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8/10/2019 BMO reit beat
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This report was prepared by an analyst(s) employed by BMO Nesbitt Burns Inc., and who is (are) not registered as a research analyst(s) under
FINRA rules. For disclosure statements, including the Analyst's Certification, please refer to pages 35 to 36.
The BMO REIT Beat
Canadian Real Estate/REIT Weekly(Week ending January 2, 2015)
Weekly Highlights
The S&P/TSX Capped REIT index was unchanged for the week ending January 2 while the S&P/TSX Composite was 1.0%.comparison, the MSCI U.S. REIT index (RMZ) was0.1%. Over the last 12 months, the Canadian REIT index is 5.1%whthe RMZ is27.3%. The 10-year CDN bond yield ended the week at 1.74%, which was down 16 bps over last week.
2014 Performance:For 2014, the S&P/TSX Capped REIT Index returned +10% on capital appreciation of 4% and yield of 6REITs performed well in the first half of 2014 but lost some of the gains later in the year. The REIT index rose 9.2% to Aug 2due largely to an unanticipated 67 bps decline in 10-year GoC yields, and then declined 4.6% triggered initially by rate concerand exacerbated by tumbling oil prices. Cdn REITs materially lagged US REITs which returned +30%. Seepage 3for more deta
Relative Valuation Very Compelling: Cdn REITs are trading at 15.2x AFFO vs. the long-term average of 13.8x and a 6discount to NAV vs. a LTA premium of 3.4%. Cdn REITs now trade at a 5.9x discount to US REITs, one of the highest spreadsover 15 years. Spreads to the 10-yr bonds are at 506 bps vs. the LTA of 373 bps, the highest level since 795 bps seen in 2009.
Noteworthy News
6.5%
5.1%4.3%
3.5% 3.5%
0%
2%
4%
6%
8%
10%
DRM NWH.UN IIP.UN MEQ D.UN
Top 5 Performers Last Week
Index Comparison - Price Changes
2-Jan-15
Index
Value
Last
Wk
Last
Mth
Last
Qtr
Last
Year
% from A
Time Hig
S&P/TSX Capped REIT Index 159.36 0.0% -2.5% 0.9% 5.1% -10.6%
S&P/TSX Financials 253.27 -0.2% -2.0% 1.1% 9.3% -3.6%
S&P/TSX Composite 14,753.65 1.0% 0.9% -0.2% 8.5% -5.8%
S&P US Financials 333.41 -1.0% 1.4% 6.3% 13.8% -34.6%
S&P 500 2,058.20 -1.5% -0.4% 4.6% 12.3% -1.5%
MSCI US REIT Index 1,134.21 -0.1% 2.4% 14.2% 27.3% -8.1%
FTSE NAREIT Global Index 1,868.61 1.3% 3.1% 12.3% 27.1% 0.0%
Source: Thomson Baseline, Bloomberg, BMO Capital Markets
-3.4%
-2.9%-2.7%
-1.5% -1.3%
-4%
-3%
-2%
-1%
0%GRPU HLC WIR'U ACR.UN BEI.UN
Bottom 5 Underperformers Last Week
Dream Industrialannounced that Lenis Quan has been appointed as theREITs new CFO effective today. Ms. Quan has experience in real estateand the capital markets and was most recently the CFO of Gazit America.She replaces John Todd who is leaving for personal reasons.
H&R REIT insider buyback activity: three insiders spent a total of$935,835 buying back units during December, with President & CEOThomas Hofstedter responsible for most of the buying.
Axiometrics reported that the U.S. apartment market ended 2014 with thestrongest Q4 annual rent growth in nine years at 4.5% (preliminary
figures) vs. 4.1% in Q3/14 and 2.8% in Q4/13. This is the strongest Q4since 2005 (+ 5.8%).
According to an article in the Calgary Herald, Colliers estimates the recentsell-off in oil prices lifted Calgarys downtown office vacancy rate to 8.5%in Q4/14, up from 7.7% in Q3/14 and 7.3% in Q4/13. Q4 office absorptionwas negative 333,000 sf, with almost 200,000 sf in Class AA office.Colliers expects negative 500,000 sf of absorption in 2015 as companiestrim office requirements and sublet space. (Link to Calgary Herald Article).
The Globe & Mail reported that due to the growing number of energyplayers shelving expansion plans in the oil sands, lodging company CiveoCorp.s occupancy is roughly half of what it was this time last year, forcing
them to shut down work camps and lay off employees. (Link to Globe &Mails Article).
