John Ewing

He and his team are contrarian investors. They try to look at areas that are at least a little bit out of favour. Things that are hitting all-time highs are not usually what excites them. Small caps have had a good rally in the last quarter, but not at the 52-week highs the way large caps are. 

Canadian REITs are still really out of favour, so that's an interesting area. People have been obsessed with interest rates and how that affects real estate; but rates don't impact every sub-sector the same way. REITs tend to trade right near their NAV, except in occasional dislocations such as the GFC or Covid. But we're going on 2 years that Canadian REITs have traded at a big discount to NAV, which hasn't happened in the last 25 years. The property market is a lot more buoyant than the REIT market, so that's a great opportunity for investors to take advantage of 2 different ways to own the same asset. 

When GICs were yielding 5%, you didn't need the volatility of REITs. As rates have come down, the attractiveness of REITs has gone up. Good place to get yield. Often trading at discount to NAV, so you can probably get some capital gains too. Relatively safe way to be invested in stocks.

One of the larger Canadian apartment REITs. Mostly in Alberta, where there's no rent control. So with population growth, it can raise rates faster. But if economic slowdown in Alberta, this name feels it faster. Pivot in Canadian immigration policy put the whole apartment sector under pressure.

Well run. Alberta's economy is doing really well, and cost of living is better than many other places in Canada. Likes the sector. Stock's cheap relative to underlying asset value.

No, not as much as a lot of people think they are. Canada's in a tough spot economically. Seems that rate cuts are more likely than rate increases, which would probably help the REIT sector. The sector can definitely do well without rate cuts. 

REITs are bond-like, but people forget that at least some REITs have the ability to raise rents over time. They can grow cashflow, which offsets the pressure from interest rates. An office REIT with 20% vacancy would find it tough, but an apartment REIT in Calgary with 1-3% vacancy would be fine.

Grocery-anchored retail, and a big industrial portfolio. Core retail has been a great sector, with almost no new construction but the population keeps growing. Landlords really have the advantage over tenants right now, growing rents rapidly. 

Office buildings. Big yield, and he thinks they'll be able to keep paying it. Most buildings are in Toronto, with vacancy at 20%. Long time before it can raise rents again.

Mostly grocery-anchored retail, and the whole sector's in good shape. Captive to Sobey's; inherent conflict of interest where the biggest shareholder owns the biggest tenant and doesn't want rents raised. So he prefers the independent REITs.

Infrastructure is a great asset class. Brookfield is world-class, great at being value investors. A lot of the return tends to come from yield as opposed to growth. Good income generator with good underlying assets. For the long term.

Grocery-anchored retail in major cities in Canada. Most in-demand asset class in real estate today. Irreplaceable portfolio of great retail properties. World-class assets. Will have great rent growth, as new builds are too costly. Potential down the road to build apartments or condos on top of current sites, further adding to value over time.

Main tenant is WMT, which is a blessing and a curse. WMT drives a lot of traffic and attracts a lot of tenants, and it has great credit. But WMT has locked in low rents for a long time, though rents can be raised for the other tenants. Not as much growth as some of the other grocery-anchored REITs.

Portfolio is half in Canada, half in Europe. Europe doesn't have a lot of population growth, but the real estate is in dense cities and hard to replace. Fundamentals for industrial real estate in Canada are terrific, as there's still lots of room to grow in adoption of e-commerce. As well, Canada's population grows faster than most other developed countries. 

Industrial REITs have sold off over the last 6 months, as they're more economically sensitive. Might be a good buying opportunity.

Diversified REIT that doesn't work very well anymore, as it tends to trade at the multiple of the least-liked sector it owns, and it has a lot of office. If you own, hold on, as today's press release indicated interest from multiple parties (and so a higher bid may come forward).

Not all small caps are startup biotech or drone companies. Lots of businesses dominate a niche that you never even knew was a business. Usually in the range of $500M to $5B market cap.

For example he owns Latham Group, North America's largest manufacturer of fibreglass swimming pools. Its market cap is just under $1B. Fibreglass pools are cheaper up front, last longer, cheaper to maintain; keeps taking market share from concrete, now up to 25% of total pools. This company is 5x bigger than the next largest competitor, with 50% of the fibreglass market.

The sector probably trades at a 20% discount to NAV on average. Fundamentals for real estate in Canada are great. Most of our population lives in cities with some kind of land constraint -- border, mountain, water. Land constraints tend to push up rents over time. We also have better population growth than almost any developed country, creating good demand. And Canada's a safe country.

Buying into a REIT at 20% off is a lot cheaper than hiring a firm to buy you a building at full price.

Industrial properties in Western Canada, London, and Montreal. Not quite big enough for the index, but it's close. Some really good assets. If they can just get over the hump to the $1-1.5B market cap, then this could become an in-favour REIT with institutions. Thinks they can do it if they can keep adding good assets. Good yield, good CEO.