# Real Estate Income Trusts (REITs)



## CanadianCapitalist (Mar 31, 2009)

Want to own some real estate but cannot be bothered with tenants, clogged bathrooms and the dreaded midnight phone call? A far simpler way is to own securities called Real Estate Income Trusts (REITs) that allow you to become a landlord without the hassles of managing rental properties. REITs own shopping malls, apartment buildings and commercial real estate and pass on their income to unit holders.

A Primer on Canadian Real Estate Investment Trusts (REITs)

Canadian Capitalists articles on REITs


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## Canadian Finance (Apr 3, 2009)

I wrote an article about buying the top 4 REITs instead of indexing this part of your portfolio.

*Real Estate Investment Trust (REIT) Portfolio*


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## Fraserrc (Apr 6, 2009)

What are the advantages of Canadian REITS (true trust units) vs. Real Estate Corps such as FCR or BPO? I happen to like FCR which is nice because all the distribution is eligible dividend, and BPO has been pummled lately so its yield is also very attractive. Are there pros or cons that corps have over strict reits? Are dividends typically more stable than REITs? 

Thanks,
Fraser


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## CanadianCapitalist (Mar 31, 2009)

Fraserrc said:


> Are there pros or cons that corps have over strict reits? Are dividends typically more stable than REITs?


FCR was a new name to me... you learn something new everyday!

I think that the only significant difference between corps and REITs is their tax structure. REITs are required by law to flow through most of their earnings to investors at whose hands it is taxed. REITs are required by law to distribute most of their earnings (I believe it is 90%). Corps pay taxes on their income before paying dividends to shareholders but they can decide to reinvest as much of their profits as they want. But dividends are again taxed in an investor's hands. 

From a strictly asset class point of view, I would think that it doesn't matter whether a real estate company is a REIT or a corp.


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## Knight Rider (Apr 5, 2009)

Is there any major disadvantages of investing in an REIT, for example REI.UN, I mean, the trust is almost paying 1% returns per month, seems like a darned good deal to me? Some other trusts are paying well as well, ALA.UN (at its current price) would be returning about 14% per year.


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## Bullseye (Apr 5, 2009)

Knight Rider said:


> Is there any major disadvantages of investing in an REIT, for example REI.UN, I mean, the trust is almost paying 1% returns per month, seems like a darned good deal to me? Some other trusts are paying well as well, ALA.UN (at its current price) would be returning about 14% per year.


Around half of that payout is ROC (return of capital), your own money being returned to you. 

Hopefully capital gains will restore your capital, but it's quite possible that the unit value will decline and your original investment will shrink. 

Given a 6% actual yield, they don't look as attractive any more, compared to some other options. Certainly a place for them in a diversified portfolio, though.


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## Canadian Finance (Apr 3, 2009)

Because of the mixed bag of ROC, interest and dividends, I believe REITs are a perfect candidate for the TFSA.


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## DrStan (Apr 5, 2009)

REITS are ideal for the TFSA. Mine is 100 % RioCan; same for my wife. It just makes sense to shelter it and to let it grow with substantial yield for a number of years. Plus it makes the accounting a lot simpler!


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## Jon Chevreau (Apr 4, 2009)

My advisor likes REITs for something like 6 to 10% of the equity portfolio. I use iREIT in Canada and a Vanguard one for the U.S. Of course they've been hammered something like 50% since the downturn. Likely it's a good time to average down but I just can't bring myself to throw good money after bad.


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## RI.ca (Apr 28, 2009)

*REITinvestor upgrades Calloway REIT & increases target to $11.50/unit*

REITinvestor.ca issues upgrade to #2 Ranking & estimates Calloway distribution to be safe for the remainder of 2009 and increased its target to $11.50/ unit.

Calloway REIT (CWT.UN - TSX) May 7, 2009 
REITinvestor.ca issues upgrade to #2 Ranking & estimates Calloway distribution to be safe for the remainder of 2009 and increased its target to $11.50/ unit. REITinvestor.ca, a private subscriber-based independent rating and ranking service, believes that the current distribution of $0.1292 per month ($1.55 annualized) is secure for the remainder of 2009, assuming financial and economic conditions do not weaken substantially over the rest of the year. Today REITinvestor.ca is issuing an upgrade to #2 Ranking and increasing its 3-month target from $10.00 to $11.50. Following a review of Calloway’s Q1-0 (is this a typo? Should it read Q-1?) Report, REITinvestor.ca believes that management has improved its liquidity in preparation for difficulties in retail-leasing markets. REITinvestor.ca is maintaining its neutral #3 rating for CWT.UN for 2009. Of particular note to REITinvestor.ca: Calloway REIT continues to maintain high occupancy rates (98%) despite a spike in the number of unbudgeted vacancies; NOI was only slightly lower by 0.6% Q1 - 09 vs. Q4 – 08; CWT.UN was successful in negotiating a $105M secured revolving operating facility; CWT.UN reported that in April 2009, it replaced approximately $150M of $200M (4.51%) unsecured debentures that were due in September 2010. The new issue is 10.25%, due in 2014. CWT.UN finances development projects with various mortgages and loans that equal $256M, the quality and risk of which can not be ascertained. Calloway’s indebtedness is approaching a maximum of 60% of GBV. Management currently reports its D/GBV at 54.4% (excluding convertible debentures). CWT.UN units closed on Wednesday, May 6 at $11.75 per unit. For more information, visit REITinvestor.ca 

DISCLOSURE: REITinvestor.ca maintains its own investment fund and does not currently hold units of CWT.UN. REITinvestor.ca does not provide investment advice, nor does it recommend the purchase or sale of securities including any REIT units it covers. Please consult your personal professional advisor before investing.


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## RI.ca (Apr 28, 2009)

*REITinvestor issues positive #2 rank to Boardwalk REIT- 3mo target remains $29.00/unt*

REITinvestor.ca issues a positive #2 Ranking and estimates Boardwalk REIT’s distribution continues to be safe. 3-month target remains $29.00 / unit.

Boardwalk REIT (BEI.UN - TSX) May 14, 2009 REITinvestor.ca issues a positive #2 Ranking and estimates Boardwalk REIT’s distribution continues to be safe. 3-month target remains $29.00 / unit. REITinvestor.ca, a private subscriber-based independent rating and ranking service, today issues a positive #2 ranking for Boardwalk REIT, and believes that the current distribution of $0.15month ($1.80 annualized) is safe for the remainder of 2009. Following a review of Boardwalks REIT’s Q1-09 Report, REITinvestor.ca is holding its 3-month target steady at $29.00 for BEI.UN. Of particular note to REITinvestor.ca: Management reported that distributions for Q2 have been confirmed without change. Management estimates that additional proceeds of $140M will be gained on refinancing activity for the rest of 2009. Management is determined to raise as much cash as possible through refinancing and disposition of certain non-core assets, with the intention of capitalizing on available low mortgage rates. Management has modified its apartment marketing strategy to lower rents in order to maintain high occupancy, rather than hold rents up in the face of weakening demand in certain markets. Nevertheless, we note that average rents across the entire portfolio have increased approximately 5% from Q1-08 to Q1-09. Cash-on-hand as of March 31, 2009 increased to $169M in Q1-09 and overall liquidity to total remains excellent, at over 16%. BEI.UN units closed on Tuesday, May 13 at $27.75 per unit. For more information, visit REITinvestor.ca 

DISCLOSURE: REITinvestor.ca maintains its own investment fund and does not currently hold units of BEI.UN. REITinvestor.ca does not provide investment advice, nor does it recommend the purchase or sale of securities including any REIT units it covers. Please consult your personal professional advisor before investing.