Heather Kirk, CFA(416) [email protected]
Troy MacLean, CFA(416) [email protected]
AssociatesMaria Benavente / Salim Ben Mansour / Zan Zhang(416) 359-6943 / (416) 359-7441 / (416) [email protected]/[email protected]/ [email protected]
http://calgaryherald.com/business/commercial-real-estate/calgary-downtown-office-market-faces-downturnhttp://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/oilfield-man-camp-operator-civeo-cuts-canadian-us-jobs-amid-oil-slump/article22236291/http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/oilfield-man-camp-operator-civeo-cuts-canadian-us-jobs-amid-oil-slump/article22236291/mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/oilfield-man-camp-operator-civeo-cuts-canadian-us-jobs-amid-oil-slump/article22236291/http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/oilfield-man-camp-operator-civeo-cuts-canadian-us-jobs-amid-oil-slump/article22236291/http://calgaryherald.com/business/commercial-real-estate/calgary-downtown-office-market-faces-downturn8/10/2019 BMO reit beat
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Sector Comment Financials - Real Estate/REIT
Page 2 January 6, 2015
Table of Contents
2014 REITs Performance Review ........................................................................................................................................... 3
Research Comparables ............................................................................................................................................................. 5
Implied Bond Yield Watch ....................................................................................................................................................... 6
Relative Performance
Total Return Performance Summary .......................................................................................................................................... 9
Price Performance Last Week, Month, Quarter, Year ........................................................................................................... 10
Valuation
Cdn REIT Current Valuation vs. Other Benchmark Indices .................................................................................................... 11
Canadian REIT Implied Cap Rates ........................................................................................................................................... 12
Historical Private Market Cap Rate Spreads to 10-yr GOC Bond and BBB Bonds by Property Type .................................. 13
Canadian REIT AFFO Yield Spreads ....................................................................................................................................... 14
Canadian REIT Historical AFFO Multiple .............................................................................................................................. 15
Cdn REIT Yield and Multiple Spread vs. U.S. REITS ............................................................................................................ 16
Cdn REIT Yield and Multiple Spread vs. Banks...................................................................................................................... 17
Cdn REIT Yield and Multiple Spread vs. Telecom ................................................................................................................. 18
Current 2014E AFFO Multiple vs. Historical Average ............................................................................................................ 19
Prem/Disc to NAV .................................................................................................................................................................... 20
Latest Disclosed IFRS Cap. Rates vs. Current Implied Cap. Rates ......................................................................................... 21
Other
Canadian Real Estate Mutual Fund Flows ............................................................................................................................ 22
Capital Raising & Cumulative Market Capitalization .............................................................................................................. 23
Capital Raising 2014 to 2015 YTD Summary ....................................................................................................................... 24
Canadian Real Estate M&A 2012 and 2013 YTD Deals and IPO Performances .................................................................... 26
Average Daily Trading Volume, Last Week and Last Six Months .......................................................................................... 27
Net Insider Activity ................................................................................................................................................................... 28
Financial Position Summary ..................................................................................................................................................... 29
Financial Position: Mortgage Maturity Schedule ..................................................................................................................... 30
Financial Position: Debt to Total Assets .................................................................................................................................. 31
REIT & REOC Convertible Debentures ................................................................................................................................... 32
REIT & REOC Preferred Shares .............................................................................................................................................. 33
2013 Return of Capital .............................................................................................................................................................. 34
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Sector Comment Financials - Real Estate/REIT
Page 3 January 6, 2015
2014 REITs Performance Review
2014 REIT performance had a strong start in the first part of the year, but delivered a weak
finish. The S&P/TSX Capped REIT Index rose 9.2% to August 21, due in part to an unexpected
67 bps decline in 10-year GoC yields. From August 21 to year end, the index declined 4.6%
triggered initially on concerns that rates could move higher exacerbated by the impact of
tumbling oil prices.
The top performing REITsdelivered price appreciation of over 1530% and were dominated
by 1)U.S. weighted REITswhich benefitted from an appreciating USD as well as 2) seniors
housing and apartment REITswhich delivered above-average growth on solid fundamentals
and narrowing NAV discounts. Underperformers were down ~530% and tended to be
concentrated in the office market,which is grappling with new supply or to be weighted to
Western Canadawhich is forecast to face economic challenges due to plummeting oil prices.
