# Thinking REITs. Artis anyone?



## underemployedactor (Oct 22, 2011)

Been doing my best DD on Canadian REITs, think I've settled on Artis. Any objections? Thanks in advance.


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## phrenk (Mar 14, 2011)

In terms of risk / reward, a good choice. If you wanted to be safer, you could choose Riocan, but i personally went the same route as you did, except i chose Whiterock, which is very similar to Artis.


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## HaroldCrump (Jun 10, 2009)

Artis is among the second tier of Canadian REITs and it is higher yield.
Their payout to FFO ratio is still too high, but it is getting better.
Not sure of their foray into the US market will work out, esp. their properties in the mid-West.
I'd say they are getting better but still have some way to go before they can be considered stable and secure.
For the type of properties they have, yields should be in the 6% range, not north of 8%.

Overall, it is not a bad choice, but it wouldn't be my first and only choice.
But then, I'm no expert 

While the yields and type of properties are similar between Artis and Whiterock, there are differences between the two companies.
Artis is exclusively concentraded on Western Canada while Whiterock is more diversified.
Artis has exposure to the US market, while Whiterock has none or very little.
Whether you consider exposure to US market a good thing or bad is up to you.

Also, Whiterock has had issues in the past around management compensation and some questions raised about their financial statements.
I am not sure if those concerns are behind them or still hanging around - I haven't kept up with the latest.

What you pick is up to you but neither of these is top tier.

For full disclosure : I have a small position in Artis and no position in Whiterock.


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## gibor365 (Apr 1, 2011)

From Tier 1 I like more CWT and REF, but they're expensive , close to 52 weeks high.
From Tier 2 I like PMZ and CUF


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## Spidey (May 11, 2009)

Artis looks interesting and probably wouldn't be a bad investment. But for office/retail I've been looking at adding to my position in Morguard REIT. A little lower payout @ 5.8%, but also lower debt and better value. Also management at Morguard generally seem to be more respected than Artis. 

I've also been adding shares of CAP REIT during dips, mostly because I'm very underweight in apartment properties versus retail/office. Boardwalk is starting to look interesting in the apartment space but their yield is fairly low.


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## jamesbe (May 8, 2010)

I invested a bunch into D.UN and it has been my best performing holding since day 1. Good dividend and the price of the stock itself has climbed 15% since I purchased.


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## HaroldCrump (Jun 10, 2009)

Spidey said:


> But for office/retail I've been looking at adding to my position in Morguard REIT.


For office/retail, don't forget Dundee (D.UN).
A very respected and seasoned player in this game.
Holding both might be a good idea, too, since Dundee is more west focused while Morguard is east and central.
Dundee has been actively diversifying into east and central with their recent acquisitions.


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## gibor365 (Apr 1, 2011)

BTW, as an alternative you can consider ZRE (weighted REIT ETF) that combines majority of the best REITs in Canada.

Holdings:

Securities	% of Assets
Cdn Apartment Prop REIT	6.43%
Allied Properties REIT	6.41%
Canadian REIT	6.39%
Crombie REIT	6.30%
H&R REIT	6.24%
Calloway REIT	6.23%
Dundee REIT	6.18%
Boardwalk REIT	6.18%
Primaris Retail REIT	6.11%
Morguard REIT	6.05%
Cominar REIT	5.99%
RioCan REIT	5.99%
Northern Property REIT	5.86%
Artis REIT	5.61%
Chartwell Sr Housing REIT	5.56%
Extendicare REIT	4.38%
InnVest REIT	3.59%
Cash	0.50%
Total Holdings in Portfolio	18


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## HaroldCrump (Jun 10, 2009)

InnVest doesn't qualify as a REIT any more.
Is ZRE planning to remove them?
I recall vaguely that management had some plans to take it private and were looking for buyers.


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## gibor365 (Apr 1, 2011)

HaroldCrump said:


> InnVest doesn't qualify as a REIT any more.
> Is ZRE planning to remove them?
> I recall vaguely that management had some plans to take it private and were looking for buyers.


You can send BMO ETFs email with this question, they usually reply right away


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## killuminati (Mar 14, 2011)

Hmm this ZRE looks like a good entry for me into a REIT. I don't have much to start. I was thinking just RIO but the price seems high today. This one seems pretty stable on price over the last year. 

Whats the dividend roughly on this? I can't find the number but I'm guessing that's because it changes?