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## RI.ca (Apr 28, 2009)

*REITinvestor issues positive #2 rank to Dundee REIT- raises target to $18.50/unit*

REITinvestor.ca issues a positive #2 Ranking and estimates Dundee’s distribution to be safe for the next 12 months. Target is today raised to $18.50 per unit. 

Dundee REIT (D.UN - TSX) May 12, 2009 REITinvestor.ca issues a positive #2 Ranking and estimates Dundee’s distribution to be safe for the next 12 months. Target is today raised to $18.50 per unit. REITinvestor.ca, a private subscriber-based independent rating and ranking service, today issues a positive #2 ranking for Dundee REIT, and believes that the current distribution of $0.183 per month ($2.20 annualized) is safe for the next 12 months. Following a review of Dundee REIT’s Q1-09 Report, REITinvestor.ca is increasing its 3-month target from $16.88 to $18.50 for D.UN. Of particular note to REITinvestor.ca: Dundee has increased its AFFO to be nearly equal to its distribution through solid management performance on lease rollovers and new leases. Dundee reported in Q1-09 that it increased occupancy by 14,000 square feet, managing to release or renew 174,000 sq. ft. of the 162,000 sq. ft. that expired. Of the vacant space at period-end, approximately 70,000, or 23% has been committed. This leaves the vacancy rate at approximately 3%. Liquidity remains exceptional with cash and credit lines reported at $124M. We calculate the liquidity to total-debt ratio to be over 14%. Management expects to add $12M to its liquidity later this year through proceeds from excess mortgage refinancing. Mortgage renewals due in Q2 & Q3 of 2009 total $129M. Management reports that it is currently finalizing $54M of $75M due, and has begun the process of refinancing the balance due, without concern for liquidity. D.UN units closed on Monday, May 10 at $15.79 per unit. For more information, visit REITinvestor.ca 

DISCLOSURE: REITinvestor.ca maintains its own investment fund and currently holds units of D.UN. REITinvestor.ca does not provide investment advice, nor does it recommend the purchase or sale of securities, including any REIT units it covers. Please consult your personal professional advisor before investing.


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## RI.ca (Apr 28, 2009)

*REITinvestor.ca lowers HR REIT Rank to favorable #2 and lowers target price to $9.00*

H&R REIT (HR.UN - TSX) May 19, 2009 REITinvestor.ca lowers HR REIT Ranking to favorable #2 and lowers target price to $9.00 / unit. REITinvestor.ca, a private subscriber-based independent rating and ranking service, has completed its review of H&R REIT Q1 -09 Quarter Report and has lowered HR’s Ranking to #2 from #1, and revised its target price from $10.00 to $9.00. Of particular note to REITinvestor.ca: - HR reported a solid performance of its operations in Q1-09 with Distributable Cash increasing by 13%, as compared to Q1 -08. Other financial metrics, including AFFO, also improved in Q1. - HR REIT reported that it has secured $85M, which is 6.5% of its 5-year first mortgage financing for its Phase III Bell Corp. Centre, and is expected to close in Q3-09. - HR continues to sell non-core assets, and added $20M in net proceeds from dispositions in Q1-09. The effect of the sale will reduce the net earnings by $1.4M a year. - More clarity on the financing for The BOW revealed that Fairfax Financial received warrants for 28.6M units at a unit price of $7.00, in addition to its 11.5% yield for its debenture investment. These warrants may not be exercised before 2013, and REITinvestor.ca believes it will negatively affect the unit’s ability to rise in value. In addition, the agreed construction facility contains several requirements regarding the distribution to unit holders, including that the payout must not exceed $.06/unit monthly and other restrictive undertakings. These conditions could cause the distribution to be cut. - HR REIT estimates that it will require nearly $300M in investments from cash flow, mortgage proceeds and asset sales going forward to complete The BOW. HR reported that currently 80% of construction cost has now been locked for the $1.5B project. REITinvestor.ca estimates the final project to have a cap rate of 6% and will not to be accretive to HR once “takeout financing” is secured. HR continues to look for an equity partner for the project. - HR REIT’s credit facility of $200M expires in August 2009, and has not been renewed yet. - Of particular concern to REITinvestor.ca remains HR’s relatively low liquidity, which could affect their ability to survive should the economy further weaken. - H&R REIT has a manageable amount of mortgage refinancing due over the next 3 years. HR.UN units closed on Wednesday May 15th at $9.07 per unit on the TSX. For more information, visit REITinvestor.ca 

DISCLOSURE: REITinvestor.ca maintains its own investment fund and currently is not holding units of HR.UN. REITinvestor.ca does not provide investment advice nor does it recommend the purchase or sale of securities including any REIT units it covers. Please consult your personal professional advisor before investing.


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## RI.ca (Apr 28, 2009)

*REITinvestor.ca lowers Artis REIT to a #4 Ranking and confirms 3-mo target at $7.25*

REITinvestor.ca raises lowers Artis REIT to a negative #4 Ranking and confirms its 3-month target at $7.25


Artis REIT (AX.UN - TSX) April 23, 2009 REITinvestor.ca raises lowers Artis REIT to a negative #4 Ranking and confirms its 3-month target at $7.25. REITinvestor.ca, a private subscriber-based independent rating and ranking service, has today lowered its assessment of Artis to a negative #4 Ranking following a detailed review of Q1 – 09 Report. - Artis REIT reported solid operating income in Q1 – 09; however, Distributable Income remained relatively flat. - Management has settled its legal dispute for the purchase of Interplex II & III. - Artis REIT completed the sale of 2 Calgary office properties. REITinvestor.ca now estimates that Artis REIT has resolved its low liquidity position. - However, with the associated reduction in cash flows from the disposition, REITinvestor.ca now estimates that AX.UN’s payout ratio to be well over 100% in future. This trend will be clearer, following Q2 -09 reporting. - Looking towards 2012, we remain concerned that roughly 35% of Artis’ total mortgage financing comes due and it will need to be refinanced. AX.UN units closed on May 20, 2009 at $8.10 per unit on the TSX. For more information, visit REITinvestor.ca. 

DISCLOSURE: REITinvestor.ca maintains its own investment fund and is not holding units of AX.UN. REITinvestor.ca does not provide investment advice nor does it recommend the purchase or sale of securities, including any REIT units it covers. Please consult your personal professional advisor before investing.


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## Spidey (May 11, 2009)

Canadian Capitalist or Canadian Finance or Jonathon C., can you answer my question on Boardwalk REIT? 

http://www.canadianmoneyforum.com/showthread.php?t=381

In a nutshell, I'm questioning why BEI.UN trades at 188 times book value when most other REITs are currently trading for less than book value. I'm sure I'm missing something as this REIT is considered a buy by many respected analysts. This is one of the most commonly held REITs in the country and despite posting the queries on a couple of forums, no one has been able to fully answer my questions.