Canadian REITs outperformed the S&P/TSX on a price performance basis by 200 bps in the
fourth quarter as energy stocks retreated from their earlier highs.
Quarterly Price PerformancePriced as at 31-Dec-2014
Name Q4 2014 Q3 2014 Q2 2014 Q1 2014 Q4 2013 Q3 2013 Q2 2013 Q1 2013
S&P/TSX Real Estate Index 4.5% 0.7% 3.5% 5.2% 3.7% -1.1% -4.3%
-0.2% -2.3% -4.4% -8.3%
-2.2% -1.2% -4.9%
-4.0% -1.8% -3.9% -2.5%
1.3%
S&P/TSX REIT Index 2.5% 4.3% 1.7% 0.3%
S&P/TSX Index 5.7% 5.2% 6.5% 5.4% 2.5%
MSCI US REIT Index 13.1% 6.0% 8.9% 7.1%
Source: Bloomberg, BMO Capital Markets
S&P/TSX REIT Index vs. S&P/TSX Composite Index - Total Annual Returns
80
90
100
110
120
130
140
Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14
TotalAnnualRe
turns(Indexedto100)
Canadian REIT Price Performance vs. US REITs and TSX Composite (Total Annual Returns)
S&P/TSX S&P/TSX REIT MSCI US REIT
Source: Bloomberg, BMO Capital Markets
Last Datapoint: December 31, 2014
MSCI US REIT
S&P/TSXComposite
S&P/TSX REITComposite
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Sector Comment Financials - Real Estate/REIT
Page 4 January 6, 2015
Of note this year was the significant underperformance of Canadian REITs relative to U.S
REITs. The MSCI US REIT Index returned 30% in 2014 vs 10% for the S&P TSX REIT index
making it the worst year for Canadian REIT underperformance since 2000.
2014 Top and Worst Performers
Price ReturnsTotal Annual Returns
Source: BMO Capital Markets, Bloomberg, Thomson One
Priced as at December 31, 2014
-24%
-20%
-9%
-8%
-6%
-5%
-4%
-3%
-3%0%
0%
2%
3%
3%
3%
3%
4%
4%
6%
6%
6%
8%
9%
9%
9%
10%
10%
10%
11%
12%
12%
13%
15%
15%
16%
16%
16%
19%
19%
24%
25%
30%
31%
34%
36%
37%
-40% -20% 0% 20% 40%
PAR.UN
TPH
NPR.UN
ACC
RMM.UN
D.UN
F.UN
NWH.UN
MR.UNAAR.UN
PLZ.UN
CRR.UN
EXE
AX.UN
DIR.UN
HOT.UN
KMP
MEQ
CHP.UN
BOX.UN
TN.UN
HR.UN
ACR.UN
BEI.UN
CUF.UN
SMU.UN
REF.UN
FCR
DRG.UN
REI.UN
GRT.UN
MRG.UN
CWT.UN
BTB.UN
IIP.UN
MRT.UN
RUF'U
AP.UN
CRT.UN
CAR.UN
CSH.UN
LW
RLC
WIR'U
MST.UN
INN.UN
Source: BMO Capital Markets, Bloomberg, Thomson One
Priced as at December 31, 2014
-31%
-30%
-16%
-14%
-13%
-13%
-11%
-9%
-7%-6%
-5%
-5%
-5%
-5%
-4%
-3%
-2%
0%
0%
1%
1%
1%
2%
2%
3%
4%
5%
6%
6%
6%
7%
7%
8%
9%
10%
12%
14%
15%
18%
19%
19%
21%
23%
26%
28%
29%
-40% -30% -20% -10% 0% 10% 20% 30% 40%
PAR.UN
TPH
RMM.UN
NPR.UN
ACC
D.UN
NWH.UN
MR.UN
AAR.UNPLZ.un
HOT.UN
DIR.UN
CRR.UN
AX.UN
EXE
TN.UN
KMP
CHP.UN
ACR.UN
SMU.UN
CUF.UN
BOX.UN
HR.UN
DRG.UN
BEI.UN
MEQ
FCR
REF.UN
BTB.UN
MRG.UN
REI.UN
GRT.UN
RUF'U
CWT.UN
MRT.UN
IIP.UN
AP.UN
BPY-US
CAR.UN
CSH.UN
MRC
RLC
LW
WIR'U
INN.UN
MST.UN
Note: BMO Capital Markets is r estricted on Summit Industrial REIT and Tr ue North Commercial REIT
Top performers within our universe in 2014 were primarily comprised of REITs with exposureto robust economic growth in the U.S. (MST.UN and WIRU) as well as REITs in the senior
care/LTC sector (RLC and LW). The top five performing REITs were further elevated abovethe rest of the pack when accounting for distributions and had an average yield of 8-9%. Wecontinue to expect strong performance from both REITs with U.S. exposure given diminishedCanadian GDP projections and tumbling energy markets, and senior care/LTC REITs withfavourable tailwinds from market fundamentals and demographic trends.
