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

REIT sector is interesting and he is trying to be a little bit ahead of the curve on it. Valuations are very high and slowly but surely he has seen REITs trickle off a little bit this year. Some risks on the valuation front. Prefers names that are trading at a discount on price to NAV such as Brookfield Office Properties (BPO-T), which pays a nice dividend. Has a lot of vacancies in their New York property but they are some of the best office properties globally.

Will be rolling Primarus’ debt, which should be accretive to them by Q4. Their Bow property in Calgary has been in “earnings negative” and that should swing to a positive by the 3^rd quarter. Trades at a discount to its peers. Becoming more cyclical now with Primarus’ portfolio.

(A Top Pick April 10/12. Up 4.77%.) Struck a fair size deal with Primarus which is why it has been kind of a laggard. Considered it as being one of her Top Picks again because she likes it at this level. Yielding about 5.7%.

(Top Pick Jan 10/13, Down 0.98%)

Prefers Boardwalk (BEI.U-T) even though the yield is lower but the growth rate is pretty good and has a 70% payout ratio, one of the lowest. (See Top Picks.)

Because it is so big, he doesn’t see as much growth as in others.

Likes this. Came off on the news that it was getting together with Primaris, which was largely in the enclosed mall business. A great buy here if you are looking out 3-5 years.

5.7% yield. Stock lagged the sector due to Primaris acquisition. If it goes though, which she thinks it will, retail will become a much larger part of their portfolio. They will have to issue equity to find this transaction. It is creating a temporary overhang on this name.

(A Top Pick Feb 14/12. Up 8.89%.) Their move into malls was unexpected but if they can retain the platform i.e. all of the people, it will be a good move for them.

Short positions on this one rose to 7.9%, an increase of about 3.7%. The 7.9% is 4.1% of the outstanding shares. He is sure the Short position relates to the forthcoming takeover of Primaris (PMZ.UN-T) but thinks it is unwarranted as this is a great entry point if you are looking out 2-3 years. His price target is $27.25 giving you a good capital gain plus a good yield.

Now moving into malls with their deal with Primaris (PMZ.UN-T) but is probably not the right time with some of the headwinds with Canadian consumers. Thinks it was a reasonable deal that they did but there could be some immediate headwinds. Yield is safe.

REITs have generally done well. This one is now moving into malls and is struggling a little bit. The model is not being embraced as malls are pretty competitive. Wouldn’t own this right now.

Right now this is available at a favourable price because they made a deal to buy new properties from Primaris (PMZ.UN-T). Had to issue stock and the company is diluting itself a little bit. Feels it is in accretive deal. Spreads the nature of their business from commercial and industrial to add retail. Buying the properties at a high price, but not a stupid price. Yield of 5.9%.

(A Top Pick Feb 8/12. Up 4.53%.) Moving into malls now with Primaris (PMZ.UN-T). Didn’t make sense to a lot of people but this combined bid is less dilutive. This is a long-term growth strategy which she likes.

Sold last spring because he thought REITs were pretty fully priced. He is moving from the income play to income WITH growth now. It is ok as a replacement for a fixed income instrument. The dividend is safe. But if rates start back up then this one will get squeezed.