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

Debt too high. Net operating income fell last quarter. At current valuation bad news is priced in. Their overall growth rate through acquisitions is okay. Payout ratios are turning down. He is giving them a chance.

This company has a decent portfolio. A lot of it is based in Québec and Eastern Canada. Have grown hand over fist through acquisitions. For them to realize growth outside of Eastern Canada, they need the unit price to go higher so they need to do acquisitions. Still generating same property NOI growth of around 2%, and this is what you can expect on a go forward basis. However payout ratio and leverage remains relatively high so they have to digest the acquisitions they have made.

Quebec market is still somewhat weak. He does not have a lot of conviction about where that is going. Doesn’t see a lot of catalysts.

Prefers H&R.UN-T. Doesn’t know what the catalyst is, but the dividend is safe.

You are not going to see much growth. This is a smaller Québec oriented Riocan (REI.UN-T). In fact he were going to go below Riocan, he would prefer Crombie (CRR.UN-T) which has a little more growth than this one.

One of the sadder stories. Eroded their blue chip balance sheet. There is concern in the economy in Quebec.

Got hit because their numbers were on a weaker side in the last couple of quarters, but their assets are still pretty good. Good managers. Not over levered. Payout ratio of about 95%. Feels they can meet their distributions and possibly over the next year or 2, look to increase it.

(A Top Pick July 31/13. Down 9.1%.) Sold his holdings Jan 16/14 because of frequent frustrations with management and their unwillingness to communicate better with the Street. He sees them buying more Québec properties where he is seeing negative cash flow growth on the properties they already own.

Dundee (D.UN-T) or Cominar (CUF.UN-T)? They are both trading below his assumed NAV. To him, this is the better pick. Slightly higher dividend and a slightly lower payout ratio. A little less expensive. Dundee probably looks better on leverage.

One of the issues with this company is their geographical location, mostly in Québec. Payout is a little bit high. He is neutral on this one. He would rather have REITs that have exposure to Western Canada.

Bond 4.92% 2020. 6.5 years and 4.8% yield to maturity. Cominar may give you a slightly better rate than that. Could see some capital appreciation in the future.

Likes this, however in the REIT space they are somewhat challenged. Focused predominantly in Québec and tend to do very, very well in the Québec market. Made a number of acquisitions in the past 2 years that has broadened their reach a little bit into Ontario that they are still digesting. Payout ratio is a little bit higher that she would like.

Diversified with office, industrial and retail. Predominantly invested in Québec. Acquired about $2 billion of assets over the last 2 years and the integration of those assets have been fumbled. Because of this. There has been very little in the way of free cash flow growth. In the most recent quarter, there was a 2% funds from operations growth, which was encouraging. He will continue to watch this. Payout ratio at around 90%, so the distribution will be safe.

Gives it an A for low valuation at 11X forward earnings. Growing at about 3.9%, which is in line with its peers so he would give that a B. Leverage of about 56% of Fair Value is a little high. Payout ratio of about 90%, which is average. Adding it all up, this is not bad. If you can get it at $17, you can start nibbling at it.

Has been one of the more frustrating stories in REITs this last year. Diversified portfolio and is Québec centric. Has always been regarded as one of the more dependable, defensive REITs. However, in the last few years, they have decided to grow out of that and now we are seeing the effects. Operations have been a little disappointing. Have been doing some transitions in their balance sheet and have loaded up with too much debt. You are going to have to be patient. Your dividend is safe, however, there have been two quarters of negative cash flow growth. Until there is some recovery, you are not going to see a lot of price appreciation.