RioCan Real Estate Investment (REI.UN.TO)

Very well run REIT. Has come off a lot recently because the pump up in interest rates. Feels that the way consumers are consuming and buying products is changing with mobile technology and feels it will be really, really challenging for malls to overcome that.

REIT sector has underperformed in the last little while because of rising interest rates. If you want something that pays a nice yield, that has great assets and will continue to grow, this is a perfect company to do that with. A great company at a very reasonable price. Have some really great assets that can mature and grow.

Trading at a very slight premium to NAV. It usually deserves a much higher premium because they have incredible urban developments. This is high beta so if you get a recovery in the REIT markets this is a good stock to own at these levels. 5.76% yield.

Cdn REITs had a big pull back with the rise in interest rates. They tend to be interest sensitive. REITs have a knee-jerk reaction to rising rates, which is probably an overreaction. This company is a good quality name in the retail industry. If rates are slowly going to climb and there is a good global economy, you wouldn’t want to put all your money into REITs. Good entry point.

(Market Call Minute.) As a REIT, it has come under a lot of pressure recently. It’s a good one if you want to own REITs and you don’t think interest rates are going to rise.

On REITs, you want to find those that have conservative payout ratios. Also, you want to find the ones that are conducting good business. If rents are not going up or vacancies are poor, that tide of falling interest rates was great for them, but now this is being exposed. On this one, he sees some warning signs. This is big and very liquid, but sometimes it can be dangerous. 6% distribution.

6% yield. Has done a tremendous job over 10-15 years of high grading their portfolio. In Canada’s 6’th largest cities. 10% lift on leases coming up for renewal. Balance sheet pristine. Sold off because of general sell off in interest issuers. Should be insulated against increasing rates and occupancy should increase.

Likes the look of some of the interest sensitive sectors such as pipelines but really doesn’t like the look of the REIT charts. Unlike a corporation, there are no real companies behind it, no reinvestment of their earnings for new projects. If you own, he would be looking for a rally in the next month or so as an exit strategy.

Thinks there is more room for REITs to run lower because rates are still creeping up. This is a good REIT. Expanding more into the US judiciously. This kind of investment is an interest-rate call. Wouldn’t add to your holdings at this time.

You have your uptrend and then the bond shake-out and then it corrected. Probably is almost bottomed. Don’t expect any capital gain, but no harm done.

Has been fairly hard-hit, along with the rest of the sector, by increased interest rates. On average, REITs are down 10%-12% for the year. This being the largest and most liquid, mutual funds were taking profits. Thinks this was an overreaction. Has a high portfolio of assets and is primarily in retail. Probably quite an attractive yield right now. Finding this sector particularly attractive for income investors right now.

Owns a little. His company has a $28 target. Likes the yield of about 6%. Mostly in Ontario, Western Canada, Québec and the US. Payout ratio is about 97%, a little bit higher than average. Doesn’t like their US exposure as he would rather be in pure Canadian plays.

He owns the debt, but not the equity. Nothing wrong with the company. Great management. The problem is, if there ever is a hiccup with this company they will get hurt because of the valuation. Trying to grow in the US and doing it alone (no joint partners). Their properties are mostly city-based so they are going to benefit.

Feels REITs have been overly punished and he can’t understand why they continue to go down even though it looks like the 10 year Canada and 10 year U.S. Treasury (which REITs should be priced off of) have stabilized at the 260 level. Also, there are so many US retailers coming in which is positive for this company. Not his favourite as he feels capital allocation is not as strong as others. Also, hasn’t seen many REITs increase distributions over the last few years. Doesn’t see interest rates going much higher. Prefers H&R (HR.UN-T) and Crombie (CRR.UN-T).

Reported a great quarter. Sales per square foot have gone up. New leases in terms of renewal rates have gone up dramatically. Grew their funds from operations. You will probably see another distribution increase later this year. $29-$30. 5.9% yield.