H&R Real Estate Inv Trust (HR.UN.TO)

(A Top Pick April 23/13. Up 2.81%.) Excellent yield. Modest AFFO growth for the next while. His target is $25. If you put the yield with the capital gains, you should get close to 10% returns. Trading at a discount to NAV in the $24-$25 area.

Moved from office to retail. Whenever there are these changes he is a little on the sidelines. It is due for a little bit of a pullback. He wants to see more clarity on the properties in the portfolio. There could be stress in that portfolio. It is stable in terms of a long term investment.

A solid company. Had a bit of trouble 2-3 years ago with a property they had in Alberta, but the Alberta economy is starting to definitely do well, so those issues are out-of-the-way. Would not have a problem recommending this to an elderly person. Yield is maintainable. Has this as a sector perform with a medium risk and at $23 target. He would rather underweight the sector for now and wait and go bigger later.

Had a pullback with a rise in rates early last year and hasn’t really recovered to the extent that rates have pulled back. She is buying it for new clients. Nice yield of close to 5%. High quality portfolio of properties with a high occupancy rate.

Has been a difficult one to own for 18 months. Been trading sideways. REITs are surprising to the upside so far in 2014.

Don’t switch out of REI.UN-T. Management issues from the past pertain to the fact that it was externally managed, but is now internally managed. That could make it a takeout candidate now. Payout ratio very well covered.

Owner of diversified assets such as office, industrial and retail. Probably trading close to a 10% discount to its NAV. A unique story now because they have internalized asset management which was previously an issue. Also, announced a large buyback of shares because they believe their units are undervalued. He would look at how they are able to create value going forward. This is going to provide you with a stable yield and 2%-3% of free cash flow growth. To drive any outperformance versus the REIT sector, it is going to need to undertake either further acquisitions or joint ventures. Doesn’t think their capital price right now is going to allow them to raise equity. Have been talking about joint ventures to raise equity.

Canadian REITs are trading at very attractive prices with very high current yields. In particular, he likes H&R (HR.UN-T) for industrial, RioCan (REI.UN-T) for retail and True North Apartments (TN.UN-T) for residential.

(A Top Pick Feb 19/13. Up 5.02%.) People say that REITs all have a lot of debt on their mortgages and are eventually going to have to roll over those mortgages and what happens when interest rates go up and they have to remortgage at higher rates, which will cost them money. This would not be much different than where we are now. When you have normalized interest rates, and you have inflation, there is the ability to increase your lease rates. Vacancy rates are very low and rents are stable to rising. This company has a particular strategy that he likes. They will build a 2 purpose building, lease it for 20 years and mortgage it for 20 years and they lock in a spread. Because of this, there occupancy rate is very, very consistently high over 99%. Yield of 6.08%.

(Top Pick Mar 14/13, Up 0.52%) Got hit by rising rates. Continues to yield in excess of 5% and high occupancies.

Not sure if we see future distribution increases this year because they are going to embark on a significant normal course issuer bid. They are thinking of selling some non-core assets later in the year.

Waiting to see how the retail portfolio will perform. Prefers RIO.UN. He is underweight on this one.

(Market Call Minute) Watch the earnings and how the retail numbers pan out. He is expecting a disappointment.

Likes this one. Has been going through indigestion, not the least of which is fear of higher interest rates. First rate company, well run and he buys it for new accounts.

Last year’s Primeris acquisition was incredibly expensive. He has issue with this company as it is kind of all over the place in regards to assets. Has indoor shopping malls, large office buildings and an unfocused portfolio. As a portfolio manager, he wants to diversify his risks by owning different types of stocks. He needs to know their story and what they are investing in. He wants them to do just one or 2 things well. They are generally long-duration assets and so are leveraged a little bit higher than most. If interest rates happen to go up, there is more risk of them going down.