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COMMENT
COMMENT
A new GTA REIT Continuum REIT is his single largest holding in their Real Estate fund -- a private fund that just launched its prospectus last week. It holds apartments in the GTA area of Ontario. They are exploring an IPO -- a pure play exposure in this very hot market. Rent controls in the market actually caused other rents to spike as people held onto their apartments. This REIT will take advantage of the opportunity to raise rents on the units available. This shows rent controls are not the answer to keeping rent affordable. You need to increase the supply.
BUY
The Starlight buy allowed TCN-T to expand apartment rentals in the US to be added to their single-family for rental portfolio of holdings. They were able to issue stock to the Starlight holders at very high values to bring them in -- a very smart strategy. This created a large overhang of shares that could hurt share prices. Recently TCN-T removed the overhang to allow them now to sell those shares unrestricted. Investors on the sidelines appear to have sopped up the surplus. The only reason it was not a Top Pick, is that he was blind sided by the share announcement. His discussions with the management team about the US acquisition is solid, he thinks. He likes the valuation of the company, he thinks it could be worth $13 per share.
REAL ESTATE
HOLD
A small Canadian REIT focusing on US middle market apartments. He likes these specific markets because they less risk around the affordability and the ability to raise rents without regulatory issues. They are trading at a discount to NAV, which confused him why they issued at a discount. Yield 4.4%
REAL ESTATE
HOLD
REITs in general have done well and are now fairly valued -- there are no desk pounding deals out there. You want to own them as they prove they hold their value in the late stages of the bull cycle. As we get more into uncertainty in growth, political turmoil and trade wars the income they generate is good. Don't expect a ton of growth, however, due to the required capex. Yield 5.4%
property mngmnt
investment
HOLD
He likes holding this one. Apartments are doing well in the space. He worries if these are being over valued. REIT distribution yeilds need to be re-though. Real Estate is very capital intensive and high distributions may require more debt and more equity to get raised to pay them. He prefers a lower yield and low payout ratios. This REIT has done things well, with a low distribution yield that is allowing free cash flow to grow at 18%. He prefers owning apartment REITs versus owning a condo. Yield 1.8%
property mngmnt
investment
PAST TOP PICK
(A Top Pick Aug 16/18, Up 21%) If you want to own one international real estate holding -- this is it. They continue to raise lots of capital and have an army to deploy it. They charge fees to management assets and fees on the profits. The bigger the pool of assets, the bigger the fees they collect. Their inside owners interests are well aligned with investors. If markets do drop, they are best positioned to take advantage of opportunities. There could be some risk that regulations that come into the private equity market, but he is not too concerned it would impact their fees.
management
diversified
PAST TOP PICK
PAST TOP PICK
(A Top Pick Aug 16/18, Up 35%) The largest warehouse holders in the world. They have a solid platform around their business. He says 2% of global GDP flows through their warehouses. They are using that understand the data of the flows through their assets and use that to better their client services. He sees this as value that will continue to feed on itself.
investment companies
funds
DON'T BUY
Why the higher yeild? He prefers to put money in with the parent instead. BPY.UN-T holds a lot of US malls and offices. There are supply issues in some of those key markets and the capital insensitivity is creating some uncertainty, resulting in the higher yield he thinks. The leverage is also pretty high. It will do well in the long run and they hold high quality assets. But he doesn't think you need to be there.
REAL ESTATE
BUY ON WEAKNESS
If you want good global REIT exposure own PLD-N. WIR.U-T raised equity and this has resulted in a share drop today. This is not a high conviction name -- you don't have to own it. We have gone through the most bullish industrial run up over the past few years and we have not seen their cash flows really increase. He is starting to see supply of industrial space increasing and some of their leases expiring soon -- this could challenge their cash flow going forward. He would buy on a pullback.
investment companies
funds
