RioCan Real Estate Investment (REI.UN.TO)

Trading at a discount to NAV, this rarely happens. Stock has gone down on investors concerns about interest rates going up. Probably one of the highest quality REITs in Canada. There is a lot of visibility in terms of occupancy and cash flow growth. Prefers H&R (HR.UN-T) because it represents more compelling value but you can’t really go wrong if you own it. Yield of 5.68%.

(Market Call Minute) All of the REITs have been hit recently. Is exposed to broader retail. He would look at possibly buying it again.

(Market Call Minute.) Likes the assets. People make the mistake of thinking that if interest rates go up it is bad for REITs but if interest rates go up, rents are going to go up as well and this company rolls its leases faster than almost all the other REITs.

Has done well over the last 2 years in improving the quality of their portfolio, but as well, their capital structure. Their balance sheet leverage has come down. Payout ratio is now at a sustainable level. Trading close to its NAV while historically has usually traded at about a 5%-10% premium to NAV. Going forward they are going to have strong access to the capital market and attractively priced capital and will be able to take advantage of opportunities. Could see this trading at $27-$28 in 12 months.

Owned the debt for a long term. Never owned the company because it has always been expensive. 15 times price to AFFO. Largest company in REIT space so it is hard to find anomalies in the price. Prefers apartment buildings because they are defensive. Prefers Boardwalk.

There had to be a breathing point. People would make a momentum play and sell. It is still a great way to play the real estate market but you should expect more volatility at this time.

Not a big fan of REITs so he would caution you on this. Over the last few months, the bond market has backed up in yields and we are seeing a rotation happening in the US with regards to interest sensitive assets. Utilities have come off as well as the telcos. The issue on this one is interest rates. If the US economy is what he thinks it is, these rates have to go an awful lot higher than what they are today and all the interest sensitives like REITs, utilities and pipes, certainly in Canada, a day of reckoning is going to come. He finds REITs are very expensive.

High quality reit. Dominint shopping centre Reit. Well run company. 4.8 yeild.

Trades at 20X price which seems pretty expensive.

Solid portfolio. 70% in Canada's 6 largest cities. A good core holding in a portfolio.

(Market Call Minute) senior retail REIT in Canada. Growth is slowing down but have excellent stock valuation.

(Has had a good run. What signal should I look for to sell?) Likes this one. Trades at a very lofty valuation at around 19 times versus the group at about 16.5. However, it is on par with the US REITs which trade at around 22. Have a strategy of recycling capital from their secondary smaller properties of $600 million that they want to sell this year, and recycle it into better performing, higher growth markets such as Toronto. Good combination of growth and dividends.

(Market Call Minute.) REITs continue to be a very important theme in the market. He has reduced his exposure to the Canadian consumer REITs. More focused on the industrial REITs in the US.

Assets are all across Canada in the retail sector. For the long term is a solid hold. First distribution increase in 2012 reflects that assets are starting to pay off. Going forward you will see more of the same. But instead of issuing assets, they will recycle lower quality assets to acquire new ones. He doesn’t think interest rates are going higher but if you saw this because of stronger economic growth then he wouldn’t worry anyway.

Decent holding. He holds a little. Lots of room for growth even though they have built out a lot of their shopping centers. Some US stores coming into Canada which will allow them to get a little better rent. That should translate to the bottom line. You are not looking at great growth potential on the capital appreciation side but you have a nice yield and over the course of the next 4-5 years, you add the yield to some very modest growth.

Feels this is consolidating. There is always a lurking fear at this stage of the cycle that interest rates will start to go up with the question of what impact this will have on their performance.