Morguard Corporation (MRC.TO)

You have to value real estate companies on 2 metrics, funds from operations (cash flow) and NAV. To him the real estate is valued at about $150-$160 a share and funds from operations are probably trading at 11 or 12 times. Has gotten a little bit more expensive, but good quality REITs trade at 17 or 18 times funds from operations. As long as interest rates stay low and there is cash on the sidelines, it will go to these types of companies.

(Market Call Minute.) Had a good run, but valuation is relatively fair. Great earnings and the cash flow is fairly significant and growing.

Expects to see some pretty decent cash flow growth. This is not a REIT, it is a real estate company with a significant ownership in Morguard Real Estate Inv Trust (MRT.UN-T) in addition to several other properties. Because the dividend is not very high, they take their income and plow it back into growth. Trades at a significant discount to NAV which he sees as North of $150.

This is very, very cheap but not very liquid. NAV is conservatively around $160-$170. Has always traded at a discount because it is essentially a holding company. There is a bit of a management discount as well as the team hasn’t done an effective job of marketing this name in the last few years. Very low yield. Good quality real estate and have added value.

Real estate in general is driven by interest rates. Very, very well-run company. Real estate space has been very good to investors recently.

Why buy a REIT that is trading at nosebleed levels when you can own a company that owns 2 REITs? Thinks the NAV is about $150 a share. Feels it is trading at a 60% discount to the REITs based on funds from operations.