First Capital Realty (FCR.TO)

Was a little worried that the valuation, especially relative to some of the other retail REITs, was a little expensive. However, it has pulled back and this is a pretty good entry point. This is a very, very high quality portfolio. Good management team.

A fantastic company. Very high quality management team. Great assets. What he likes is that they pay detailed attention to leasing.

(A Top Pick March 19/14. Up 16.29%.) An owner of high quality retail in Canada. Also, have a very large development pipeline and will likely invest over $1 billion in the next 5 years. Trading slightly above NAV, but this is because of the quality of its properties, the quality of its balance sheet and the above average free cash flow growth.

A good operator, but a lot of these look relatively cheaply compared to US counterparts.

In a rising rate environment, real estate will get hit hard. This one will get hit less because of their defensive asset class and they have premier tenants. Great management. He likes their properties. They are conservative, good operators and they will outperform the class. He doesn’t expect much even then, next year.

Grouped with REITs, but not technically a REIT. Good track record. Revenue is relatively safe. Staple industries are anchors. In a recession they will do better, but interest rates will impact them significantly. Dividend is secure, portfolio is diverse, but not one he would invest in.

Very high quality business. Management team is very well aligned. Asset quality has improved. Payout ratio and leverage that are almost the best in the business. The valuation is very undemanding. There is an overhang because of an equity issue done recently. NAV is about $18-$18.25. It is a core position in his opinion. He would add to it right now.

They realize the market is expensive so they are lightening up on their acquisitions and are sweating their assets. The chance to grow their earnings is in Toronto. They are deleveraging their balance sheet. They should outperform because of their defensive aspects. He owns the bonds.

(Top Pick Sep 24/13, Up 15.24%) Continues to have this as a core holding. He is looking for them to increase cash flow.

This is a retail REIT, typically anchored by national tenants, focused on people’s everyday needs, grocery stores, banks, drugstores, etc. They have an excellent portfolio of very high quality real estate. The only problem is that they haven’t really benefited much from AFFO growth as some of their peers have, because they have tended to be more focused on growth by acquisition and turned a bit of a blind eye to the multiples they pay for some of the assets. If you own this, you need to have a very long term time horizon of probably 5-10 years. Very high quality assets with a good management team.

There seems to be a fear that rates are going to rise, but he thinks not for some time. Many investors think interest rates will affect large cap REITs negatively, but he thinks they are a little too concerned. He loves the properties, but has been taking profits at these levels.

Had a nice move. Occupancy is 95.3%. Renewal spreads are up 13% higher than expiries. It is pricy but is a high quality name. Buy at $17.50 or below.

A very stable company. High end retail. Strip centers in really good neighbourhoods. The dividend is high enough.

One of the highest quality real estate businesses that he owns. Have moved to more of an unsecured debt structure, which allows a large proportion of their assets to be unencumbered. Also, brought down their payout ratio which allows them to give consistent dividend increases. The most important thing to him is the “value add”. There is a large development and redevelopment program that is underappreciated by the market. Dividend yield of 4.76%.

Likes this REIT. This is one of the best ways to play the very strong urbanization trends that we are seeing, particularly in the big markets of Toronto, Calgary and Vancouver. This one tends to have a longer timeframe in some of the things they do and they tend not to pay dividends in the short term. If you are a long-term shareholder, you ultimately do get the benefit. 4.87% yield.