True North Apartment REIT (TN.UN.TO)

Facing a lot of the same circumstances as the others that came out late in the cycle, issuing additionally equity to refinance purchases. Thinks they could be taken out. Don’t add more money. Go for a name that is more liquid and also beaten up.

Has recently graduated to the TSX. Like all REITs, has done nothing lately. The smaller REITs do not reflect the true intrinsic value. 8.5% dividend yield is fully covered by the cash flow. (See Top Picks.)

Small apartment REIT. Terrific investment. Attractive apartments in Ontario and Montreal. Growing diversification. They announced a stock buyback. The only apartment REIT he owns. He has a 5% REIT exposure.

Gives you exposure to the apartment market. In an inflationary environment, they have the tendency to appreciate with that because they can adjust their rents quickly. There are others that he prefers such as Killam Properties (KMP-T) and Cap REIT (CAR.UN-T). 8.5% yield. (See Top Picks.)

(Market Call Minute) Valuation is still relatively stretched, equity issue coming probably.

(A Top Pick Aug 20/12. Down 21.87%.) This REIT hasn’t done anything particularly wrong. When people sell down in a sector, small caps get hurt most. Good management. Still a Hold.

Their Chairman of the Board has been buying stock on the open market almost every day since June. If he’s taking advantage of the depressed stock price, probably you should too. Great company. You’ll have to be patient.

Owns apartments all across Canada. He avoids REITS with high payout rations and growth by acquisition. Highly leveraged balance sheet. Prefers Interrent.

Is a very young company, owner of apartment buildings in Toronto and Montreal. Has a nice yield on it and a small capitization. Thinks they will grow over time, but it's a risk with a small cap stock.

Thinks the dividend is safe, and payout ratio around 95%. Problems are 1. externally managed, 2. management is incentivised to use finacial engineering to make their money. Doesn't feel that this will be a good story in 18 months.

Share consolidation 2 for 5 recently. He is quite enthusiastic about multi-unit residential. Fort McMurray. Economy there is strong. The consolidation is probably going to be an exception to the rule that after a consolidation the stock goes lower.

A Top Pick the last time he was on the show. He likes the sector of apartment buildings. Good management. Wonderful company and it is just getting started so it is going to be volatile. You own this one for the 7.5% distribution.

Apartments. Canadian apartment sector is fragmented and it is hard to acquire assets. Look for their ability to grow by adding free cash flow per unit. Management did a good job of acquiring assets and going forward they will continue to do so. Distribution is safe and going forward payout ratio and leverage will come down.

Unusual for him to buy a Venture exchange company, especially one with such a low market cap. Shrewd operators. Management has a great track record of creating value for shareholders. Acquiring good quality apartment buildings great cash flow. Beautiful yield of 7.36%.

Some concerns with the structure of the REIT and particularly the area at this point in the cycle of buying companies that are focused on growth by acquisition, where there is an external management contract. Majority of assets coming into this REIT in the next few years will come from TransGlobe.