He has met with their management a few times. They have transitioned their business from hotels for railworkers and staff, which was a simple and good business. They have transitioned to owning more hotels, generally in B cities in the US. He doesn’t have confidence that this will work out well. Its price has been dropping. He doesn’t recommend selling it this low.

This was a focused railroad hotel. They did a new contract with the rails, which allows them to resell 20% of unused accommodation to the general public. They focus on suburbia USA. The railway business is less important now, being only 30% versus the 60% it used to be. The stock has been under pressure, and he wouldn’t be surprised to see better numbers coming out. It is interesting and he is looking at it.

They were always known as the railroad hotel as they had contracts with railroad providers. That is now only about 20% of the REIT. They focus on secondary markets in the US and have brands including Marriott, Hilton and Holiday Inn. They came in with numbers that were light. Margin compression was happening at the rail side of the business. There were also some timing issues with regards to a couple of the new hotels. This is a play on US GDP growth. With the US$ where it is, this is probably not a bad time to have US assets. He would like to see another quarter numbers. About 78% payout ratio which is normal. Distribution of almost 9%.

It is a smaller cap REIT.  The payout is high.  Most of the earnings are US$ translated back to CAD$, which just appreciated over the last three months.  The market is pricing this depreciation in the yield into the stock.  He is not expecting a dividend cut, but it is a possibility.  AIR B&B’s have not shaken up this industry yet, but they could.  He prefers BPY.UN-T.

This recently took a hit, because they did an issuance. Issued some shares to repay some debt. They’ve done a pretty good job. Thinks the payout ratio is fine. Hotels are a more cyclical area, so you have to be careful. Trading at a good multiple and has good distribution.

He owns this for 2 reasons. It began as a hotel for railroads. 1. It has some nice growth potential as they roll up smaller hotels in and across the US. 2. He likes its real estate outside of Canada, so you get exposure of the real estate sector, without having assets tied up in Canada. If the Cdn$ goes down, he has an asset that appreciates in value.