InterRent REIT (IIP.UN.TO)

This is a well-run company, but isn’t particularly cheap among the smaller cap REITs.

(A Top Pick March 19/15. Up 19.04%.) An apartment REIT based in Eastern Canada. Most properties are in Ontario where rents are regulated, but they tend to focus more on “value add”, where they buy a property that is not really achieving its full potential, put a little bit of money into it, and try to ramp up the occupancy, which has certainly worked out well for them.

(A Top Pick March 19/15. Up 8.46%.) Has exposure to Eastern Canada, so low income Housing. No exposure to Western Canada, strong balance sheet and good management has really helped. Dividend yield of 3.5%.

He is a big fan of this company. They have a very entrepreneurial style. Dividend payout is very low and very sustainable. Sees more than average growth potential, so continues to like it. Good management.

(Top Pick Nov 13/14, Up 12.48%) Just raised their yield 5%. He believes in their markets, such as Hamilton.

He likes that it is exposure to Ontario, which is a hot market. You are seeing visibility of low cap rates and developments that will come online. This will continue to provide income. The returns will be a little more stabilized than the last few years.

Likes this company. Their most recent quarter showed a slight little bit of weakness, and this is mostly because of weather. There might be a bit of an opportunity this year, because this REIT has is some very interesting developments that they have been doing, and another pipeline coming up over the next couple of years of opportunities to significantly grow cash flow, as they have been able to acquire apartments in the Ottawa area.

You’re not getting the yield on this that you would normally get, but in this case he thinks that is a good thing. The company is retaining more of the cash and redeploying it into the markets that they know so well. Focused in the Ottawa area. They are real creators of value, so he thinks it is a great long-term hold.

Likes the apartment sector in Canada. Shorter leases and about 40% turnover so with inflation you can capture higher rates. Rock solid balance sheet and they just made a major accretive acquisition – a redevelopment play. You are buying at a discount and you will get dividend growth. They make improvements and get above guideline rent increases.

Apartment REIT. Has a management team that is well aligned with a history of creating value for shareholders. Trading well below its NAV. They recently raised equity at around $6.40, and he thinks that capital is going to be invested into acquisitions, development and re-development. The stock got hit because of a large repositioning effort on a property in Ottawa that needs to flow through in terms of driving free cash flow. Payout ratio is around 70%. Yield of 3.68%.

A small apartment REIT focused in the Ottawa district. Thinks this is cheap because it doesn't scan so well, but they actually have 7% of their portfolio in one very large redevelopment position, where they have emptied the entire building. As they finish this renovation going on to Q1 and Q2 in 2015, and they start to lease up the building in 2015 and into 2016, there is a tremendous amount of cash flow that is going to come online. In the past had double-digit FFO growth. After a one-year pause, they will be able to continue that in the future. Yield of 3.4%.

(Top Pick Nov 20/13, Up 5.27%) He is one of the largest shareholders. They are an owner operator and redeveloper of apartments. Thinks it should be a dollar higher. They got hurt with repositioning some assets. He is still confident in the management team. It is very compelling value.

He has looked at it for two years. Ottawa and Toronto apartment strategy, renovating apartments and renting them out at higher rent. It has come up so much so far. It is now trying to fit into its growth profile. Buy it in the low $5s.

A smaller cap apartment REIT that trades well below NAV. Management team is well aligned. Stock was taken down by weather issues.

An apartment REIT with majority of assets in south-western Ontario and Ottawa. Has a firm belief that management is going to drive value over time, both through acquisitions and redevelopment and repositioning of assets they have in their portfolio. Recent quarter was somewhat of a disappointment relative to the consensus numbers because of the repositioning of one of their key assets they purchased in Ottawa. With low leverage and a low payout ratio and a management team that is well aligned in the incremental growth you are going to get from redevelopment from some of the assets, he sees this as a core holding. Dividend yield of 3.6% and there is room for distribution increases from free cash flow growth.