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Today, Dennis Mitchell, CFA commented about whether REF.UN-T, REI.UN-T, EXE-T, HLC-T, CSH.UN-T, MEQ-T, LHR-X, PMZ.UN-T, CAR.UN-T, HR.UN-T, BRE-T, FCR.UN-T, HEQ-T, AX.UN-T, KMP.UN-T, CUF.UN-T, AP.UN-T are stocks to buy or sell.

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TOP PICK

(A Top Pick June 12/08. Down 26.18%.) Lost a little bit of occupancy but still delivered strong free cash flow growth year over year in Q1. Able to retain tenants in a declining market. Payout ratio is very sustainable. Management has a plan to realize significant value internally on their assets.

TOP PICK

Commercially diversified. Have some very accretive acquisition opportunities and some excellent development yields. Recently made some land purchases. Low leverage. Sustainable payout.

TOP PICK

Dominant apartment landlord in Atlantic Canada. Also have a portfolio of manufactured housing communities. Great Q1 performance but probably not sustainable as it was off of low occupancy last year. Sustainable payout ratio. CMHC financing. Look for opportunities to pick away at lower prices during the summer.

PAST TOP PICK

(A Top Pick June 12/08. Down 42.67%.) Overhang has to do with the Calgary offices where there is an overbuilt situation. There has been some slippage in occupancy. Have an opportunity for some acquisitions at good prices.

PAST TOP PICK

(A Top Pick June 12/08. Down 21.36%.) Management cut distributions because they thought it was the prudent. Converting to a scheduled 2 bank in Canada and will be able to diversify their funding source in terms of taking in deposits.

PARTIAL BUY

Dominant owner of neighbourhood convenience shopping centres. Very stable tenants such as banks, Shoppers Drugs, etc. Distribution is sustainable. Expect some downside volatility so he would pick away at it over the summer.

COMMENT

Primarily focuses on Royal LePage residential real estate brokers. Paid a fee depending on how many real estate brokers are included and how many franchises. This trust will be taxable in 2011. Think they can absorb the tax hit so distribution is probably safe. Not a lot of fixed assets so not much depreciation. Very levered to the domestic residential market. Volumes are down.

COMMENT

REITs: Assuming a weak economy, increasing inflation and higher long-term interest rates, large cap liquid names with pristine balance sheets will do extremely well. Will have access to capital with the opportunity to pick and choose assets from weaker performers. Smaller ones will suffer.

BUY ON WEAKNESS

Probably undervalued relative to its peers. It is now really 2 different companies. There are the stable REIT assets with major companies as long leased tenants. The other part is the Bow development in Calgary and is probably the reason for most of the stock depreciation. This is now fully financed and going forward will be one of the best assets of any REIT. You'll be able to pick away at it over the summer for a better price.

COMMENT

Not a REIT for tax purposes because they recently purchased high-end manufactured home communities, which does not qualify as passive investments. (Wouldn't worry because of this.) Tremendous asset/debt ratio with CMHC financing. Not sure they will be able to grow free cash flow.

PARTIAL BUY

Retail REIT owning unenclosed power centres and enclosed malls primarily in secondary cities. Have done a lot of redevelopment of their assets that has generated a lot of free cash flow growth. Have $80 million in cash. Good portfolio. At these levels you could pick away at it.

DON'T BUY

Limited service hotels with a big exposure to Western Canada. Has taken it on the chin because of weak gas prices. If you own you are probably sitting on dead money until the economy recovers.

BUY

Focused on buying B & C assets in Calgary, Victoria and Saskatoon. Management owns 40% and has shown a knack for finding markets that are just about to boom. No distributions.

DON'T BUY

Seniors housing with a significant amount of US assets. No debt due you until it 2013. Always seems to be operational issues.

COMMENT

Limited service hotels, primarily Western Canada. Overpaid for a large portfolio of assets in Grand Prairie. Good management. Will not qualify as a REIT under government rules. However are only taxed on taxable income, which is nil and they won't be taxed under new legislation.

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