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## joes_k (Apr 29, 2009)

Long answer Spidey, I hope it helps.

Using a market value to book value metric for REITS can be very misleading for several reasons.

Any number of things can affect the numerator ie the market value. In Boardwalk's case, the market is pricing in a premium over commercial REITS because of the lower perceived risk of residential real estate ie., lower vacancy risk and lower financing risk. The two go together, any institution will more willingly lend, refinance or roll over debt for Boardwalk because their rental stream is almost guaranteed to be in place. Boardwalk also benefits because they can get CMHC financing insurance which again lowers risk and hence lowers rates at which they can get financing. Compare this to Calloway who recently issued a debenture at 10.25% to keep their balance sheet on side. H&R REIT had to issue a 11.5% debenture to finance their latest project. Just this gap in financing costs alone shows you how much risk the market is discounting commercial vs residential REITs. 

The market is discounting the value of commercial REITS due to vacancy risk, which in turn hits cash flow which then drives down the value of the underlying real eatate. 

On the book value side things can be really distorted. The majority of the book value will be the real estate at historical cost less depreciation. So if a REIT has an old portfolio that has significant depreciation booked then the book value will be low. I can't speak with certainty as to the age of Boardwalk's portfolio but just looking at the pictures on their web site I would have to say they are not new buildings so there is definitely some major depreciation booked. Compare this again with Calloway where they are constantly acquiring new real estate for the Walmart Smart Centres. Their comparative age to Boardwalk is much new and therefore higher book value.

In essence you cannot use the book value metric unless you know what the underlying assets are.

So ... applying the math, high value assigned by the market over a low book value give you the number you are looking at. 

When investing in REITS you must know what class of real estate ie., residential, commercial, industrial, office the REIT owns. Each comes with its own valuation parameters and issues and therefore some valuation metrics won't work when applying them on a comparative basis.

Hope this helps


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## joes_k (Apr 29, 2009)

Canadian Finance said:


> Because of the mixed bag of ROC, interest and dividends, I believe REITs are a perfect candidate for the TFSA.


I'm not sure why this would be so. If part of your income is ROC, doesn't it make sense to hold this in a taxable account where the ROC component is tax deferred and then taxed at Capital Gains rates (lowest marginal rate) when sold.

Unless the REIT's distribution is not ROC (and there are some REITS that have no or very small ROC) then it would make more sense to me to shelter an investment that pays tax at the highest rates inside a TSFA.


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## RI.ca (Apr 28, 2009)

REITinvestor.ca raises WRK.UN to a #2 Ranking but maintains 3-month target at $14.00.

Whiterock REIT (WRK.UN - TSX) May 27, 2009 REITinvestor.ca raises WRK.UN to a #2 Ranking but maintains 3-month target at $14.00. REITinvestor.ca, a private subscriber-based independent rating and ranking service, has increased Whiterock REIT to a positive #2 ranking but maintained its target price at $14.00. Following a review of Whiterock REIT’s Q1-09 report, REITinvestor.ca is of the opinion that the WRK.UN payout is safe for the remainder of 2009, but does not expect any price appreciation for the foreseeable future. Of note to REITinvestor.ca are the following: - REITinvestor.ca estimates that Distribution Payouts continue to exceed 100% of Distributable Income, and expects that this margin will increase in Q2 when the additional issued equity will require servicing. - Liquidity was greatly improved in Q1, as WRK.UN raised approximately $10M in equity issue and $22M new long term mortgage debt. - Whiterock reported 71% of 2009’s lease expiry has been completed at approximately 15% rental rate increases. - Occupancy weakened slightly from 98.8% in Q1-8 to 97.1 in Q1-09, but is expected to improve in Q2 & Q3. - 59% of revenue is derived from investment-grade tenants, the two largest by rental revenue being the SIQ (Quebec Government) & the Province of Ontario, which combined total 20% of annualized revenue. - Whiterock reported its line of credit facility of $42M to be fully repaid as of May 12, 2009, and is due to be renewed in June 2009. Longer term – Despite solid management skills of Whiterock, REITinvestor.ca continues to believe that the current distribution is unsustainable and will likely need to be cut in the next 24 – 48 months in order to replace the $55M in convertible debentures coming due. While it is difficult to project the economic situation 24 months forward, management appears ready to accept the challenge to improve Distributable Income and minimize the amount of the cut. Overall, we expect WRK.UN to trade in tight range near $14.00 for some time. With its current yield is an excess of 22% at today’s trading price of $15/ unit. REITinvestor.ca does not see much upside to the units at the present time, despite the high yield. WRK.UN units closed on May 26 at $15.10 per unit on the TSX. For more information, visit REITinvestor.ca. 

DISCLOSURE: REITinvestor.ca maintains its own investment fund and has no position in WRK.UN. REITinvestor.ca does not provide investment advice nor does it recommend the purchase or sale of securities, including any REIT units it covers. Please consult your personal professional advisor before investing.


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## CanadianCapitalist (Mar 31, 2009)

*RioCan won't 'monkey around" with distribution*



> "There is a lot of chatter about [cutting the distribution]," said Mr. Sonshine, referring in part to the buzz in the analyst community that company is simply paying out more cash than it is actually pulling in. "I don't think anybody is worried about our ability to pay it. What has happened is about half the REITs in the U.S. have cut their distribution or are distributing stock instead of cash. Everybody knows the less you distribute the more cash you can keep in the company and that's a good thing with capital scarce. So analysts say 'what are you paying out that money for'."


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## RI.ca (Apr 28, 2009)

*REITinvestor.ca maintains a cautious #3 Ranking for CUF.UN and reduced its 3-month ta*

REITinvestor.ca maintains a cautious #3 Ranking for CUF.UN and reduced its 3-month target at $13.00

Cominar REIT (CUF.UN - TSX) May 28, 2009 REITinvestor.ca maintains a cautious #3 Ranking for CUF.UN and reduced its 3-month target at $13.00 Following a review of Cominar REIT’s Q1-09 report, REITinvestor.ca is of the opinion that the CUF.UN payout will be strained, but safe, for the remainder of 2009. However REITinvestor.ca today lowered CUF.UN target price from $14.00 to $13.00. Of note to REITinvestor.ca are the following: - REITinvestor.ca estimates that Distribution Payouts will exceed 100% of Distributable Income going forward following the issuance of 4.8M units (approximately 10% of previous outstanding units) in April 2009. - Liquidity was improved by the issuance of units. However, REITinvestor.ca estimates that Cominar REIT will require most of its available credit facility to finance its committed development pipeline, which is estimated by management to be $50M for the remainder of 2009. - It remains uncertain to REITinvestor.ca whether Cominar REIT will be able to fill all of its current 671,420 sq ft development projects at the projected rental rates. In particular, the 396,000 sq.ft. Complexe Jules-Dallaire Class A office project in Quebec City is currently only 33% leased and is scheduled to begin accepting tenants later in 2009. - Cominar REIT reported that “properties under development and land held for development” increased from approximately $94M in Q4-08 to $135M in Q1-09. The direct carrying cost of these properties is a concern to REITinvestor.ca in the future. CUF.UN units closed on May 28 at $14.70 per unit on the TSX. For more information, visit REITinvestor.ca. 

