Minto Apartment REIT (MI.UN-T)

Our PAST TOP PICK with MI.UN has triggered its stop at $13.  To remain disciplined, we recommend covering the position at this time. This will result in a net investment loss of 12%, when combined with previous recommendations. 

We reiterate this REIT which owns multi-resident properties across the country as a TOP PICK.  With a rising cost of capital, the company prudently terminated an option to purchase an apartment complex, which allowed it to reduce debt and build its cash reserves.  It trades under book value and supports a 14% ROE thanks to a 56% operating margin.  It pays a good dividend, backed by a payout ratio under 15% of cash flow.  We continue to recommend a stop-loss at $13, looking to achieve $19 -- upside potential of 24%.  Yield 3.2%

Average occupancy rates continue to improve helping revenue to grow over 10% annually.  The company sees the widening gap between insufficient new housing supply and demand for affordable housing working in their favour.  They have aggressively rebalanced a large segment of their debt at interest rates half of previous rates, while also building cash reserves.  It supports a 14% ROE and its dividend is backed by a payout ratio under 15% of cash flow.  We recommend trailing up the stop (from $12) to $13, looking to achieve $19 -- upside potential over 25%.  Yield 3.1% 

Despite the impact of higher interest rates, MI-UN is showing reporting rising cash reserves, while debt is being retired. Same property revenues are up 8% and occupancy averages 97%.  It trades below book value and supports a 20% ROE. It pays a good dividend, backed by a payout ratio under 10% of cash flow.  We recommend placing a stop-loss at $12.00, looking to achieve $19.50 — upside potential over 32%.  Yield 3.2%