Investment Q&A

Q: peter, I've owned btb.un for quite awhile. I was wondering what your opinionis after this last acquisition and would it be safe to add to my position. thanks a lot Bill

Q: Chartwell REIT (CSH.UN) hit a new high today, presumably from news that Ventas is acquiring some retirement communities from Holiday Retirement. Is Chartwell expensive now or do you think it still has room to go? Do you think the REIT may be a future takeover target? Thank you for a great service!

Q: Hi 5i Team
Would you consider LW Leisureworld more likely than Chartwell to have growth over the next few years. How secure do you think the 7% dividend of LW is? Do you think this sector is desirable in a portfolio for RRSP with years to grow.Thanks
Kathy

Q: Hello,
I have a question regarding Cominar (CUF.UN). I initially had 3% of my portfolio invested in Cominar, then increased it to 5%. It has very low P/E and high dividend yield, yet it never recovered from REIT drop. What is your opinion on the stock, is there something I'm missing?

Q: I am curious what youthink of the Q1 results just reported for MOB. I like the very accretive pipeline, the growth in affo/unit and the fact the ceo owns 80% of the shares - so he is clearly aligned. I was concerned however that debt ratio is up around 63% and POR grew to 101%. What do you think?

Arnie

Q: True North has just announced a major acquistion of $286 million purchased from company insiders It has a cap rate of 5.4 %

Could you please explain what a cap rate is

As retail investors how do we assess i this is a good deal Most of the payment will be in shares priced at a premium which I assume will be dilutive It said the deal will be accretive

What metrics do you use to value this deal
Your previous comments on the company have not been favourab[e

Thanks again for your great service Paul

Q: Sector Allocation Question: In addition to your great service, I use RBC's Direct Investing to analyze and balance my portfolios. The sector Categories RBC uses seem to line up nicely with yours,with one exception, namely Real Estate. Where would you place stocks like HR.un, DIR.un, CWT.un, AP.un,AAR.un,RUF.u, RIO.un?

Thanks.

Q: Could I have your comments on Milestone REIT MST.UN.T, pls? Tx

Q: 5i team. I recently purchased TCN for $8, then read that they have increased the # of shares from 42 -- 109 mm. over the one year period. I concur like you that this is great dilution. Is this a good invest. or take my loss and move on. Also, I have a theory that gold & silver sector goes done when the rest of the market does well and usually goes up when investors feel that they cannot make money on the many other stocks in Canada and US. Is there a better stock than TCN? thanks, REne

Q: Good morning 5i!
Pembina’s (PPL) rise has resulted in it being 14.7% of my portfolio (retired, for dividend income), with the dividend now being less than 4%. I own 14 stocks, and am also in the oil/gas/energy world with a full position in ENF and a minor holding (.8%)in the more speculative/risky ABM.
I am considering trimming to a position of 10% or slightly less and biting the capital gain bullet. These funds I would invest in Crombie (CRR.UN). The increased dividend (CRR.UN pays a distribution of 6.67%, AFFO payout of about 89%) has about a 3 or 4 year payback on the extra taxes for 2014. I own other reits (about .75 positions in each of CAR.UN, HLP.UN, and MRG.UN) but nothing in the retail sector.
Crombie had a 90% ROC last year, and over the previous few years an average ROC of 62-65%, so I realize it will result in more taxes on an ongoing basis. I see no easy way for estimating the future ROC, and the net tax effect. I have every intention of holding CRR.UN indefinitely.
I would appreciate your comments on the advisability of this “rebalancing”.
Thanks!

Q: Hi Peter & 5i: Just a comment on Mark’s question about whether REITs should be held in RSPs. In my view it depends on (1) which REITs you are talking about and (2) an evaluation of all of your accounts and holdings. The second part is just that the question of where you hold something for tax reasons can really only be evaluated against what your alternative holdings arrangements might be. So it takes into account what the REIT might displace if you were to hold it in a particular account and what might be the costs and tax consequences of the whole shebang. The “which REIT” question takes account of how the REITs themselves designate the money they are distributing. Some REITs (like Artis, AX.UN, for example) have designated nearly all of their distributions as Return of Capital (ROC) for many years. This effectively means that instead of paying distributions that would be fully taxed as equivalent to interest income, the designation lets you have the money with no immediate tax consequences but instead reduces your adjusted cost base (i.e. the book value of the holding in your account) by an amount equivalent to the payments designated ROC. The effect is that the ROC designation converts that income into an unrealized capital gain that will defer the taxation until you sell the units. So you get the benefit of having access to the untaxed capital distribution until you sell. Then when you do sell, the gain is taxed at the capital gains rate (1/2 of your top marginal rate at the time). This is a potential advantage to the unit holder, which would be lost if the units were held in an RSP. Inside the RSP you would get the tax deferral benefit on both the income and any gain on a sale of the units. But then once you get to the point where you are taking the money out of the RSP it all gets taxed as regular income. With REITs whose trust distributions are designated as “interest income” or “other income,” just like bonds these attract your highest tax rates anyway, so you don’t lose a lower tax rate opportunity by holding them in an RSP, and you’d would likely do better on them in the RSP if the presumption holds true that in retirement, when you are expecting to draw on the RSP, you will likely be paying lower tax rates because you’ll have less income than you do when you are working. You can find out about most REITs’ tax designations on previous years’ distributions by looking through the investor information on their websites. It isn’t a guarantee they’ll do it exactly the same way in each subsequent year but is a pretty decent indicator of what they may do. Hope that’s useful!

Q: Hello, your last comment regarding MRC indicated an investor presentation earlier this month. Was anything gleaned from same. It is priced today at .8/book so is very cheap. I am thinking of buying for capital appreciation. Is it presently a buy? Thank you, Bill Y

Q: Hi Peter and Ryan

Re: BOX.UN

My understanding is that this company represents the non-controlling interest of the former BPO (Brookfield Office Properties) acquired by BPY. That said, it would seem that BPY would be very much interested in consolidating the office properties portfolio into one company by taking out the BOX.UN shares especially since there appear to be only 26M shares outstanding.

BOX.UN appears to have investment merits on its own given the quality of assets and that it is under the Brookfield umbrella but do you think any attempt to acquire the outstanding shares of BOX.UN by BPY would be undertaken at much of a premium to market?

Thank you

Q: I would appreciate your outlook for Brookfield Property Partners (BPY.UN)

Thanks

Q: RLC recent results look very good, with strong growth in Rev, NOI and AFFO. They have announced another fin/acq. at $7.65. I know you are critical of serial financings but if the growth is there and distributions are solid , would you not recommend at this price? thanks

Q: Please give me your opinion on temple hotelsTPH.Thanks Jim

Q: tph What do you think of their latest results. thanks

Q: Hi-
could you please provide a few Reit picks for income and some growth? Thanks

Q: OK, I'm confused. Have looked on Globe and Mail and TDWaterhouse to get info on Dundee International DI.UN. Both have indicated this does not exist. My understanding this is listed on the TSX, if not, where is it listed?

Q: Hi Peter & Co.
I noticed that the stock price of Genesis Land Development of Calgary had a substantial rise in April then fell off a bit and is now approaching the highs again. Can you shed some light on this recent positive market action and would GDC be a buy now?