DISCLOSURE: REITinvestor.ca maintains its own investment fund and has no position in CUF.UN. REITinvestor.ca does not provide investment advice nor does it recommend the purchase or sale of securities, including any REIT units it covers. Please consult your personal professional advisor before investing.


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## RI.ca (Apr 28, 2009)

*REITinvestor.ca issues an upgrade to neutral #3 ranking from negative #4 and raises t*

REITinvestor.ca issues an upgrade to neutral #3 ranking from negative #4 and raises target to $8.00 / unit for Crombie REIT.

Crombie REIT (CRR.UN - TSX) June 5, 2009 REITinvestor.ca issues an upgrade to neutral #3 ranking from negative #4 and raises target to $8.00 / unit for Crombie REIT. REITinvestor.ca, a private subscriber-based independent rating and ranking service, today issues an upgrade to neutral #3 ranking for Crombie REIT and believes that distributions are now safe for the next 9 months. On June 4, 2009, Crombie REIT announced a two year extension of its $139M bridge loan with a syndication of lenders which was due to expire in October 2009. REITinvestor.ca had had grave concern that CRR.UN would be forced to cut distributions to unit holders in order to arrange permanent replacement financing for the remaining $140M bridge loan facility. Crombie REIT was able to avoid this by issuing $35M in shares in a public bought deal and the issuance $30M Class B shares to a related party. As a result liquidity has been greatly increased and Crombie has arranged a significant amount of time in order to arrange new long term financing. REITinvestor.ca estimates that the dilutive issuance of new shares will increase the AFFO payout ratio to approximately 95% - 98% for the remainder of 2009. Furthermore, REITinvestor.ca does not estimate that revenues will grow in 2009 or in 2010. CRR.UN will need to focus on maintaining occupancy in its portfolio and improve operational efficiencies to improve its balance sheet and profitability going forward to allow for the amount of refinancing now due over the next two years. CRR.UN units closed on Thursday, June 4 at $8.30 per unit. For more information, visit REITinvestor.ca 

DISCLOSURE: REITinvestor.ca maintains its own investment fund and does not hold units of CRR.UN. REITinvestor.ca does not provide investment advice, nor does it recommend the purchase or sale of securities, including any REIT units it covers. Please consult your personal professional advisor before investing.


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## RI.ca (Apr 28, 2009)

*REITinvestor.ca comments on H&R REIT “At The Market Equity Financing Program”*

REITinvestor.ca comments on H&R REIT “At The Market Equity Financing Program” announced June 5, 2009 and maintains neutral #3 ranking & $9.00 target.

H&R REIT (HR.UN - TSX) June 6, 2009 REITinvestor.ca comments on H&R REIT “At The Market Equity Financing Program” announced June 5, 2009 and maintains neutral #3 ranking & $9.00 target. REITinvestor.ca, a private subscriber-based independent rating and ranking service, has determined that H&R REITs announced “At The Market Equity Financing Program” is both good and bad for unit holders of H&R REIT. REITinvestor.ca maintains its neutral #3 ranking and short-term target for HR.UN at $9.00. The Good: - The “At Market Equity Financing Program” provides for an alternative source of funds (up to approximately $150M) for emergency needs. - As noted in REITinvestor.ca May 19, 2009 report, H&R REIT had very low liquidity as a percentage of total debt. This new equity program addresses this concern. Nevertheless, it serves to remind all investors that HR.UN will if it sees fit dilute existing unit holders (including to some degree the units & warrants owned by Fairfax Financial). - H&R REIT will now have the option not to sell quality assets into a soft market place in order to raise cash. The sale of performing assets reduces ongoing distributable income from operations and can trigger taxes liabilities. The Bad - The need for more cash reserves signals to REITinvestor.ca that likely the cost of completing The Bow $1.5B office construction project in Calgary, Alberta in still a concern. H&R REIT reported that most of the construction costs for The Bow project have been locked in there remains other construction risk until the projects completion. The access to additional funds largely reduces this concern. REITinvestor.ca believed that this risk was largely underestimated by the market place. - It may also be that that other sources of cash, such as upward financing of existing assets have limited expectations going forward. - HR REIT’s credit facility of $200M expires in August 2009, and has not been renewed yet. HR.UN units closed on Friday June 5th at $10.33 per unit on the TSX. For more information, visit REITinvestor.ca 

DISCLOSURE: REITinvestor.ca maintains its own investment fund and currently is not holding units of HR.UN. REITinvestor.ca does not provide investment advice nor does it recommend the purchase or sale of securities including any REIT units it covers. Please consult your personal professional advisor before investing.


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## RI.ca (Apr 28, 2009)

*REITinvestor.ca maintains target $13.50 & negative #4 ranking for AP.UN*

REITinvestor.ca is now on TWITTER as "REITinvestor" - click on http://twitter.com/REITinvestor


www.REITinvestor.ca maintains target $13.50 & negative #4 ranking for AP.UN
Allied Properties REIT (AP.UN - TSX) June 10, 2009 

REITinvestor.ca reiterates target $13.50 & negative #4 ranking Following a review of Allied Properties REIT’s Q1-09 report, REITinvestor.ca is of the opinion that the AP.UN payout is safe for the remainder of 2009. However, REITinvestor.ca remains concerned about the lease expiry schedule. Of note to REITinvestor.ca are the following: - REITinvestor.ca estimates that Distribution Payouts currently represent a sustainable 94% of AFFO, and that AP.UN liquidity is a healthy 10% of total debt. As such, REITinvestor.ca has no real concern for dilutive equity distribution or a distribution cut for the remainder of 2009. - Our primary concern remains with the near-term lease expiry schedule. Over the next 30 months, Allied Property has approximately 40% of its gross leasable area expiring. While “brick & beam” space is typically less expensive than traditional Class A office space, our concern is for competitors attempting to lure away Allied Properties’ large AAA tenants with “sweet” deals to fill vacant space. This could potentially force Allied Properties to lower rent renewals so as to remain competitive. One particular concern is AP.UN’s largest tenant by revenue (5.5% of Q1 rev), CGI in Montreal whose lease expires in 2010. CGI originally agreed to pay above-market rent order to benefit from Quebec government employee subsidies. These subsidies more or less expire with the lease. REItinvestor.ca estimates that Allied Properties may need to cut the net effective rental rate by 10% -20% to retain CGI as a tenant. - Other tenants in a similar situation with above-market lease rates in Montreal are Motorola, Compuware and SAP labs. These tenants, along with CGI, represent approximately 430,000 sq.ft. of GLA space - REITinvestor.ca notes that Allied Properties REIT has excellent management skills and a track record of successful operations and growth. AP.UN units closed on June 9 at $14.55 per unit on the TSX. For more information, visit REITinvestor.ca. 

DISCLOSURE: REITinvestor.ca maintains its own investment fund and has no position in AP.UN. REITinvestor.ca does not provide investment advice nor does it recommend the purchase or sale of securities, including any REIT units it covers


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## RI.ca (Apr 28, 2009)

*REITinvestor.ca maintains a negative #5 Ranking for SRQ.UN and lowers its target*

REITinvestor.ca maintains a negative #5 Ranking for SRQ.UN and lowers its target price to $4.00.

