RioCan Real Estate Investment (REI.UN.TO)

How do you feel online purchases will affect this REIT? Great question. It is one he has been fielding more recently when people are asking about retail. Focus for many retail landlords across North America is now on the quality of their assets and the amount of foot traffic those assets see on a daily basis. That is consistently being tracked and it is being seen that the lower quality assets, especially in the US, are suffering. Especially the ones that are selling discretionary goods. Stores like Sears, JCPenney, Best Buy are lowering their footprint. They are focusing their stores on higher quality assets. This REIT’s strategy has been to focus on Canada’s 6 major markets, VETCOM (Vancouver, Edmonton, Toronto, Calgary, Ottawa and Montréal). By focusing on those urban markets in having 70% of their assets in those markets, they believe population growth and high quality locations are going to drive people to these retail assets. There will be a proportion of people that start to shop online. In Europe, e-commerce is a much bigger issue. Doesn’t believe this company’s distribution is at risk over the next 5 years. 5.3% yield.

Chart shows a long upward advance from 2009 to early 2013. This was followed by a selloff and it is now just working sideways. He thinks the group is okay. Doesn’t expect there will be a lot of capital gains or losses. Feels the lows during 2013 is the bottom and we are now going to rally back getting into the area of $27-$28. This is an income situation and you have to treat each REIT unto its own. If he were doing this, he would prefer just buying the ETF on REITs (XRE-T).

Canadian REITs are trading at very attractive prices with very high current yields. In particular, he likes H&R (HR.UN-T) for industrial, RioCan (REI.UN-T) for retail and True North Apartments (TN.UN-T) for residential.

(Market Call Minute) A gigantic machine with properties all across North America and he thinks there will be a distribution increase this year.

Well run company. There was a pullback on interest rate fears. This is a premier company in that sector and will continue to do well. It is hard to find organic growth. It has great tenants and reasonable yield. It has pulled back enough for you to buy it. Owns MEQ, B2B, Boardwalk.

Everything is firing on all cylinders. Can continue to expand on existing properties. A lot of institutions are starting to come back into REITs.

Has a lot of faith in management. More of a defensive play than a lot of other REITs. However, a lot of the REITs have moved up quite a bit. The time to get into REITs was 3-5 years ago in the US where they were tremendous bargains. If you are looking for a defensive play he doesn’t think REITs is where he would be playing.

Will be sensitive to interest rates. There is a very good cash flow growth profile.

One of the higher quality REITs. Focused on retail, which is relatively stable for the next year or 2. There is still strong demand for retail properties.

Canada’s largest shopping center REIT. Also, has some office. Has also moved somewhat into the US. Likes the growth profile and the quality of the management. Did really well, like all interest sensitive stocks, when interest rates were going down. When interest rates started to climb, all the REITs fell off. Earnings are going up and he feels the dividend is okay.

Very high quality REIT. 75% of its properties are located in Canada’s 6 largest cities and 50% of the population lives in those cities. This has enabled them to maintain occupancy in the high 90% even in the worst of 2008-2009. Should continue to be able to generate some pretty decent rent growth. If it gets 10%-15% cheaper, it could be a takeover target. 5.7% yield.

Owns no REITs but thinks they are cheap. Has some growth ahead of it but headwinds if rates start to rise.

Canada’s largest REIT and is retail focused. Thinks the great management will really shine through this year with the ability that management has to quickly adjust by issuing equity above NAV and buy more property. This company did that. However, they have already adjusted to focusing on their internal portfolio and making very wise sales.

REITs have all come down. This is a decent name, but to him it is more expensive than some of the other REITs. Payout ratio of about 96%. Prefers Cominar (CUF.UN-T) as it has a payout ratio of about 90% with a dividend of 7.2%.

Benefits from a strong retail environment as major US chains come in looking for real estate. This is the biggest operator of shopping centers in Canada. Came down in price with the scare of interest rate concerns, so this is a good Buy right now.