Canadian Apartment Properties

CAR.UN-T

Still likes the assets, management, and the huge shortage of high-quality apartments in markets like Toronto.
A great holding.

Has done fantastically, owning apartment buildings mainly in Ontario. Largest landlord in Toronto region, and benefiting from high rents. Biggest issue is that it’s very expensive, trading about 28x AFFO, compared to most REITs at 16-18x. Large cap spend on older units, but they’re developing so there’s growth. Question as to what new Ontario government will do with rent control.

They did very well in Q1. Funds from operations up 10% y-o-y. NOI up 7%. Good balance sheet. 72% payout ratio. 47% debt to fair value. Everything great except it is trading at 22.8 times 2019 earnings.

Income generator. A stable one. It is richly valued. They look for a combination if income and growth.

Take the money and run. It is an all stock deal. He is not bullish on the sector. His issue with the sector is valuation. There is very little growth here except by acquisition.