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Stock Opinions by Dennis Mitchell, CFA

PAST TOP PICK

(A Top Pick Feb 14/12. Up 8.89%.) Their move into malls was unexpected but if they can retain the platform i.e. all of the people, it will be a good move for them.

property mngmnt / investment
PAST TOP PICK

(A Top Pick Feb 14/12. Up 26.23%.) All they have done over the last year is to continue to grow their NAV, continue to increase their cash flow and continue to increase the dividend. Very happy with it. Worth in the $40’s at this point.

management / diversified
PAST TOP PICK

(A Top Pick Feb 14/12. Up 52.22%.) Doesn’t own this one because it is just too small. Primarily apartments in Western Canada. Good management.

property mngmnt / investment
DON'T BUY

Not a big fan of lodging REITs. Operating margins tend to be much lower than the typical REIT. An operating business that tends to own their own real estate. Also it is dramatically over levered.

REAL ESTATE
COMMENT

Payout ratio had been very high. Nearing completion on a couple of projects that should add to cash flow and materially reduce the payout ratio so he is going to take a closer look at this going forward. Generally the gas powered power generators are names he has not traditionally owned because the power purchase agreements are coming due and the recontracting process has usually led to a lower cash flow per unit.

Utilities
BUY

A mortgage REIT. Have done an effective job of maintaining their book value, despite the fact that spreads have come down. Leverage is at almost an all-time low. Great management. If your strategy is to hold it for 5 years, you will do very well.

Financial Services
COMMENT

Passed on the IPO because of unsatisfactory answers from management but the stock is done very well since then.

REAL ESTATE
DON'T BUY

Has all the qualities that he likes in a REIT. They don’t have to compete to acquire the types of properties they are getting. He didn’t like the valuations on the IPO and has never had a chance to get into the name. Not cheap. Occupancy still hasn’t come back to where they said it would be during the IPO.

REAL ESTATE
COMMENT

At these levels it is probably a Hold, leaning towards a Buy. He thinks it’s worth $39-$40. Below $36, he would be buying materially.

property mngmnt / investment
STRONG BUY

Premier apartments, basically on the West Coast but also on the East Coast. Traded off recently because they partnered with Equity Residential (EQR-N) to buy Archstone. Likes quite a bit but the stock has suffered because people are anticipating they are coming to market to sell shares. This is an opportunity to buy a name with an NAV of $130-$135. Have been able to grow their cash flow dramatically.

Financial Services
BUY on WEAKNESS

A bit of a conglomerate within a conglomerate, holding rail, coal and ports. Likes their ability to go out and secure long-tail infrastructure projects in a number of geographies in a number of different sectors. Would like to see a pullback to $36-$37 so he could add a little bit more. Pretty much fairly valued at this price.

Energy Infrastructure, Industrials & Utilities
BUY

Becoming a core holding for a lot of institutional investors. Very solid management. They are the only acquirer, manager, developer, owner of class 1 real estate across Canada. Probably worth about $35.

investment companies / funds
COMMENT

Tremendous portfolio. Grocery and drugstore anchored strip retail in the big 6 retail markets in Canada. Strong management. However, they have struggled to generate sustainable cash flow per unit growth, so the NAV is strong, assets are irreplaceable but what you want to see are these acquisition, developments and redevelopments translate into cash flow per unit growth. Have the best investment grade rating in Canada in the real estate space.

property mngmnt / investment
HOLD

(Market Call Minute.) Have the exposure to Sobey’s.

property mngmnt / investment
DON'T BUY

(Market Call Minute.) Issue here is a quality of the real estate and motivation of management.

REAL ESTATE
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