Andrew Moffs

The publicly traded real estate space absolutely is a beneficiary of this. When you look across equities today, real estate stocks have been largely underweight ever since interest rates went higher. As the uncertainty continues, people will be looking for more defensive equities to invest in.

In contrast, when you look at the private markets, fundamentals in the commercial real estate space have been quite strong. Seeing internal growth of 3-4%, balance sheets in check. Given the interest rate backdrop, transactions should pick up at quite a pace in the back half of this year. That will shed light on the valuation disconnect in the public market.

So he's actually quite bullish on the outlook of the sector for the rest of this year.

He's foreseeing a pickup in both, but definitely a difference between the two. People seem to be translating slowdown in the US into a recession, but he doesn't think this is necessarily the case because there's a stronger economic backdrop there. 

The backdrop in Canada is tougher, and tariffs do not help. Recession could be a reality. What that means is that the central bank here in Canada is going to be cutting at the fastest rate of any country globally. That type of backdrop in interest rates can be quite positive for the valuation of real estate. It's particularly positive for those that have a better cost of capital. 

This is an environment where people can take advantage, not necessarily of broken assets but of broken owners, and buy great assets. If assets continue to trade at such a wide discount in the public market, we could definitely see M&A pick up and REIT privatizations across Canada.

As a stock picker, it's really important to get the top-down correct, and then do your bottom-up research. Looking across the sectors, if you're thinking bullish and recession, you want to think defensive. Grocery-anchored shopping centres across Canada are very defensive. Seniors housing is enjoying secular tailwinds, where demand is far going to outpace any new supply. 

Shy away from office space, which has a secular headwind with high vacancies. Doesn't expect any rent uplifts in that space anytime soon.

Very defensive income profile. Main anchor is WMT, and the flipside of that stability means internal rent growth is quite low. Not a lot of earnings growth. Attractive yield in low 7% range, but high payout ratio. Better retail opportunities elsewhere.

By and large, commercial real estate landlords do consider this name to be in the grocery space. It's doing a better and better job of that. But not a pure-play grocery. He thinks of defensive, grocery-anchored shopping centres as neighbourhood, urban, smaller centres -- where you can get a haircut and do other errands that can't be done online.

NAV materially higher than share price. Doesn't see catalysts for NAV increasing, so discount will continue. Asset base is mainly retail and office, sectors that are somewhat out of favour. Earnings potential not great. Higher than average cost of debt.

Great little company. In certain markets, huge market share. Its markets are non-regulated, so it's easier to capture upside than in rent-controlled markets. Model is buy-fix-rent-repeat. Alberta is more affordable with higher population growth than national average.

CEO retired, but Andrew still thinks highly of management team. Primarily in Eastern and Atlantic Canada. Fits his grocery-anchored profile. Attractive 7+% distribution, and high implied cap rate. Discount to NAV, though not the greatest, and decent upside.

Loves the space. Core holding. Wouldn't be shy adding here. Defensive profile, as over half its portfolio is in LTC. Mainly in Ontario, where wait list is over 50k. Rents are paid by the Ontario government. Nice job growing retirement side, with a compelling demographic.

Supply is barely 1% of inventory. Anytime there's a mismatch between supply/demand, it's usually a positive. Heading for 95% occupancy. Expects great cashflow growth.

Recent results reflect a challenged operating environment. Q4 earnings below expectations. FFO was down 13% YOY. Interest rate headwinds, negative internal growth, earnings headwind. Goal of 90% occupancy by year's end is ambitious, especially with new supply in the key market of Toronto.
 
Payout ratio hovering around 100%; but when you adjust for non-cash revenues, distribution is not covered. Company's adamant in not cutting dividend, willing to borrow to cover it. That's not a formula for success. So don't buy it for the yield.

CHP.UN is far more defensive. Great portfolio, with about 20% in industrial warehouse space (a sector he's quite bullish on). If you want defense, this is your better bet.

With CAR.UN, you have to think about affordability and how defensive is the tenant base and the cashflow from that base. Great portfolio, with higher concentration in Ontario -- something to keep in mind if you're concerned about tariffs and loss of manufacturing jobs in southwestern Ontario. See his Top Picks.

CHP.UN is far more defensive. Great portfolio, with about 20% in industrial warehouse space (a sector he's quite bullish on). If you want defense, this is your better bet.

With CAR.UN, you have to think about affordability and how defensive is the tenant base and the cashflow from that base. Great portfolio, with higher concentration in Ontario -- something to keep in mind if you're concerned about tariffs and loss of manufacturing jobs in southwestern Ontario. See his Top Picks.

Was on path to close the gap to NAV, which is around $16-17. Hit by concern over tariffs, but he thinks it's well insulated by demand of "last mile" e-commerce. Rents are far below market, so still has internal growth in rent earnings. Attractive development pipeline. Risk/reward is really to the upside.

Great opportunity to add.

91% occupancy, aiming for 95% by year's end, which is very high-margin growth. Great position to add to portfolio in an accretive way. Still lots of upside. He expects Q1 report will show positive balance sheet developments.

Bullish on the space. Got really close to its NAV of ~%58, so he took the opportunity to exit. Reallocated proceeds to other industrial warehouse names that trade at a discount.