(A Top Pick Jul 19/18, Up 0.3%)  They are doing a lot of very smart things in the health care area around the world and he is sticking with it.

The only REIT he owns.  The property portfolio is not just Canadian but half is international.  The CEO is a very smart capital allocator.  He owns quite a bit of the company. (Analysts’ target: $11.65).

Their plan is to acquire medical office buildings and standardize the rent and leases, get advertising and get parking. It was a Canadian only entity, but then merged with Northwest International, and has become a much bigger REIT. A REIT is fine in your portfolio, but it’s hard to get excited about a company that has to pay out 95% of its cash flow to shareholders. The valuation on all REITs is quite expensive at this time. Yield of almost 7%.

A globally diversified REIT with exposure in Canada, Brazil, Germany, Austria and Asia. Rather than being in healthcare, they are more of a rent collector. In Canada, in particular, they run medical office buildings, which is a more defensive part of the market. Yield of about 8%. Although it has some positive attributes, the balance sheet is stretched, and a lot of their debts are in convertible bonds.

NWH.UN-T vs. CSH.UN-T.  CSH.UN-T has decent growth because of their demographics.  His problem with REITs is that they were one of the biggest beneficiaries of the low interest rate.  He looks at the cap rate and turns it into an enterprise value and you are paying 15-16 times operating cash flow.  You should pay that for a high tech company, not a healthcare company.  You are paying out 80-90% of the income as yield.  You can’t do that in other sectors.  Where is the money to invest in the business – how does it grow?  He went short the REITs about two months ago.  He does not like either one, but if forced to choose it would be CSH.UN-T.

(Market Call Minute.) Excellent management. A niche business in that they are growing in the healthcare space but have now focused outside of Canada, and are getting leased properties that have cap rates that you don’t really see in Canada. Being in a foreign market, currency is an obvious issue. If you own it, he expects you are going to get a nice distribution. Expect they will make acquisitions and grow.

Owns this in his income portfolio. Their portfolio is diversified outside of Canada. Thinks they will continue to grow by acquisition. They pay nice yield and the CEO owns a fair bit of the stock as well.