Scott’s REIT (SRQ.UN - TSX) June 15, 2009 REITinvestor.ca maintains a negative #5 Ranking for SRQ.UN and lowers its target price to $4.00. REITinvestor.ca, a private subscriber-based independent rating and ranking service, today maintains its lowest negative #5 ranking for SRQ.UN and lowered its target price from $4.40 to $4.00. Following a review by REITinvestor.ca of SRQ.UN’s Q1-09 Financial Report and 2008 Financial Statement, REITinvestor.ca has serious concern for Scott’s REIT’s operations. Of particular note to REITinvestor.ca are the following points: - Scott’s REIT continues to report a deteriorating financial situation in Q1-09 with a loss per unit increase from (.015)/u in Q1-08 to (.059)/u in Q1-09. While a portion of the higher loss was due to increased amortization, interest expenses represented the largest increase. SRQ.UN will need to begin to reverse this trend in Q2 & Q3-09 in order not to exceed 100% payout ratio. - Liquidity is far too low, at 2% of debt. SRQ.UN recently had its line of credit reduced from $10M to $5M. - Oct 2010 will see nearly 59% ($66M) of SRQ.UN long-term mortgage debt come due. We remain extremely cautious on how this MBS debt will be replaced in the face of SRQ’s operational issues, the credit crisis and the continuing weak economy. - 2012 will see SRQ.UN $20M convertible debenture come due and we have no expectation the new debentures can be issued to replace the expiring issue. - Lastly, we remain extremely concerned that Priszm LP holdings, a related company, which operates 190 tenant quick service restaurants in Scott’s REIT properties, will remain fully viable going forward. Priszm reorganized in 2007 and continues to struggle financially. They have several hurdles to overcome in the coming quarters, including a requirement to update their restaurants and pay renewal fees for their national franchise rights with Yum Brand’s KFC, Taco Bell & Pizza Hut. SRQ.UN units closed on June 15 at $5.21 per unit on the TSX. For more information visit REITinvestor.ca. 

DISCLOSURE: REITinvestor.ca maintains its own investment fund and does not hold any units of SRQ.UN. REITinvestor.ca does not provide investment advice nor does it recommend the purchase or sale of securities, including any REIT units it covers. Please consult your personal professional advisor before investing.


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## RI.ca (Apr 28, 2009)

*REITinvestor.ca reiterates short-term target $0.30 set 23-5-09 & negative #5 ranking*

REITinvestor.ca reiterates short-term target $0.30 set 23-5-09 & negative #5 ranking for LRT.UN. 

Lanesborough REIT (LRT.UN - TSX) June 17, 2009 REITinvestor.ca reiterates short-term target $0.30 set 23-5-09 & negative #5 ranking for LRT.UN. TSX target 9500 retrace LRT.UN units closed on June 16 at $1.07 per unit on the TSX. For more information, visit REITinvestor.ca. 

DISCLOSURE: REITinvestor.ca maintains its own investment fund and has no position in LRT.UN. REITinvestor.ca does not provide investment advice nor does it recommend the purchase or sale of securities, including any REIT units it covers. Please consult your personal professional advisor before investing. Follow REITinvestor.ca on Twitter.com ID: REITinvestor


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## RI.ca (Apr 28, 2009)

*REITinvestor.ca comments on latest unit issue and reduces CUF.UN Ranking to a weak #4*

REITinvestor.ca comments on latest unit issue and reduces CUF.UN Ranking to a weak #4, but maintains its 3-month target at $13.00

Cominar REIT (CUF.UN - TSX) June 17, 2009 REITinvestor.ca comments on latest unit issue and reduces CUF.UN Ranking to a weak #4, but maintains its 3-month target at $13.00 Following Cominar REIT’s announcement today of a bought deal financing for gross proceeds of $50M, REITinvestor.ca views this news as aggressively dilutive to existing unit holders. REITinvestor.ca believes that Cominar has limited price appreciation potential for some time to come. Of note to REITinvestor.ca are the following points: - While REITinvestor.ca had determined that Cominar REIT would require most of its available existing credit facility to finance its committed development pipeline, which management estimates to be $50M for the remainder of 2009, it was hoped that Cominar would find alternative sources of financing to bridge this period. - With the new issuance, REITinvestor.ca estimates that liquidity is stabilized in the near term. However, Distribution Payouts will now greatly exceed 100% of Distributable Income going forward, and it remains unclear to REITinverstor.ca how and when the payout ratio will be brought back under 100%. - REITinvestor.ca continues to be concerned about whether Cominar REIT will be able to fill all of its current 671,420 sq ft development projects at the projected rental rates. In particular, the 396,000 sq.ft. Complexe Jules-Dallaire Class A office project in Quebec City is currently only 33% leased and is scheduled to begin accepting tenants later this year. CUF.UN units closed on June 16 at $16.42 per unit on the TSX. For more information, visit REITinvestor.ca. 

DISCLOSURE: REITinvestor.ca maintains its own investment fund and has no position in CUF.UN. REITinvestor.ca does not provide investment advice nor does it recommend the purchase or sale of securities, including any REIT units it covers. Please consult your personal professional advisor before investing.


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## HaroldCrump (Jun 10, 2009)

Bullseye said:


> Around half of that payout is ROC (return of capital), your own money being returned to you.


Isn't that bordering on Ponzi?
Sorry, I may be ignorant of how trusts work but if their earnings are that great, why do they need to do ROC?
Also, how do the tax law changes of 2011 effect these trusts?


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## RI.ca (Apr 28, 2009)

*Calloway REIT (CWT.UN - TSX)*

Calloway REIT (CWT.UN - TSX) 

June 24, 2009

REITinvestor.ca short-term target $12.50 hit & issues positive #2 ranking for CWT.UN.

TSX target 9500 retrace 




CWT.UN units closed on June 23 at $12.70 per unit on the TSX. For more information, visit REITinvestor.ca.


DISCLOSURE: REITinvestor.ca maintains its own investment fund and has no position in CWT.UN.

REITinvestor.ca does not provide investment advice nor does it recommend the purchase or sale of securities, including any REIT units it covers. Please consult your personal professional advisor before investing.

