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Stock Opinions by Joshua Varghese

BUY
Quebec's biggest REIT and once a darling REIT. But they had a lot of dilutive raises which increased leverage and bloated their portfolio. Also, the dividend is too high and will likely get cut. Last year, activists forced the company to change at the board level and cut the dividend (and needs yet another cut). The payout ratio is now much better and they've hired a new CFO who should do a fine job. Now, they are considering what to do with Gare Central in Quebec City, and this may benefit shareholders. A good time to buy.
investment companies / funds
BUY
What he likes the most is that their managers expands from investing in pure real estate to asset management. This increases returns. NWH has moved into asset management in a big way. Also has good free cash flow.
REAL ESTATE
BUY

For an RRSP as a 2-3-year hold, vs. BAM Go with BAM. But he likes Granite--boasts a very strong balance sheet with low debt which protects them in a downturn. Or they can lever up their balance sheet and buy accretive assets.

property mngmnt / investment
BUY
A safe, low-Beta stock in single-family homes for rent in America. Revenue growth is a good 4-6% annually.
REAL ESTATE
BUY
Has grown 280% over 10 years. A great way to play residential rentals in Canadian cities like Toronto.
investment companies / funds
DON'T BUY
It's a saga. The latest is that an activist has come in during this sale to complicate things. We'll see where it goes. A few parties want to buy it and see more value than the current share price. But overall he's not positive about HBC.
department stores
DON'T BUY
It's range-bound and getting to the lower end, which may lead to an entry point. It's a low-risk investment. The CEO owns a lot of stock. The downside is protected, but don't expect much on the upside. He's concerned about their big mall portfolio, because malls aren't doing too well. Also, he's not impressed with the total return.
property mngmnt / investment
PAST TOP PICK
(A Top Pick Dec 05/18, Up 33%) When he called it, ARE wasn't cheap. They hold life sciences properties, which is solid and lucrative (fuelled by R&D spending). They can raise rents by 20-30% annually with these companies, which means strong cash flow growth.
REAL ESTATE
PAST TOP PICK
(A Top Pick Dec 05/18, Up 45%) It's a Blackstone-sponsored company that bought a bunch of single-family homes and rent them out. Blackstone IPO'd this and sold it in tranches over time. Now, the stock has legs and doesn't need the parent's support. They rent to tenants and are adding ancillary businesses, like pet services beyond just rent.
REAL ESTATE
BUY
It's pulled back recently, so now is a good time to buy. They hold apartments, especially in the east coast, like Halifax and Charlottetown. Well-run.
property mngmnt / investment
BUY
A way to invest in Europe, though it's a Canadian REIT. Buy this.
0
WEAK BUY
They hold retirement communities. To be honest, it's not incredibly hard to build such facilities, but aging demographics are a tailwind. It's not one of his top holdings, but belongs in a portfolio.
other services
TOP PICK

Was a spin-out of MGM (the casino). They structure a master lease to this parent. These rents are bullet-proof. Cash flows within MGM are strong (from gambling), even if there will be a recession. You're buying good long-term cash flow, supported by an investment-grade tenant. Also, they can buy more quality assets, some within gambling, some outside, which leads to more accretion. Offers stability yet growth. Pays a 6.1% yield. (Analysts’ price target is $36.15)

REAL ESTATE
TOP PICK
They own chilled warehouses, the biggest player in this space. Given consumers' food tastes (fresh foods), this will attract market demand. There's been a recent pullback in COLD, so now is a good entry point. (Analysts’ price target is $40.58)
REAL ESTATE
TOP PICK
They have less exposure (40%) to US coastal markets (than other industrial REITS) where there is a constraint of supply (and can seriously raise rents). Given the other 60% of the company pushes down the value--too cheap in his eyes. (Analysts’ price target is $43.33)
investment companies / funds
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