Granite REIT (GRT.UN.TO)

This has a huge exposure to Magna (MG-T) and their operating platforms. Not a bad REIT. The whole REIT sector in Canada has been a bid down. This company generally has had lower leverage making it somewhat attractive. Has never taken a position in the REIT sector. Would prefer Artis (AX.UN-T) or Brookfield Property Partners (BPY.UN-T) over this. (He owns some of their bonds.)

There was a sudden management change. This is not usually good news. GRT-T has good exposure to MG-T. It is a single tenant REIT. The balance sheet is quite strong. The dividend is safe. The management change has cast some uncertainly over it. Wait until more is known before buying it.

(A Top Pick Sept 5/14. Down 3.04%.) CEO has been terminated by the board and the CFO is stepping in. Doesn’t see this as a slight against the company in any way. Had moved from an overweight position down to a market weight before the news.

(Top Pick Jul 15/14, Up 6.40%) They are now looking at a strategic review. He likes that you have a monetization event.

They have the lowest debt of any of the Canadian REITs. Because of that they are able now to use solely debt in order to acquire and build up their portfolio. They have a very disciplined approach of only buying real estate that they are comfortable with. This is a global industrial real estate. He buys this on the dips.

Likes this. An international REIT, as you are buying industrial real estate across the world. A lot of that is linked to the Magna (MG-T) empire. That can cause certain bits of disruption and a certain amount of volatility. The balance sheet is so good that they have the ability to continue to acquire high quality industrial real estate globally. Good source of income and growth over the next 3 years.

They were pretty much 100% a Magna property, which brings risk, but they have a great balance sheet, about half the leverage of the average REIT. The trick here is to add acquisitions, adding property other than Magna to reduce the risk profile and increase the distribution. As long as they can continue to execute and buy more properties at the right price, you see the dividend continued to increase. Yield of 5.31%.

Magna is the main tenant. They are trying to reduce that concentration to 50% from 85% now. They sold some non-core assets. He will not allocate capital here because he does not like the long term prospects. Payout ratio and leverage are low enough that there is not a lot of risk if you hold it for the distribution.

Large company with a lot of potential because its debt is very low and they have a lot of cash on the balance sheet. A lot of exposure to the auto industry, but they are expanding out of that. 5.37% yield, responsible management, safe growth. No equity dilution risk.

Very low debt: 23% of market cap. They sold a bunch of Mexican assets. Tons of cash. Last transaction was in the Netherlands. They can expand without coming to market. Debt rates they get in Europe come with a 2% handle. The spread is fantastic, but it is not recognized in the stock price.

(A Top Pick March 7/13. Up 11.19%.) Liked this because of the new capable management team with leverage way below industry average, which means they have a lot of opportunity to make acquisitions and increased distributions. They still have a lot of potential to create value this way.

Main tenant is Magna. 2017 leases were extended so less of an issue. Very low debt. They are able to accelerate their growth.

(Market Call Minute) Thinks they can diversify away from magna.

If the annual payout rate has gone up 4.75% and if the auto sector takes a large hit, will this be affected drastically? This is his concern as well. This REIT represents an entity that has a majority of its assets leased on a single tenant basis to Magna International (MG-T). Any difficulty in Magna flows right through to the REIT. While it may not directly flow through on day 1 on news headlines, you have to believe that the underlying real estate is going to have a use further than what Magna has for it. The company has planned to reduce their exposure over the next 3-4 years to about 50% of their total assets. They are also in a great position, from a leveraged standpoint. They have the ability to grow by using debt and debt capital markets are wide open now have very attractive pricing. They can go out and buy industrial assets and diversify. Payout ratio is at a sustainable level. From his perspective, the single tenant risk is too high.

(A Top Pick March 7/13. Up 3.43%.) Owns all real estate that Magna (MG-T) operates on. Have tons of cash that they can use to diversify. Acquisition pace has been a little bit slower than everybody would’ve liked, but they are steadily making progress. Just renewed a big contract with Magna. Pays a pretty decent dividend yield.