Follow REITinvestor.ca on Twitter.com ID: REITinvestor


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## RI.ca (Apr 28, 2009)

*REITinvestor.ca issues highest #1 ranking & maintains short-term target $12.50 for CW*

REITinvestor.ca issues highest #1 ranking & maintains short-term target $12.50 for CWT.UN.
Calloway REIT (CWT.UN - TSX) July 3, 2009 REITinvestor.ca issues highest #1 ranking & maintains short-term target $12.50 for CWT.UN. REITinvestor.ca yesterday issued a #1favorable ranking for Calloway REIT. Of particular note to REITinvestor.ca - Calloway’s low loan to value of 62% (estimate by REITinvestor.ca) and provides access to lenders to both finance growth and defend the $1.55 annual distribution - Calloway recently successfully issued $75M and $150M in new unsecured debentures. The funds will be used to reduce its credit facility and to repurchase expiring September 2009 debentures. - CWT.UN insiders have been steadily buying units of late in the public market - CWT.UN is well positioned to weather the economic weakness with Wal-Mart as its largest tenant and draw for other tenants. - Calloway is Canada’s largest open format unenclosed retail center owner. This format avoids the negative impact to shoppers of closed locations that dot enclosed malls. CWT.UN units closed on July 2 at $12.76 per unit on the TSX. For more information, visit REITinvestor.ca. 
DISCLOSURE: REITinvestor.ca maintains its own investment fund and has no position in CWT.UN. REITinvestor.ca does not provide investment advice nor does it recommend the purchase or sale of securities, including any REIT units it covers. Please consult your personal professional advisor before investing. 
Follow REITinvestor.ca on Twitter.com ID: REITinvestor


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## RI.ca (Apr 28, 2009)

*REITinvestor.ca issues positive #2 ranking & issues new short-term target $11.00 for*

REITinvestor.ca issues positive #2 ranking & issues new short-term target $11.00 for CWT.UN.

Calloway REIT (CWT.UN - TSX) July 14, 2009 REITinvestor.ca issues positive #2 ranking & issues new short-term target $11.00 for CWT.UN. REITinvestor.ca yesterday issued a #2 favorable ranking for Calloway REIT. Of particular note to REITinvestor.ca - Insider - Trustee Mitchell Goldhar has purchased approximately 25K CWT.UN units in past 30 days at prices ranging from $12.13 -$12.73 CWT.UN units closed on July 13 at $12.88 per unit on the TSX. For more information, visit REITinvestor.ca. 

DISCLOSURE: REITinvestor.ca maintains its own investment fund and has no position in CWT.UN. REITinvestor.ca does not provide investment advice nor does it recommend the purchase or sale of securities, including any REIT units it covers. Please consult your personal professional advisor before investing. Follow REITinvestor.ca on Twitter.com ID: REITinvestor REITinvestor.ca is please to sponsor www.theREITforum.com


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## stephenheath (Apr 3, 2009)

I'm curious on what you mean by these posts. For instance, you've given CWT a #2 positive ranking which I'm assuming is a good thing, but you've given it a short term target of $11.00 when it's currently at $12.88, which seems to say to me that you're expecting it to go down about 15% in the short term, so why would that be positive?


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## canabiz (Apr 4, 2009)

We were in Smiths Falls' Ontario County Fair mall earlier today and there were a ton of real estate for rent. The place is managed by RioCan.


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## RI.ca (Apr 28, 2009)

*Be wary of retail REITS - RIO.UN - CWT.UN - PMZ.UN - WRK.UN*

stephen: The rankings are relative to the other REIT's. When the economy is doing poorly, it will be possible for one of the better REIT's to have a shorter term target set well below it's current value, despite the fact we believe that the company is headed in the right direction. 
That being said, the units have seen a bit of a rally and could be headed towards a bit of a pull back. Calloway has been switching between #2 & #3 ranks the last couple of days, which is a sign that the yield may not be worth it at its current value according to the calculations made by our analysis.

canabiz: here is our post from this weekend regarding RIO and the other retail REIT's.
"Be wary of retail REITS - RIO.UN - CWT.UN - PMZ.UN - WRK.UN
We view the impending bankruptcy of CIT as a bad omen for retail REITs should it occur later this week."

There has certainly been a lot of downturn in the areas of retail, and RioCan will undoubtedly be hit. We currently have it's distribution set as "Stone with downside risk". In other words the distribution is safe but has potential risk to be reduced.


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## RI.ca (Apr 28, 2009)

*REITinvestor.ca comments on HLR.UN announced distribution cut, revises target to $0.3*

REITinvestor.ca comments on HLR.UN announced distribution cut, revises target to $0.30 & maintains neutral #3 ranking.

Holloway Lodging REIT (HLR.UN - TSX) July 22, 2009 REITinvestor.ca comments on HLR.UN announced distribution cut, revises target to $0.30 & maintains neutral #3 ranking. REITinvestor.ca view on Holloway Lodging REIT’s announced cancellation of distribution exemplifies the overall weakness within the economy and particularly within the lodging industry. A combination of business weakness in nearly all sectors along with families focusing on cost cutting has manifests itself in greatly reduced travel/holiday expenditures. While Holloway Lodging REIT was not severely over levered, it was relatively light on liquidity with a REITinvestor.ca estimate of 6.4% available liquidity/total debt at end of Q1. Our expectation is that HLR.UN will post very weak revenues in Q2 when they repost in August and an expectation of weak performance into the foreseeable future based on current room bookings. It is our opinion that management was left with no alternative but to cut distribution and to focus on substantial debt and debenture maturity coming due in 2011 & 2012. We do not see a reinstatement of distribution until there will be a resolution of these maturities. HLR.UN units closed on July 21 at $0.75 per unit on the TSX. For more information, visit REITinvestor.ca. 

DISCLOSURE: REITinvestor.ca maintains its own investment fund and has no position in HLR.UN. REITinvestor.ca does not provide investment advice nor does it recommend the purchase or sale of securities, including any REIT units it covers. Please consult your personal professional advisor before investing. Follow REITinvestor.ca on Twitter.com ID: REITinvestor


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## RI.ca (Apr 28, 2009)

REITinvestor.ca comments on RioCan REIT Q2 results and maintains #3 ranking & short-term target of $13.50.

RioCan REIT (REI.UN - TSX) July 28, 2009 REITinvestor.ca comments on RioCan REIT Q2 results and maintains #3 ranking & short-term target of $13.50. REITinvestor.ca, a private subscriber-based independent rating & ranking service, continues to believe that the current distribution of $0.115 per month ($1.38 annualized) is secure for the next 12 months, assuming financial and economic conditions do not weaken substantially. Following a review of RioCan’s Q2-09 Report, REITinvestor.ca believes that management has taken important steps to combat the current difficulties within the economy and has a clear short-term and long-term strategy going forward. REITinvestor.ca is maintaining its neutral #3 rating for REI.UN for 2009. Of particular note to REITinvestor.ca: - RioCan REIT continues to maintain high occupancy rates (97%) despite a spike in the number of unbudgeted vacancies. (REI.UN reports occupancy rate according to leases signed and not necessarily occupied or revenue generating space. Actual occupancy is likely closer to 95%); - RioCan REIT reported lower earning of $27M in Q2 compared to $44M in Q2/08 however amortization increased and reduced future income taxes offset much of the reduction in FFO & AFFO calculatiosn. This reduction had been anticipated by REITinvestor.ca. - REI.UN was successful in building a war chest of cash through new issuance equity and debentures and increased its lines of credit. Liquidity to total debt is currently calculated by REITinvestor.ca at a healthy 13%. While this liquidity level will fall with the repayment of $80M debentures due September 2009, RioCan has substantial un-encumbered assets to draw additional funds upon. REITinvestor.ca estimates that REI.UN Loan to Value at approximately 50%. - In increasing total debt in Q2 & Q1 REITinvestor.ca currently estimates REI.UN AFFO at $1.12 for 2009 & $1.15 for 2010 well below the current payout of $1.38. We do not consider the distribution to be at risk for the nest 12 months unless the several major anchor tenants were to stop paying their rent. The shortfall is offset by a strong participation in the DRIP program. Nevertheless, Management will need to continue to focus on increasing AFFO over the nest 24 -36 months. - RioCan REIT did not make any acquisitions during Q2. RioCan REIT management is committed to not proceed with any future developments unless the project is substantially preleased to credit-worthy tenants; - REITinvestor.ca notes that other serious concerns remain: o Namely, its $200M credit line may be terminated if loan-to-value for pledged properties exceeds 60%. o S&P and DBRS maintained their credit rating for REI.UN at BBB, or investment grade, as of 12/31/09. This rating could be affected by further weakening of financial and economic conditions, which could trigger replacing debentures coming due. o RioCan has a number of joint venture partnerships which expose the REIT to external risk, in case of default by a partner. o RioCan will need to implement a Qualification Plan for REIT Exemption, according to SIFT legislation, by December 31, 2010, the failure of which would have a material and adverse affect. - REITinvestor.ca maintains its short-term target at $13.50. for REI.UN REI.UN units closed on Monday, July 27 at $15.15 per unit. For more information, visit REITinvestor.ca 

