Smart REIT (SRU.UN.TO)

(A Top Pick Dec 29/14. Up 18.74%.) (Used to be Calloway.) They internalized their development team, so now have a development arm which adds growth. Their existing portfolios are anchored by Walmart (WMT-N).

(A Top Pick Dec 29/14. Up 18.11%.) A great company. Existing portfolio is anchored by Wal-Mart.

He is a big fan and is overweight. It is a core holding. It is not a downtown REIT. Wal-Mart as a tenant attracts other tenants. It continues to have very high cash flow. Vaughan metropolitan area. A very skilled development team.

They are anchored by Wal-Mart. It is quite defensive. They tied themselves to Wal-Mart and not to Target. They outperformed the REIT index. They have good centers all around in the cities. They don’t need to expand and they have good access to capital. Their formats might get smaller because of the transition to online. Target’s exit has left so much retail space. It does what it does and gives you a 6% yield.

He likes that you have a Wal-Mart anchored portfolio of properties that is 99% occupied. You also have a development arm. A core holding.

Valuation has improved quite significantly. If you look at it relative to other retail REITs in North America, it is trading at a little bit of a premium. It wouldn’t be amongst his top retail picks, but continues to like the business. Prefers strip centres versus enclosed malls. This has a tremendous development pipeline with a sustainable yield and a very good balance sheet.

He feels interest sensitives are not where you want to be. These are the ultimate interest sensitive vehicles. Unless you want to hold it for a very long time, don’t go into it.

He is very excited about this one. It was not always a very clean structure. They had the Smart Center vehicle that was off to the side. They have internalize that now and brought that whole development team inside. They developed basically all the Wal-Mart’s across Canada. You combine that with the growth opportunity with their existing portfolio and you have a mix of stablity and growth. It deserves a higher multiple in the market. 5.4% yield. They don’t have pricing power over Wal-Mart, but Wal-Mart attracts other great tenants.

Retail oriented REIT. Wal-Mart is 27% of their revenues. It is harder to get rental rate increases. They acquired 24 properties from Smart Centers. It does enhance the long term growth profile. It’s a bigger and better REIT. Below 90% payout ratio. It is about 2% below NAV. She would be patient and acquire it when it is lower.

People have been concerned about the retail business right now, however none of those issues affect this company. They are coming in with a Wal-Mart (WMT-N) anchor. This is an opportunity to buy a very, very stable cash flow. They have internalized their development programs. Have a fully internalized management with an internal development program that will now be able to continue to expand across Canada in Wal-Mart anchored centres and possibly in the US over time. Dividend yield of 5.37%.

Just struck a big deal with Smart Centres, which will be renamed as Smart REITs. Wal-Mart (WMT-N) is a core tenant which provides stability. He likes the opportunity that this company now has to continue to develop on their properties. Dividend yield of 5.38%.

Retail assets and their largest tenant is Wal-Mart. Historically they have been 99% occupied which has driven stability in their cash flow as well as their distributions. They have started to dispose of some of their non-core assets. A stable yield and you will get 3%-5% cash flow growth.

Very stable retail name. Wal-Mart (WMT-N) is their largest tenant which continues to expand giving them some expansion growth. This REIT was trading at significant discount to its peers. 99% occupied. Have some very significant developments happening in Vaughn, Ont. which offers some very interesting opportunities. It has pulled back so it is a nice opportunity to get into it. Dividend yield of 5.27%.

His company has this with a $29 target. Thinks the cash flow is solid. This is diversified through Canada, so you are not specific to any single place.

Retail REIT. Trading at a discount. Main tenant is Wal-Mart. They have development opportunities as well.