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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: Good afternoon! As a retired dividend investor, I've held Crombie as a full holding for a number of years, having bought at a good margin of safety (now up 22%). I am concerned that their dividend has not grown since March of 2007 (a 4.7% raise then), and their payout ratio has remained in the 90% range (often more) on AFFO in spite of a number of acquisitions. The distribution is very good, of course, (currently 5.86%) but growth in payable funds seems to be nil on a per share basis. Eventually, inflation will erode the magnitude of the distribution if they fail to grow in an accretive way.
I am considering moving on to another 5-6% dividend payer. Could I have your comments on Crombie as to whether there is something I am not seeing here that should make me want to keep it - i.e. is my thinking correct? Also, if I do switch, which might you recommend that might pay similarly yet have some chance for growth? I am not specifically looking for a similar commercial REIT. (FYI, my current full holdings include STB, RSI, RNW, ECI, BNS (half, should I increase?), PPL, and SIA)
Thanks!
Paul
Read Answer Asked by Paul on July 06, 2016
Q: I understand that Crombie's tenant, Sobey's, is having difficulties integrating their acquisition of Safeway. Our informal observation here in BC is that the Safeway stores are less busy than in the past. Further, it appears that Sobey's has taken a significant impairment charge. With Sobey's being a tenant of Crombie REIT would you recommend that we sell CRR.UN and replace it with another name in the sector? If so, which REIT would you suggest?
With appreciation!
Read Answer Asked by Ed on March 11, 2016
Q: I have heard that Sobey's is having integration problems with its Safeway acquisition. We have observed a marked drop in customers in Safeway stores in our part of BC since the acquisition. With Crombie REIT as the landlord for this chain would you recommend selling Crombie and purchasing an alternative in the REIT space. I do like income with a bit of growth.
With appreciation!
Read Answer Asked by Ed on March 10, 2016
Q: Hi Peter. I would like some exposure to the consumer staple sector for my RRSP. However I find the dividend yield too low (less than 2%). Does it make sense to buy a REIT like Crombie that rents all the Sobey's and IGA stores and pays out a distribution that is more that five times what Empire pays out in dividend? Even if Empire increased its dividend by 10% every year for the next 10 years it still would not catch up to Crombie. Thank you in advance for your advice.
Read Answer Asked by L J on May 20, 2015
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!
Read Answer Asked by Paul on May 23, 2014
Q: re: CRR.UN
Hi Peter: last time someone asked about Crombie, it was in July before the REITS head down South due to pending rise in interest rates, would this be a reasonable entry to look for a yield of about 5% with at least a 3 year hold ?
I already have Riocan and H&R as long term hold for yield which I am above water, would you recommend Crombie ? Thanks
Read Answer Asked by Michael on November 02, 2013
Q: Hey guys. Can I get your thoughs on crr.un. I've held it for a few years and have a pretty nice gain on it. Its held up better than most reits recently and I was thinking about locking in some gains and redeploying a portion of the cash into a higher quality reit that has declined lately like hr.un or cwt.un for a long term hold.

Do you think there is any chance Empire might take Crombie back in again? Thanks again.
Read Answer Asked by john on October 05, 2012
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