DISCLOSURE: REITinvestor.ca maintains its own investment fund and is not currently holding units of REI.UN. REITinvestor.ca does not provide investment advice, nor does it recommend the purchase or sale of securities including any REIT units it covers. Please consult your personal professional advisor before investing. Follow REITinvestor.ca on TWITTER. ID : REITinvestor. For up to date REIT content visit theREITforum.com.


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## RI.ca (Apr 28, 2009)

REITinvestor.ca comments on RioCan REIT Q2 results and maintains #3 ranking & short-term target of $13.50.

RioCan REIT (REI.UN - TSX) July 28, 2009 REITinvestor.ca comments on RioCan REIT Q2 results and maintains #3 ranking & short-term target of $13.50. REITinvestor.ca, a private subscriber-based independent rating & ranking service, continues to believe that the current distribution of $0.115 per month ($1.38 annualized) is secure for the next 12 months, assuming financial and economic conditions do not weaken substantially. Following a review of RioCan’s Q2-09 Report, REITinvestor.ca believes that management has taken important steps to combat the current difficulties within the economy and has a clear short-term and long-term strategy going forward. REITinvestor.ca is maintaining its neutral #3 rating for REI.UN for 2009. Of particular note to REITinvestor.ca: - RioCan REIT continues to maintain high occupancy rates (97%) despite a spike in the number of unbudgeted vacancies. (REI.UN reports occupancy rate according to leases signed and not necessarily occupied or revenue generating space. Actual occupancy is likely closer to 95%); - RioCan REIT reported lower earning of $27M in Q2 compared to $44M in Q2/08 however amortization increased and reduced future income taxes offset much of the reduction in FFO & AFFO calculatiosn. This reduction had been anticipated by REITinvestor.ca. - REI.UN was successful in building a war chest of cash through new issuance equity and debentures and increased its lines of credit. Liquidity to total debt is currently calculated by REITinvestor.ca at a healthy 13%. While this liquidity level will fall with the repayment of $80M debentures due September 2009, RioCan has substantial un-encumbered assets to draw additional funds upon. REITinvestor.ca estimates that REI.UN Loan to Value at approximately 50%. - In increasing total debt in Q2 & Q1 REITinvestor.ca currently estimates REI.UN AFFO at $1.12 for 2009 & $1.15 for 2010 well below the current payout of $1.38. We do not consider the distribution to be at risk for the nest 12 months unless the several major anchor tenants were to stop paying their rent. The shortfall is offset by a strong participation in the DRIP program. Nevertheless, Management will need to continue to focus on increasing AFFO over the nest 24 -36 months. - RioCan REIT did not make any acquisitions during Q2. RioCan REIT management is committed to not proceed with any future developments unless the project is substantially preleased to credit-worthy tenants; - REITinvestor.ca notes that other serious concerns remain: o Namely, its $200M credit line may be terminated if loan-to-value for pledged properties exceeds 60%. o S&P and DBRS maintained their credit rating for REI.UN at BBB, or investment grade, as of 12/31/09. This rating could be affected by further weakening of financial and economic conditions, which could trigger replacing debentures coming due. o RioCan has a number of joint venture partnerships which expose the REIT to external risk, in case of default by a partner. o RioCan will need to implement a Qualification Plan for REIT Exemption, according to SIFT legislation, by December 31, 2010, the failure of which would have a material and adverse affect. - REITinvestor.ca maintains its short-term target at $13.50. for REI.UN REI.UN units closed on Monday, July 27 at $15.15 per unit. For more information, visit REITinvestor.ca 

DISCLOSURE: REITinvestor.ca maintains its own investment fund and is not currently holding units of REI.UN. REITinvestor.ca does not provide investment advice, nor does it recommend the purchase or sale of securities including any REIT units it covers. Please consult your personal professional advisor before investing. Follow REITinvestor.ca on TWITTER. ID : REITinvestor. For up to date REIT content visit theREITforum.com.


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## RI.ca (Apr 28, 2009)

*REITinvestor.ca issues a neutral #3 Ranking and estimates Dundee’s distribution to be*

REITinvestor.ca issues a neutral #3 Ranking and estimates Dundee’s distribution to be safe for remainder of 2009. Short term TA target has been lowered to $14.50.

Dundee REIT (D.UN - TSX) August 5, 2009 REITinvestor.ca issues a neutral #3 Ranking and estimates Dundee’s distribution to be safe for remainder of 2009. Short term TA target has been lowered to $14.50. REITinvestor.ca, a private subscriber-based independent rating and ranking service, today issues its neutral #3 ranking for Dundee REIT and believes that the current distribution of $0.183 per month ($2.20 annualized) is safe for the remainder of 2009.. Following a review of Dundee REIT’s Q2-09 Report, REITinvestor.ca is lowering its 3-month target to $14.50 for D.UN. Of particular note to REITinvestor.ca: - Dundee continues operate solidly in a difficult real estate revenue market. We estimate AFFO to remain stable and on target for our 2009 estimate of $2.20. This continues to equal 100% payout ratio. While Dundee REIT has done well to increase cash in Q2 to $79M from $69M in Q1, we note that committed Q3 expenditures will reduce cash by approximately 50%. Dundee REIT will expend $45M to assume the balance 50% of 720 Bay debt free in September. As a result we estimate liquidity to be average near 8.5% for Q3/09. We would have preferred the liquidity to remain in the 15% area until the economy and credit markets improve. - We have no concern for Dundee REIT mortgage renewals for the remainder of 2009 or 2010 however we note that office/industrial rents and occupancies continue to fall in Dundee REIT largest market, Calgary, Alberta. The impact of will negatively affect AFFO, refinancing opportunities and property values in this market. - REITinvestor.ca has a concern for the intentions of GE Real Estate’s 13% ownership of D.UN units. We note that GE has steadily disposed of more than 500,000 units in June and July 2009 at prices ranging from $15.50 to $16.20. We estimate that GE possesses another 2.7M units. GE paid more that $47/unit in June 2007 for these units. D.UN units closed on Tuesday, August 4 at $17.01 per unit. For more information, visit REITinvestor.ca 

DISCLOSURE: REITinvestor.ca maintains its own investment fund and holds no units of D.UN. REITinvestor.ca does not provide investment advice, nor does it recommend the purchase or sale of securities, including any REIT units it covers. Please consult your personal professional advisor before investing. For up to date REIT information visit theREITforum.com.


