was one of the best office markets. They tried to diversify and they bought some lower quality properties, continuing into Atlantic Canada. This diversification process has been challenging. He is cautious about it.

Owns a little bit. One of the REITs that is fairly well diversified with a lot of exposure in Québec. It has historically grown through development, but went on a buying spree about 5 years ago, which they are now trying to adjust in their portfolio. Trading at a relatively attractive valuation. He may add to this if it gets a lot cheaper. Dividend yield of over 10%.

Dipped his toe into this. Doesn’t know if it’s the greatest idea, but just knows that in the large portfolio that he has, he has to have some. Canada has to get out of this recession, and typically it is Québec that takes us out. He would love to see a change in management. They are overpaying on their dividend; however they can skate on side with an improving economy. Don’t put everything into this one name. It is too risky. Combine it with some lower yielding safer names. Dividend yield of 10.7%.

It is not a short, but it does not look great. They pay out more than they bring in. The stock has been beaten up. The market is pricing in a distribution cut. Wait until that happens to look at it again.

A lot of REITs have been slow because of the fear of rising interest rates. This one ranks 270 in his database, borderline top 3^rd. Dividend yield of 10.3%. Payout of 87% of 4^th quarter trailing cash flow which is of concern. Currently trading at 1 year lows. Earnings growth is expected to be modest at $1.76, versus $1.70. Low PE. Be cautious on this one.

He does not worry about the dividend or payout. He is more comfortable with one than some of the others. You have to look at their properties and where they are.

A very, very nice yield of close to 10%. The payout is nicely covered and the company has a very, very strong balance sheet. This is the kind of thing he describes as really super good value. Thinks this is a longer-term hold.