riocan

RIOCAN REAL ESTATE INVESTMENT TRUST $20.80 (Toronto symbol REI.UN; SI Rating: Average) is Canada’s largest REIT. RioCan has ownership interests in a portfolio of 207 retail properties across Canada, including 10 under development. These properties contain over 53 million square feet of leasable area. RioCan is Canada’s largest owner of neighbourhood shopping centres. These are enclosed malls in smaller urban centres. But where the company is showing the strongest growth is as the largest owner of ‘New Format’ malls. These are in the suburbs of larger cities, and are made up largely of ‘Big Box’ stores with lots of parking and room for new building. RioCan’s revenue in the three months ended September 30, 2007 was $172.5 million, up 7.3% from $160.7 million a year earlier. Cash flow was unchanged at $0.36 per unit. Total occupancy is 97.6%, and anchor tenants account for 82.6% of RioCan’s rental revenue. That should let RioCan keep paying monthly distributions of $0.1125 a unit. The units yield 6.5%....

Many Real Estate Investment Trusts (REITs) moved down in January on investor concerns that problems in credit markets would hinder expansion plans, and that a slower economy might hurt cash flows. However, interest rates have dropped, and occupancy levels and leasing rates remain high at REITs in Canada. We still advise against overindulging in REITs. But if you stick with the highest quality, like RioCan REIT, you should make attractive long-term returns with low risk. RIOCAN REAL ESTATE INVESTMENT TRUST $20.80 (Toronto symbol REI.UN; SI Rating: Average) is Canada’s largest REIT. RioCan has ownership interests in a portfolio of 207 retail properties across Canada, including 10 under development. These properties contain over 53 million square feet of leasable area....

CANADIAN IMPERIAL BANK OF COMMERCE $71.31, Toronto symbol CM; moved down this week due to growing uncertainty over hedges it purchased from troubled U.S. bond insurer ACA Financial Guaranty Corp. These hedges are intended to protect CIBC from U.S. subprime mortgage losses, but ACA may not be able to meet its obligations. CIBC has already written off about $1 billion of its U.S. subprime-related securities, and could face further charges of roughly $2 billion. CIBC earned $3.1 billion or $9.24 a share in the year ended October 31, 2007, excluding unusual charges. The bank remains well capitalized, which reduces the possibility it will have to issue new equity. It’s also selling its riskier operations, and doing a good job controlling costs....

GUARDIAN MONTHLY HIGH INCOME II FUND $14.34 (CWA Rating: Income) (GGOF Guardian Group of Funds, Commerce Court West, Suite 4100, P.O. Box 201, Toronto, Ontario M5L 1E8. 1-800-668- 5613; Web site: www.ggof.com. Available from brokers) continues to emphasize more stable real estate investment trusts (REITs), and highquality, long-lived resource trusts. We still think investors should diversify carefully with trusts, and emphasize those with stable cash flows, a low need for capital expenditures and mature business operations. The $927.9 million fund’s top holdings are: Canadian Oil Sands Trust, RioCan REIT, Canadian REIT, ARC Energy, Cominar REIT, Yellow Pages Income Fund, Vermilion Energy Trust, Bonavista Energy Trust, Enerplus Resources Fund, Crescent Point Energy Trust and BFI Canada Income Fund....

EMERA INC. $21 (Toronto symbol EMA; Income Portfolio, Utilities sector; Shares outstanding: 111.4 million; Market cap: $2.3 billion; SI Rating: Average) earned $0.37 a share in the three months ended September 30, 2007, more than double the $0.18 a share it earned a year earlier. The bulk of the increase was due to a one-time tax gain at Nova Scotia Power Inc., Emera’s biggest subsidiary. Revenue rose 13.9%, to $310.3 million from $272.4 million, mainly due to higher electricity rates. Damage from Tropical Storm Noel in November cut power to roughly 20% of Emera’s customers in Nova Scotia for up to three days. However, it’s unlikely that the repair costs will hurt Emera’s ability to maintain its $0.91 dividend, which yields 4.3%. Emera is a buy....

