Andy Nasr Milestone Apartment REIT MST.UN-T BUY Dec 15, 2016

REI.UN-T vs. MST.UN-T. MST.UN-T is apartments in the US southwest. The stock has run. Don’t switch from REI.UN-T to MST.UN-T.

In general REITs could get pressure from interest rate increases, but the 10% correction they got so far has made a buying opportunity in this one. MST.UN-T is a multi family REIT, with properties in the sun belt, some of the most desirable areas, and the fastest growing areas. They are a growth by acquisition story. They also deliver organic growth through rent increases. The payout ratio of about 52% leaves lots of room for increases. About 4.5% yield, having been bumped slightly after their last acquisitions.

He is doing a lot of work on this name right now, because he does like the US theme. What is good to remember about this one is that it is at a low, low price point. It is very blue-collar rental, which he thinks is protected once the housing market picks up. He finds the price attractive.

A relatively decent name. There is going to be excess supply in 2017 which should moderate. If you look at the communities in the properties they own, they are really, really good. Excellent management team. Payout ratio is relatively low at around 60%. They have a sustainable dividend. Valuation looks pretty compelling, trading at about 20% discount to NAV. Dividend yield of 4.1%.

54% of their properties are in Texas and the rest in Florida. They just announced an increase in their distribution that takes effect in January. All these stocks have come off so he is accumulating more of this one. He likes the management team as they keep beating his expectations. They will continue to do well and may get bought out. They pay their distributions in US$. It is one of his larger positions. (Analysts’ Target: $22.15).

There are plans for this to be taken over. Considering his view that REITs are fairly valued here, you might as well continue holding.

(A Top Pick Jan 8/16. Up 52%.) There has been a proxy contest with this and he thinks a lot of the large shareholders are against this being taken out from Starwood.

(Top Pick Dec 20/16, Up 18%) He did not want them to get taken over. He thought there was more growth left. You would have got more upside over a couple of years.

(A Top Pick Nov 3/17, Up 24%) These guys were trading at a pretty good discount to peers and then got bought out. It had a reasonable payout ratio. It had all the things he looks for.