Canadian Apartment Properties

CAR.UN-T

The biggest apartment REIT in Canada. A good, liquid way to play the fundamentals in this space. Global analysts see the GTA of Ontario a great market area, right up there with India. He wonders what their rental rate growth might be going forward. A good name to hold.

The whole sector has been hot with rents increasing. CAR has been a great performer, but it's a lower-yielding REIT of 2.4%. He prefers higher ones like 5-7%. But this is a good grower--will that growth compensate for the low yield? Don't chase this now, but hold onto it.

(A Top Pick Aug 13/19, Up 7%) The chart looks good. It moved higher in the winter, went sideways in the summer, then resumed moving up to the present. Meanwhile, collect the dividend.

It’s probably too late to get in. The dividend will grow at 8% but the dividend is pretty small compared to a traditional REIT. It’s also very expensive. Would go for another company with higher growth rate.

Buy at current levels? Yes, because new Canadians continue to enter our cities which feeds housing demand. CAR is expensive, because it keeps growing.

An industrial or residential REIT? Both sectors are great with strong supply/demand imbalance. CAR is mostly based in Ontario and have 10,000 units they can develop--a strong pipeline. Fine managers. Look at Top Picks for an industrial REIT.

It's been sideways this year and only recently breaking out to all-time highs. The chart looks awesome and there's strong demand for rentals. And you're paid a dividend. (Analysts’ price target is $52.56)

All the demographics and secular boxes are checked. They own 41,500 residential units in Toronto -- accounting for half the funds asset value. They have the ability to develop 10,000 new apartment units. A big presence in the Netherlands and Dublin as well -- the only pure apartment play there. Yield 2.83% (Analysts’ price target is $52.56)

It has benefited from population growth in the residential housing space. They own assets across Canada. He thinks they may become a major take out target. Their free cash flow yield is pretty low, around 3%, so he thinks there may be better opportunities out there.

REITs are still in favour. Remember that they've performed quite well this year. The sell off is an attractive time to buy. Really likes this one. You have to own it if you're going to play the Canadian apartment space. Largest Canadian landlord. Own European assets as well. A steady name. Room for growth.

Fantastic ride. He likes it. They execute well. He never owned it based on valuations. They do well renovating. They are doing well in the Netherlands and doing very well there. When you miss a boat you get to be shy about it.

He liked this so much because the old Wynne government in Ontario re-imposed rent controls which discouraged the construction of new apartments. CAR.UN has excellent management, However, will the Ford government remove rent control and encourage developers to go into high-end apartments? If so, it could take 5 years to create an oversupply of apartments, so he feels safe with this REIT. CAR.UN holds first-class assets.

It's better to rent than buy, even with yesterday's new incentive in the federal budget. So, rentals will stay tight. He wishes he owns this REIT. They've done a good job creating value with most assets in Ontario where rents have increased. He sees no headwinds against CAR.UN, but it trades at 26x AFFO, which is high. It's too pricey to enter now. The higher it rises, the shyer he gets. Definitely hold it.

They just had a good quarter. A solid 10% YOY growth. Occupancy at 99%. He sees 5% AFFO growth. A low 73% payout ratio, so the dividend is safe. Great balance sheet. It's amazing, apart from a very high valuation and pays only a small dividend. A fine name, but he wouldn't buy it now.