ISHARES CDN REIT SECTOR INDEX FUND $16.05 (Toronto symbol XRE; buy or sell through a broker) holds the 12 Canadian real estate investment trusts (REITs) in the S&P/TSX Capped REIT Index. The weight of any one REIT in the value of the S&P/TSX Capped REIT Index is limited to 25%. RioCan REIT makes up 25% of the index’s value; H&R REIT, 15.5%; Boardwalk REIT, 9.6%; Canadian REIT, 8.8%; Calloway REIT, 8.1%; Chartwell Seniors Housing REIT, 5.8%; Canadian Apartment Properties REIT, 5.6%; Primaris Retail REIT, 5.5%; Extendicare REIT, 4.4%; Innvest REIT, 4.2%; Cominar REIT, 3.7%; and Dundee REIT, 2.6%. We’re glad to see that the top holding is RioCan, one of our favorite REITs. In fact, three of the top four holdings are among our recommendations. Note that iShares CDN REIT holds a couple of REITs we don’t recommend....

RIOCAN REAL ESTATE INVESTMENT TRUST $25.40 (Toronto symbol REI.UN; SI Rating: Average) is Canada’s largest REIT. RioCan has ownership interests in a portfolio of 207 retail properties across Canada, including 10 under development. These properties contain over 53 million square feet of leasable area. RioCan’s revenue in the three months ended June 30, 2007 was $179.5 million, up 15.5% from $155.4 million a year earlier. Cash flow per unit rose 8.6%, to $0.38 from $0.35. RioCan recently increased its annual distribution by 2.3%, to $1.35 from $1.32. Its units now yield 5.2%. RioCan is still a buy.

Real Estate Investment Trusts (REITs) have moved up lately, largely due to diminishing concerns about Canadian interest rate hikes. We still advise against overindulging in REITs. But if you stick with the highest quality, like the REITs we recommend on this page, you should make attractive long-term returns with low risk. RIOCAN REAL ESTATE INVESTMENT TRUST $25.40 (Toronto symbol REI.UN; SI Rating: Average) is Canada’s largest REIT. RioCan has ownership interests in a portfolio of 207 retail properties across Canada, including 10 under development. These properties contain over 53 million square feet of leasable area....

GUARDIAN MONTHLY HIGH INCOME II FUND $15.14 (CWA Rating: Income) (GGOF Guardian Group of Funds, Commerce Court West, Suite 4100, P.O. Box 201, Toronto, Ontario M5L 1E8. 1-800-668-5613; Web site: www.ggof.com. Available from brokers) emphasizes more stable real estate investment trusts (REITs), and high-quality, long-lived resource trusts. We still think investors should diversify carefully with trusts, and emphasize those with stable cash flows, a low need for capital expenditures and mature business operations. The $1.0 billion fund’s top holdings are: Canadian Oil Sands Trust, RioCan REIT, Alta- Gas Income Trust, ARC Energy, Cominar REIT, Yellow Pages Income Fund, Vermilion Energy Trust, Bonavista Energy Trust, Enerplus Resources Fund and BFI Canada Income Fund....

RIOCAN REAL ESTATE INVESTMENT TRUST $22.30 (Toronto symbol REI.UN; SI Rating: Average) is Canada’s largest REIT. RioCan has ownership interests in a portfolio of 206 retail properties across Canada, including nine under development. These properties contain over 52.1 million square feet of leasable area. RioCan’s revenue in the three months ended March 31, 2007 was $174.5 million, up 9.6% from $159.2 million a year earlier. Cash flow per unit was unchanged at $0.35. RioCan’s annual distribution of $1.32 gives it a current yield of 5.9%. RioCan is focusing its future development on six high-growth markets — Toronto, Ottawa, Montreal, Calgary, Edmonton and Vancouver. Although land costs more in these markets than other areas, RioCan feels their strong growth prospects offset the higher building costs....