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Derek WarrenFirst Capital RealtyFCR.TOTOP PICKFeb 03, 2017

A retail REIT basically focused on Canada’s wealthiest neighbourhoods. They are always focused on the best locations, the best corners. Retail is facing some difficulties, but retailers are not just going to close up all their stores; the best stores in the best locations are going to continue to do well. This offers growth. Because of retail pressures, the stock has sold off giving an interesting opportunity. A compelling return over the next year. Dividend yield of 4.11%. (Analysts’ price target is $23.63.)

Derek Warren

Owned

Unlock Rating

$20.89

Stock price when the opinion was issued

$20.86

As of Dec 27, 2019. Market Open.

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Highest quality globally of grocery-anchored shopping centres. 40% discount to NAV. Activism has been an overhang. Defensive, fundamentals couldn't be better. Keep holding.

PAST TOP PICK

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Best idea today. 35% discount to NAV, with attractive distribution yield while you wait for the gap to close. Owns key pharmacy and grocery across the key urban centres in Canada. Resilient. Great setup.

TOP PICK

Favourite investment in grocery-anchored shopping centres. Very defensive, with necessity-based tenants. Owns the best portfolio globally in this space. Can double size of portfolio based on what they own today. Board refreshment with timely skills. 35% discount to NAV. Yield is 5.57%.

(Analysts’ price target is $19.31)

TOP PICK

It owns retail shopping centres across Canada focused on grocery and pharmacy and is in the best markets. The strength and quality of its tenants is good and it has one of the best shopping centre portfolios globally. It trades at a great discount to the private market value of its real estate net asset value. He agrees with the company's estimate of a share price of $23. Has had some shareholder activism lately and he is hopeful for a strategic review. Yield is 4.7%. Buy 4 Hold 3 Sell 1.

(Analysts’ price target is $18.71)

TOP PICK

They own the finest portfolio of grocery-anchored shopping centres in the world, 22 million Sq. Ft + 24 million Sq. Ft in the future, located in thriving neighbourhoods of density and income growth. It used to trade at a premium to NAV, but at a discount in the past 5 years, during which it was one of the worst-performing stocks. Holds a great portfolio, though struggles that they trade at a discount to NAV. Not surprised that an activist investor has come aboard. Good growth ahead. (Analysts’ price target is $18.71)

TOP PICK

Another defensive real estate company. Owns best grocery shopping center portfolio in North America. 85% of tenants are necessity based retails(grocery etc.) Has been trading at a discount to peers and net asset value. New leases has been growing. Company has been buying back shares and selling assets to increase value.

TOP PICK

He had avoided the retail space but is now bullish on necessity-based shopping and that is what they address. The stock has been depressed because cash flows came off during the pandemic and they cut the distribution temporarily for probably two years. It is trading at a big discount to net asset value. He likes management and the setup. (Analysts’ price target is $19.50)

HOLD

A misunderstood name. People saw it as bricks and mortar retail. Its exposure to any retail is in favourable categories such as groceries, medical, department stores. Not big box or malls. Still likes it, though it's not the value it was. Prefers industrial, commerical. Worries about residential, as the rents get capped.

DON'T BUY

Used to own this. Pre-Covid they were a good asset creator through buying and integrating those assets. Problem is they also own retail, which could be a problem for a while. This exposure is a concern. Overall, though he likes the managers and the company.

DON'T BUY

They are in the retail space. Anything that is in the retail space during COVD-19 is in the penalty box and for good reason. The pandemic has shut down traffic to every shopping mall. Their shopping centers are a victim of online sales. The growth outlook has been diminished. He thinks the market has overly discounted it. The catalyst is lacking for the moment. He does not expect the distribution to be increased any time soon.

BUY

Likes it even though he's not positive on retail. They own some of the best Canadian retail in Canada. Pays a 4.5% dividend. Owns some of the best Canadian retail real estate--a niche of grocery stores and pharmacies which are stable and sell necessities. Super managers. The overhang of the previous owner is fading. They converted from a company to a REIT which will attract more investors by appearing on REIT indicies. They have 24 million square feet of development potential on land they already own.

WEAK BUY

Doesn't follow this closely, but they are well-managed and a good real estate company overall. (The ticker has changed to FCR recently.)

TOP PICK

Great Managers. All about intensification at the city level. Fantastic assets with growth profile. (Analysts’ price target is $23.75)

WAIT

They own locations in the larger cities, primarily grocery anchored shopping centres. They are managed by a good focused real estate team. They like to buy the best locations in urban areas. He will look at it on a pull back. It is a good long term hold.

BUY

He does not own REITs but this is probably his favourite in the space. They did it right in the right markets. They created liberty village. They really did well pumping money into Hazelton Lanes. He believes it is still selling at a discount to its NAV.

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Derek WarrenFirst Capital RealtyFCR.TOTOP PICKFeb 03, 2017

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