Who is shorting Boardwalk REIT (BEI.UN) — Part 2

Since Part 1 was published, the Q2 report came through, and things have indeed become softer, both in Alberta and in Saskatchewan. The stock took a drubbing from CDN $56 to around $50, where it sits as of Aug 15.

The Q2 report and the conference slide deck are available here and here.

As of June 2016, occupancy has slid to 96.65% (down from 97.40% a year ago) and average rent has gone down from CDN 1,150 to 1,086.

Also, a couple millions were lost in the Fort McMurray fire, which is extremely fortunate for the trust given how huge the fire was (est. CDN 3.6 billion in total cost). This was mostly due to the location of most Boardwalk units, away from the worst damage.

A few negatives indeed, but does this justify getting out at CDN $50?

Let’s look at the positives now. Management is making some multi-family building acquisitions (the pattern is: complexes of four-story wood-frames with elevators in suburbs well served by roads and transit) plus playing it safe by securing longer-term mortgages, making a few concessions where needed to keep tenants, and continuing the stock buyback.

The jury is out on this one, but my alter ego looks at an annual yield of 4.45% and the common-sense management, and feels confident in the long term.

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