Michele Robitaille Smart REIT SRU.UN-T BUY ON WEAKNESS Jun 22, 2015

Units are quite cheap at 11X cash flow, and generally we like it for income. Very little growth is expected, and of course inflation/rates impact it, and the retail sector is somewhat under siege right now. Payout ratio is high at 93%, but did drop from 96% in the Q1. Cash flow in the quarter improved to 54c from 51c. Decent for income but we would not expect much excitement here. 
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Great job getting into other asset types by going vertically on what they already own. Operating income dictated mainly by WMT, which gives a very defensive profile, so he doesn't really worry. Flipside is very little growth. Tight cashflow coverage. Believes distribution of 8% is safe, even though payout ratio spiked above 100% temporarily. Better earnings growth elsewhere.

Great to have a tenant like WMT, as it makes the cashflow very dependable. Being so defensive means not a lot of internal growth, really lags compared to peers, bottom line cashflow not increasing. Higher leverage than peers. Muted earnings growth. 

Higher distribution yield around 8%. Could own for the yield. Dividend secure. Payout ratio below 100%.

Likes real estate in general, sector will benefit from lower interest rates. In particular, likes those that are building their businesses; not the ones that are just collecting rents, paying dividends, and going sideways. A good business run by good people. 

REIT space is doing well because of interest rates coming down in Canada. Formula is tried, tested, and true. Good value in the name. Good place to be, as long as you have some diversification. Watch the payout ratio.

He's generally positive on retail across Canada. WMT is its largest tenant, with very good credit; but doesn't pay a lot in terms of "escalators" on rents. Lower growth profile than other opportunities. Last quarter, income growth just 1.3%. Own it for a consistent yield; previously not covered, but now it is. 

With 10-year bond yields popping up, some of the REITs are a bit challenged. This is a Canadian REIT, even though WMT is its anchor tenant. He prefers storage REITs in the US. He worries about the Canadian economy. Yield looks strong at over 7%, seems safe.

Walmart is its major tenant, secure, great cashflow. Investors like the distribution of over mid-7%. Retiring low-cost debt, so earnings will have negative FFO growth. He likes to see a return beyond the yield. See his Top Picks.

Very attractive dividend, especially for large caps. Walmart anchor tenant which is very good for business. Stable business that could only get better. 

Very defensive income profile. Main anchor is WMT, and the flipside of that stability means internal rent growth is quite low. Not a lot of earnings growth. Attractive yield in low 7% range, but high payout ratio. Better retail opportunities elsewhere.