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## londoncalling (Sep 17, 2011)

HaroldCrump said:


> InnVest doesn't qualify as a REIT any more.
> Is ZRE planning to remove them?
> I recall vaguely that management had some plans to take it private and were looking for buyers.


I currently have a small position in INN.UN.TO and follow it a bit. If you are referring to the taxation changes to stapled units I haven't heard if that legislation has been tabled yet. I haven't heard any news on this front since the summertime. If I remember correctly companies would be given anywhere from 1-5 years to comply. I also recall hearing rumors of management taking this company private. I have not heard of any plans to buyback shares since this gov't announcement nor any more speculation about it going private. However, I would be curious to know what has been happening with the company in regards to insider buying/selling. Perhaps I will take a look when I get a chance.


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## gibor365 (Apr 1, 2011)

Dividend 5.69% paid monthly, so you have also compounding, and it's pretty stable , just +/- 1 cent during last year.
I have position in ZRE in my TFSA account, planning to add....


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## underemployedactor (Oct 22, 2011)

Thanks for your thoughts everyone. All suggestions were good ones. Tried to get Artis for under $13, but may have missed my chance. Re: REIT ETFs, I'm assuming that the unit holder gets taxed the same way as if one was holding individual REITS? Am I correct in assuming that REITs work best in either a TFSA or registered account? thx


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## HaroldCrump (Jun 10, 2009)

underemployedactor said:


> I'm assuming that the unit holder gets taxed the same way as if one was holding individual REITS?


Should be...the ETF flows through the distributions as-is (less their cut).



> Am I correct in assuming that REITs work best in either a TFSA or registered account? thx


Yes, for sure!

Don't worry re. not getting AX under $13.
The general 1 yr. price target is $14.50 so it aint going nowhere.
It's sitting at $13.33 right now, and that's barely 2% from your preferred price.
If you have made up your mind that $13 is good value, go for it.


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## tendim (Nov 18, 2010)

underemployedactor said:


> Been doing my best DD on Canadian REITs, think I've settled on Artis. Any objections? Thanks in advance.


I love Artis. Up 32% since I picked it up earlier this year.


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## underemployedactor (Oct 22, 2011)

Hi all, reviving this thread because there is an entry in my account for "return of capital adjustment to book cost $108". I have 100 units of Artis. What does this mean?
thanks in advance.


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## humble_pie (Jun 7, 2009)

underemployedactor said:


> Hi all, reviving this thread because there is an entry in my account for "return of capital adjustment to book cost $108". I have 100 units of Artis. What does this mean?
> thanks in advance.


return of capital requires investor to adjust cost base down. IE when you come to sell, the capital gain if any will be greater by this downward adjustment plus any others that occur along the way.

it's to avoid nit-picky record-keeping tasks like this that many investors keep reits, trust units, etfs & mutual funds in their registered accounts.


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## HaroldCrump (Jun 10, 2009)

New unit issue at $16.55 hit the newswires after market close.
Stock closed at $17.03 this afternoon.
Expect about $0.50 drop tomorrow.


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## AGHFX (Aug 31, 2012)

I picked this up at $15.90, just enough to give me $16.20 monthly to DRIP 1 share monthly. When I see this keep creeping upwards I think "ugh, I didn't buy enough to DRIP anymore." A bit of a silly complaint but I wouldn't mind a slight pullback... maybe down to $16.18 :stupid:


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## Feruk (Aug 15, 2012)

$2B debt on a $1.9B market cap. Based on this alone, this company is completely uninvestable for me. IF investors ever get comfortable and start pulling money out of companies with big safe dividends, this big debt pig will be in serious trouble.


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## blin10 (Jun 27, 2011)

most of them operate with high debt levels


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## andrewf (Mar 1, 2010)

REITs are essentially leveraged real estate portfolios. 50% debt:EV is not unusual.


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## HaroldCrump (Jun 10, 2009)

Feruk, this is mostly secured debt, backed by the value of properties they own.
And backed by the cash flows, most of which are guaranteed with long term lease contracts.

Artis has been steadily reducing their payout as a % of AFFO.
2 - 3 years ago, it used to be nearly 120%.
Stock was $11 at that time.

My only issue with Artis is that they have never raised their distributions.
Hopefully that will change sometime in the near future.


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## nortel'd (Mar 20, 2012)

HaroldCrump said:


> New unit issue at $16.55 hit the newswires after market close.
> Stock closed at $17.03 this afternoon.
> Expect about $0.50 drop tomorrow.


