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Dennis Mitchell, CFA KEYreit KRE.UN-T SELL Feb 14, 2012

Current prospects are abysmal. Have tremendous concentration KFC, Taco Bell and Pizza Hut. Effectively bankrupt in Canada. Had difficulties in refinancing debt.

Dennis Mitchell, CFA

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$6.390

Stock price when the opinion was issued

income trust

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DON'T BUY

Quick service restaurants such as KFC. Moving into small strip malls. It’s a wait and see.

COMMENT

Illiquid. Challenged at times. He owns some of their convertible debt. Proving to be survivors. Still have a big debt hurdle coming up that puts a cloud on them for a little while. Probably okay. 11.6% yield.

COMMENT

Owns some of the convertibles but hasn't followed it. Thinks it may have a debt issue that may have to be cleared up before too long but numbers are reasonably good. 12% distribution.

DON'T BUY

Their parent Prism is in serious trouble, which could have an effect because of the overlapping ownership. They also have a big chunk of debt coming due.

DON'T BUY

Their parent company, which owns about 50% of the tenants, is in serious financial trouble. He has held off buying although he does own some of their convertible debentures.

RISKY

Had a big debt maturity coming up. They have handled a big part of that debt problem in the last couple of days. Illiquid and higher risk. It has been handling its problems.

WEAK BUY

Some shopping centers but also a lot of sites for convenience stores including KFC, etc. Parent of KFC has gone bankrupt. Although properties are still good, there have been some issues because of this. Improving and have managed to buy some things. Doesn't know if it is worth the risk as he hasn't looked at it closely enough. Yield of 13.2%, which could indicate a cut at some point. (Owns some convertible debentures.)

DON'T BUY

The last time he looked at this, it looked like the payout ratio versus what they are earning was very close at about 100%. Sustainability is in question. Also, having a single tenant brings out some of the riskiness in the business itself.

DON'T BUY

He has been Short this stock for some time. They had a big concentration of tenancy to Prism, which has had financial troubles and they are disclaiming leases and has some short-term capital issues there. Very high risk and he does not believe the yield is sustainable.

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Dennis Mitchell, CFA KEYreit KRE.UN-T SELL Feb 14, 2012

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