Killam Properties Inc (KMP.UN.TO)

Trading at a discount to its NAV. 2014 could be a very good year for them, but most of the return will be in the latter half of the year. Have gone through a very extensive development program gaining expertise on how to build excellent properties. He is not crazy about the strategy of building the best buildings in a B market. There has also been a bit of employment pressure in Halifax as shipbuilding contracts haven’t really kicked in as people had expected. Good stock to own on weakness. Real growth will be late 2014 and into 2015.

Have been developing aggressively in Halifax and there will be some time for the job growth to come through. It should have a great 2014 as developments come on line. A screaming buy.

This is a little too small for her portfolios, so is less liquid. Really likes the apartment space in general. Very defensive, but also has the characteristics that the rents are very short term in nature because they are monthly. In a rising interest rate environment, they do have the ability to increase their rents quite dramatically. This is in the Halifax market, which is a good market to be in. There has been a little bit of oversupply situation which they seem to be working through. Shipbuilding contracts that are coming through in the next couple of years will give good strong support for this market. Because of its size, it is a potential takeout candidate.

(A Top Pick Sept 24/13. Down 3.43%.) Had a weak quarter operationally. Thinks there is a bit of calm happening in their markets in the Maritimes. There was a lot of building and properties in a race up to the demand that will be required with shipbuilding contracts. This will be very long process into late 2014-2015 for the real growth to kick in. Buy this on weakness. 5% yield.

Apartments, mostly in the Maritimes but also in Ontario. Stock has been beaten up, but there was no need as the Maritime economy is booming. Shipbuilding contracts are creating a lot more jobs with a long track record going forward. Have also been doing some excellent development projects. Solid balance sheet. Yield of 5.32%.

(Market Call Minute.) Doesn’t think management is incredibly great and it is hard for them to grow the assets.

Majority of their apartment assets are in Eastern Canada, which has seen a little bit more supply than what you’ve seen in the apartment sectors outside of Eastern Canada. Because of that, a couple of their markets have seen a drop in occupancy. In addition, the company has done some development and their yields have come in slightly below where they anticipated them. This is trading well below its NAV which he feels is around $13. Doesn’t anticipate that the next couple of quarters are going to be great. The 4^th quarter and the 1^st one in 2014 should start to look better. They should be a beneficiary of the Halifax ship building contract, over the long-term.

A favourite apartment name. One of the more defensive names. You get Maritime exposure and development of high quality properties.

Has been weak because of occupancy issues in Halifax. Natural gas cost inputs doubled for them in Q4. Lowered their acquisition targets from about $125 million-to $100 million for 2013. Just came to the market with an equity issue which could make growth for them a little bit weaker in the 1^st half. However, the Halifax occupancy issue should dry up in the 2^nd half. Irving shipbuilding contract, which starts in 2014, should benefit the whole region and he sees them growing at 12.7% compound annual growth 2012-2014.

(Market Call Minute.) Had a bit of a weak quarter. Rent growth offset by cost increases and occupancy is erosion. Trading below NAV but he would want to see what they can do in cash flow growth this year.

Focus on apartments out east. He owned it but then preferred other apartment plays. He expected a pop because of the ship building contracts, but that has been a bit delayed and private investors are adding to the supply of apartment buildings. Around high $10’s he would be more interested.

Likes the Canadian apartment sector because, typically in a rising interest rate environment, apartment REITs typically outperform their counterparts in the industrial/retail/office markets. Length of apartment REITs leases are typically shorter He expects there will be an increase in interest rates in the next 12 to 24 months.

Apartment buildings and manufactured housing communities primarily in Atlantic Canada and moving into Ontario as well. Occupancy is pretty well at an all-time high so there won’t be much cash flow growth from occupancy. Looking for them to grow revenues through rent increases.

Held this one up to about 6 months ago. Focused in Atlantic provinces and Ontario. The problem is, the Eastern markets are not as vibrant as he had thought. There has been a delay with the shipbuilding and also there is more product in the market.

(Market Call Minute.) Apartments out East. Shipping industry is about to create a lot of new jobs but there are a lot of new apartments been developed privately.