I own a fair number of shares. But AX.UN is starting to disappoint. The volume of shares yesterday was app 700K versus 180K and the stock price hit a high of $17.15. I thought I had made it to the promised-land. This morning I read they have issued more shares at $16.55 at what appears to be 5:00pm April 30, 2013. When I check to see if I can get in on the “new issue” at 8:00 am May 1, 2013 I see it is closed. How did that happen?


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## HaroldCrump (Jun 10, 2009)

nortel'd said:


> This morning I read they have issued more shares at $16.55 at what appears to be 5:00pm April 30, 2013.


Yes, such news is almost always announced after market close.



> When I check to see if I can get in on the "new issue" at 8:00 am May 1, 2013 I see it is closed. How did that happen?


Because these are all bought deals.
They have been already subscribed (and over-subscribed) by all the large institutions, funds, and preferred clients of the investment banks participating in the bought deal.
Small retail investors can seldom get even a few left-over morsels of the pie.

That said, there is nothing to complain - stock is currently trading at $16.56.
Just put in a buy order at $16.56 and you are all set.
Surely, you aren't complaining about 1c. ;o)


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## nortel'd (Mar 20, 2012)

HaroldCrump said:


> Small retail investors can seldom get even a few left-over morsels of the pie.
> 
> That said, there is nothing to complain - stock is currently trading at $16.56.
> Just put in a buy order at $16.56 and you are all set.
> Surely, you aren't complaining about 1c. ;o)


Not complaining ... just grumbling. 
As a new issue I don't have to pay the commission to my broker. Dilution is not only a solution to polution. In the stock market it usually causes the share price to drop lower than the new issue price. BOOHOO I had an opportunity to sell @ $17.15 and passed.


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## none (Jan 15, 2013)

Yes, I wonder how many people actually used that information to sell the day before? That run up certainly seemed very convenient for those in the know.


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## HaroldCrump (Jun 10, 2009)

nortel'd said:


> As a new issue I don't have to pay the commission to my broker.


Right, but sometimes you have to wait.
In the case of stocks like REITs that pay monthly distributions, you might miss an ex-date, if the issue is closing after that (this one is not, since the ex date just passed last week).
Also, you won't be sure how many units you will actually get.
You could ask for 1,000 and end up with 50.

To me, it is better to pay the $9.99 for commission and get exactly what you want at close to the price of the IPO anyway.
For instance, this afternoon AX traded below the IPO price for some time.



> In the stock market it usually causes the share price to drop lower than the new issue price.


As it happened this afternoon.
If you want to buy, this is even better than begging for a few morsels from the brokerage at the IPO price.


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## HaroldCrump (Jun 10, 2009)

none said:


> Yes, I wonder how many people actually used that information to sell the day before?


There was no advanced information.
The news came out after market close.



> That run up certainly seemed very convenient for those in the know.


If that had been the case i.e. more sellers than buyers, the price would have dropped yesterday, not gone up to $17.06.


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## Financialplannerdude (Apr 30, 2015)

HaroldCrump said:


> Artis is among the second tier of Canadian REITs and it is higher yield.
> 
> While the yields and type of properties are similar between Artis and Whiterock, there are differences between the two companies.
> Artis is exclusively concentraded on Western Canada while Whiterock is more diversified.
> ...


Any thoughts on Artis? 

The stock is down quite a bit and from what I can tell it's mostly to do with their exposure to Western Canada. As analyst on Stockchase put it, the market is ignoring US exposure, as well second quarter results look pretty good. 

I have no issue with a declining stock price, matter of fact kind of like it as all my stocks are on DRIPs but I got burnt buying Aberdeen Asia Pacific for the yield and nearly put a **** load of money into Penngrowth - got seduced by the yield.


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## avrex (Nov 14, 2010)

I've held Artis for about 3 years now.



Financialplannerdude said:


> The stock is down quite a bit and from what I can tell it's mostly to do with their exposure to Western Canada. As analyst on Stockchase put it, the market is ignoring US exposure, as well second quarter results look pretty good.


There is definitely a concentration of properties in Western Canada (and Calgary in particular). It's something to watch / be aware of. I'm continuing to monitor.


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## Financialplannerdude (Apr 30, 2015)

I must say I did get a bit of a shock when I checked the price and it was way down, but looking closer, the FFO and AFFO numbers are up as well as average rents and such so my feeling is it's more a an over reaction than a high yield warning sign. I'm getting the dividend re-invested so it means I'm getting more value for my money.


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