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## RI.ca (Apr 28, 2009)

*REITinvestor.ca comments on INN/UN Q2 – 09 results, lowers target $3.30 and maintains*

Innvest REIT (INN.UN - TSX) 

Aug 10, 2009

REITinvestor.ca comments on INN/UN Q2 – 09 results, lowers target $3.30 and maintains neutral #3 Ranking. 

REITinvestor.ca, a private subscriber-based independent rating & ranking service, has today following a detailed review of Q2 – 09 Report maintained its neutral #3 ranking for Innvest REIT but lowers its short-term target to $3.30.


Of particular concerns to REITinvestor.ca were the following points:

-	INN/UN reported lower - occupancy (-7%), ADR (-4%), RevPAR (-14%), overall hotel rev (-12%) and hotel income (-25%) for Q2 09 relative to Q2 08. 

-	Liquidity remains very weak with $10M in available cash & $19M available from undrawn lines. We estimate liquidity / debt ratio at 2.4%. Other than selling hotels at large discount we see limited access to additional funds for Innvest REIT within the portfolio.

-	Innvest REIT’s $40M credit facility while renewed for 2 yrs earlier this year, the amount available is open for adjustment on a regular basis and could be reduced on further weak performance.

-	We sense that Innvest REIT is struggling to refinance a $9M bridge loan which expired in March and was granted a few months extension upon paying down $2M. If Innvest REIT is unable to refinance this bridge with another lender by August 30, 2009, it may be required to withdraw the funds from cash reserves further weakening liquidity. 

-	INN/UN commented that July RevPAR performance will likely be off 8%-10% year over year however it will receive approximately $4M from the sale of one hotel in Q3 and additional funds from a soon to be finalized expropriation of another hotel.


In summary, REITinvestor.ca believes that Innvest REIT will likely be able to make it until the end of 2009 on its razor thin excess proceeds from operations however we note that 2010 posses many hurtles including $170M in mortgages to be renewed. There is no doubt that INN.UN is dependant on the economy turning positive in the next few quarters. We are not of the opinion that economy will improve substantially until late 2010 or 2011 and therefore believe that another distribution cut remains likely in the next 12 months for Innvest REIT. 



INN.UN units closed on Friday August 7 at $3.74 per unit on the TSX. For more information, visit REITinvestor.ca.


DISCLOSURE: REITinvestor.ca maintains its own investment fund and has no position in INN.UN.

REITinvestor.ca does not provide investment advice nor does it recommend the purchase or sale of securities, including any REIT units it covers. Please consult your personal professional advisor before investing.

Follow REITinvestor.ca on Twitter.com ID: REITinvestor


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## RI.ca (Apr 28, 2009)

*Last drill down*

Hey guys! I know a lot of you have been following us, but we have been asked to no longer post our drill downs on here (apparently people have been complaining despite the hours of research and analysis that are put into each one). 

To continue discussions on REIT's we will be posting on theREITforum.com, a forum dedicated to REITs.

I hope everyone has enjoyed these posts and we look forward to your insights on the other forum. All the best 

RI.ca




Calloway REIT (CWT.UN - TSX)



August 12, 2009



REITinvestor.ca issue neutral #3 Ranking, estimates Calloway distribution to be safe for the remainder of 2009 and increases target to $12.50/ unit.





REITinvestor.ca, a private subscriber-based independent rating & ranking service, believes that the current distribution of $0.1292 per month ($1.55 annualized) remains secure for the remainder of 2009 assuming. However the 2010 and beyond picture has become somewhat less clear and more dependant on the financial and economic conditions improving in 2010. 



REITinvestor.ca today confirms its neutral #3 Ranking and increasing its 3 month target from $11.00 - $12.50. 



Following a review of Calloway’s Q2-0 Report, REITinvestor.ca believes that management has demonstrated exceptional skills maintaining high occupancy while increasing rents and revenues during a period of difficult retail leasing. 



Of particular note to REITinvestor.ca:



- Calloway REIT continues to maintain high occupancy rates (98%) and reported a 90% renewal rate with 8%- 10% rent uplift on expiring leases. All despite a spike in the number of unbudgeted vacancies;



- NOI improved 12.3% to $73.5M Q2 - 09 vs. Q2 – 08;



- CWT.UN reported continued success with new developments and earnout of 237,148 sf in Q2. 



- Calloway REIT replaced approximately $150M of $200M (4.51%) unsecured debentures and issued an additional 75M in unsecured debentures which will be used to fund maturing debts and committed development projects for the next 12 months.



- CWT.UN has an extensive investment in property developments totaling $392M and is committed to a 5 year expenditure of $875M contributing 3.4M sf to the portfolio. Calloway reported that some projects will not proceed at this time where warranted and there is no intentions to purchase additional properties for the foreseeable future.



- In relation to developments Calloway holds 15 mortgages due totaling $197M of which $155M is due from related party Smart Centres. These loans entitle Calloway the option to purchase 50% - 100% of the completed project. Calloway did not report that any loan receivables were in default.



- Calloway continues to maintain its Dominion Bond Rating of BBB.



- Calloway has several credit facilities which were reduced by $55M to $255 as of June 30, 2009. Calloway reported that higher interest will affect FFO by .03/unit going forward. 



- Cash remains unusually low at $18M or .8% of total debt however with unused credit facility the amount of liquidity climbs to 6.5%. 



- Calloway’s indebtedness continues to climb and is approaching a maximum of 60% of GBV. Management currently reports its D/GBV at 55.2% (excluding convertible debentures and 57.1% of a maximum 65% including debentures).



- Calloway REIT relationship with Smart Centres is extensive and symbiotic. We can not be sure that this relationship does not favor one party over the other. However any conflicts between the parties would prove costly to the unit holders of Calloway REIT.



Our conclusion, Calloway REIT management by all indications is outperforming on all operational fronts. We however, note that management can not prevent tenant bankruptcies should they occur. The presence of Wal-Mart in 74% of Calloway REIT’s properties is an important drawing card for both distressed consumers and other tenants. Furthermore, Calloway REIT owns unenclosed shopping centres. This format reduces the negative impact of store closings (dark spots) to the consumer. We remain confident that Calloway REIT will meet its obligations for the next 12 months while each subsequent reporting quarter will need detailed analysis.


CWT.UN units closed on Tuesday, August 11, 2009 at $15.20 per unit. For more information, visit REITinvestor.ca

DISCLOSURE: REITinvestor.ca maintains its own investment fund and is not currently holding units of CWT.UN.


REITinvestor.ca does not provide investment advice, nor does it recommend the purchase or sale of securities including any REIT units it covers. Please consult your personal professional advisor before investing.


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## RI.ca (Apr 28, 2009)

Just put up two new articles on theREITforum.

One on Artis REIT and one on H&R REIT. Enjoy, and feel free to comment or ask questions about anything from the articles.

RI.ca


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