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He is a large shareholder. Trading at about 11% discount to NAV. A great name to hold, but his concern is the Western Canadian exposure. It looks like in-place rents are about 5% higher than market rents in Western Canada, and that is getting offset by some strength in Eastern Canada, so he feels that everything on balance is okay. If looking for a name that is a little bit cheaper in the industrial sector, you could look at Dream Industrial (DIR.UN-T), which is trading at about a 25% discount to NAV and also cheaper on other metrics. However, it is externally managed and does have a little more Western Canadian exposure, but that is fully reflected in the share price. He still holds Pure Industrial and thinks it is fine.
Sold his holdings. Was getting a little concerned in the 4th quarter last year that auto sales had peaked and OEMs were going to be snapping back at some of the auto parts manufacturers to try to get some price concessions, and in a rising rate environment it could put a bit of pressure on auto sales. Some of those things have come to fruition, however the precipitous decline in these shares represents a good buying opportunity. He is looking to re-enter the stock. Great balance sheet and a very attractive valuation, trading at about 3.5X EBITDA, which is near the low end of the range.
Has been a controversial name. A report came out alleging they had overpaid for some acquisitions and were going to lose some customers and face some pricing pressures. Ever since that came out, it has been in the penalty box. Management has reasserted that fundamentally the business is okay, pricing is fine and they are not losing any customers. Before Buying wait until they report on Feb 23rd. Longer-term, this is a stock that could be worth upwards of $40.
When this IPO’d, it was primarily dependent on Magna (MG-T) accounting for well over 90% of its net operating income. Management’s objective was to reduce Magna’s exposure to less than 50% NOI within 3 years by making additional acquisitions by using their under leveraged balance sheet. Management has not done that in a very aggressive way, so debt to growth BV, it is still very under leveraged, less than 30%. They have a lot of balance sheet capacity to facilitate additional acquisitions. They haven’t done anything, which is unfortunate because in the interim the value of industrial properties has gone up and interest rates have fallen. They missed out, which is why you are seeing the stock languish. They did undertake a strategic review. The CEO left, so there is new management. Feels the dividend is sustainable.
Likes the stock at this level. Relative value compared to the S&P 500 usually trades at a premium, and that has since come in quite substantially. This is a great entry point. If you normalize for the synergies that they can get from the Rite Aid acquisition and the Alliance Boots acquisition, you are looking a pro forma earnings upwards of $7 per share they could realize a couple of years out. This is a stock that typically traded in the range of 15-20X earnings, so there is a lot of upside potential. You could buy Rite Aid (RAD-N), which would be a lower risk way to get a little bit of upside into your broader portfolio.
The largest owner of medical office buildings in Canada with some exposure in Brazil, New Zealand and Germany. Because it is so diverse it is tough for investors to get a handle on what is happening in each of those different markets, especially if you consider what is going on in Brazil. He has some underlying concerns about the health in some of those markets. Has a relatively high payout ratio that is going to have to rely on acquisitions to facilitate growth. In this market, where most REITs are trading at a substantial discount to NAV, it is going to be much harder to realize non-organic growth. Prefers others.
He is a big shareholder in this. One of the best performing Canadian REITs year to date, primarily because it is Eastern Canadian focused, and is low income housing. In an environment where there is economic uncertainty, and you are worried about the health of the economy or the consumer in aggregate, there should be more demand for low income Housing. An interesting switch would be to consider going into Boardwalk (BEI.UN-T) instead, because he thinks they will benefit as oil prices recover.
Likes the name and you are getting an attractive dividend. Very well diversified. They own everything from toll roads to terminals. Almost exactly the kind of name you want to own in a low interest rate environment, when you are seeing money flow into defensive sectors. Very defensive name. Dividend yield of 4.6%.
A very high quality REIT with a high quality management team. Defensive characteristics in many respects. Surprised to see the stock has sold off so much. Trading at a substantial discount to its replacement value, 25% discount. Has office properties, retail properties and now has some exposure in apartments and offices in the US. Very strong balance sheet and a weighted average lease term and weighted average interest rate approximate of 10 years, so it is very bond-like in nature.
Making a big US acquisition which is supposed to be 5% accretive, and to be funded with a little bit of cash and shares. Stock has come off 12%, and thinks there is some concern about further divestiture into the US. Stock has had a good run, so you are seeing them give a little bit back. A name he thinks he would be adding to, given the recent pullback. These are the kind of names you want in your portfolio given all the market volatility, because the utility sector in the US and Canada have been some of the best performing sectors year-to-date. Dividend yield of 4.2%.
Whether looking at this, a US insurance company, US bank or Canadian bank, the financial sector has declined almost in lockstep with the decline of US 10 year bonds. That tells you that people are going to these things when they are more optimistic about rising rates. This company funds their liabilities through their assets, and their liabilities tend to go down when rates go up. Have hedged a lot of the interest rate exposure. The other concern is their Asian exposure. He would almost rather own a Canadian bank because their businesses are little more diverse insulating you from just one product line. Dividend yield of 3.9%.
Markets. This is going to be a challenging year for investors. It has been much more pronounced than people expected. Feels we are now getting to the point where lower oil prices are sparking concerns about credit. A lot of people are looking at the banks, their balance sheets and exposure to oil companies as well as debt maturities coming up for renewal this year and next, and how many companies are going to be going concerns. You are seeing this with Canadian, US and European banks, so you have credit concerns. Over and above that you have global growth concerns, so people are starting to fret about China in 2016-2017 as they go through the transitionary period with their economy. People are making bets against the Chinese Renminbi, and are going short the currency, because they suspect further devaluation is necessary to stabilize economic growth. Then there is some uncertainty about growth in the euro zone and Japan and what the ECB is going to do at their coming meeting in March. All those global growth concerns, low commodity prices, currency depreciation are really contributing to the economic market volatility. Thinks we are going to see the US Fed take a more dovish stance. While most people were expecting 4 rate hikes at the end of 2015 and 2016, now we will be lucky if we get one, if that. If the US Fed backs off, it could be a bit of a rallying cry for equities and maybe a reset of inflation expectations, which is why you are probably seeing the US$ fall back.