Stockchase Opinions

Brett Girard, CPA, CA, CFA Inovalis REIT INO.UN-T DON'T BUY Mar 25, 2022

Canadian listed REIT. Office properties. Challenge with business model is that lots of leverage not good in rising interest rate environment. Cost of capital increasing (not good for long term earnings). Not a good company to own now. Wait until interest rates stabilize before buying.
$9.240

Stock price when the opinion was issued

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COMMENT

A Paris and German office REIT, and a great vehicle for being focused in Europe. Has done quite well over recent times. A little too small for him. A very successful private company managing a lot of money and this is a vehicle they use for part of their funding.

COMMENT

A small company, all France and a little bit of Germany. A very interesting way to play if you think office tenants will be leaving London and going over to Paris. They do have a larger asset manager behind them. He likes management and the properties. If you believe that something is going to happen and that Paris will benefit from BREXIT, then yes this is the name. He is a little concerned about the French economy.

BUY

(Market Call Minute) Global name probably preferred to DRG.UN-T, which was commented on earlier in the show.

WAIT

(Market Call Minute.) This is France and Germany. It all depends on your view of BREXIT. Thinks it is a little bit complicated.

COMMENT

Inovalis (INO.UN-T) or Dream Global (DRG.UN-T)? There is probably too much duplication to own both. These assets are a little more spread out, and concentrated in France. Instead of buying Canadian names that have exposure to Europe, he is actually going directly into Europe and buying some names.

BUY

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Management has a decent record although recent quarters saw some misses with 5 out of the last 8 missed expectations. Shares have done well since 2016 asides covid's impact. Insiders own over 20%. Unlock Premium - Try 5i Free

DON'T BUY
Small cap, focused exclusively on office buildings in Europe (France, Germany). Listed only on the TSX, so it trades at a discount. Strategic review was disappointing, as they failed to monetize a big part of their portfolio. He's not bullish on the office space, a tougher sector. Volatile. Cost of capital not where it should be.
DON'T BUY
A difficult one to own. High yield, with paying out all of, or more than, their cashflow. European commercial properties are now a tough environment. Internal growth prospects not as rosy as they once were.
DON'T BUY

Difficult to own. Commercial real estate in Europe. Strategy of owning secondary assets was not the best. Cut distribution. Unless you have a high risk tolerance, don't add to your portfolio.