Worst performers included REITs with exposure to Western Canada and softening economicconditions in the energy sector (TPH and NPR.UN), as well as REITs with operating challengeand leverage that is above-average (PAR.UN, RMM.UN, and ACC). We expect REITs withexposure to Western Canada as well as those with higher-than-average leverage to face greaterheadwinds for performance compared to peers.
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Sector Comment
Page 7 January 6, 2015
A C D E F G H
(1 / C) (D - 1.74%) (D - F) (F + 2.16%)
AFFO - 10yr AFFO - 10yr Bond Yield Projected
Price 2015E AFFO Current Hist. Implied by Yield @
Coverage Universe 2-Jan-15 P/AFFO Yield Spread Spread Current Price 2.16%
Brookfield Cda. REIT $27.09 23.3x 4.3% 2.6% 3.1% 1.2% 5.2%
Allied Properties $37.68 19.0x 5.3% 3.5% 3.7% 1.5% 5.9%
Chartwell $11.86 15.9x 6.3% 4.6% 4.6% 1.7% 6.7%
CREIT $45.90 17.4x 5.8% 4.0% 3.8% 2.0% 5.9%
Leisureworld $14.02 10.3x 9.7% 8.0% 7.8% 1.9% 10.0%
PIRET $4.42 13.0x 7.7% 5.9% 5.4% 2.3% 7.6%
Retrocom $3.91 10.8x 9.2% 7.5% 6.9% 2.4% 9.0%
First Capital Realty $18.95 19.8x 5.0% 3.3% 2.6% 2.4% 4.8%
Morguard $18.09 13.5x 7.4% 5.7% 4.9% 2.5% 7.0%
Crombie $12.99 13.8x 7.2% 5.5% 4.6% 2.7% 6.7%
Calloway $27.48 14.4x 7.0% 5.2% 4.3% 2.7% 6.5%
RioCan $26.72 16.7x 6.0% 4.2% 3.2% 2.8% 5.4%
Killam Properties $10.31 14.9x 6.7% 5.0% 3.9% 2.9% 6.0%
Dream Industrial $8.43 10.6x 9.5% 7.7% 6.2% 3.3% 8.3%
Amica Mature Lifestyles $6.95 15.6x 6.4% 4.7% 3.3% 3.1% 5.5%
H&R $21.95 13.0x 7.7% 6.0% 4.4% 3.3% 6.6%
CAP REIT $25.33 17.0x 5.9% 4.2% 2.8% 3.1% 5.0%
NorthWest Healthcare Prop. $9.28 11.7x 8.6% 6.8% 4.9% 3.7% 7.0%
Boardwalk $62.04 19.0x 5.3% 3.5% 2.0% 3.3% 4.2%
Artis $14.35 11.5x 8.7% 7.0% 4.5% 4.2% 6.7%
Cominar $18.76 11.6x 8.6% 6.9% 4.5% 4.1% 6.6%
Northern Prop. $23.57 10.7x 9.4% 7.6% 4.5% 4.8% 6.7%
REIT Average 5.4% 4.4% 2.8% 6.5%
Source: BMO Capital Markets
AFFO yield spread over Canada
10-yr government bond
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Sector Comment
Implied Bond Yield - 10-year Canada Bond Yield Spreads:Monthly Spreads
1.7%
2.0%
3.0%3.2%
3.3%
3.1%
2.9%
3.1% 3.1%
2.9%2.7%
2.8%2.6%
2.5%2.4%
2.7%2
1.70%
2.06%
2.44% 2.45%2.62% 2.56%
2.42%2.55%
2.79%
2.34%2.43% 2.44% 2.41%
2.30% 2.25%2.11%
1
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Au
Implied Bond Yield 10-yr Bond Yield
Source: BMO Capital Markets, Bloomberg, Thomson One (Priced as at January 2, 2015)
Weekly Spreads
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
1.40%
1.60%
Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Se
Source: BMO Capital Markets, Bloomberg, Thomson One (Priced as at January 2, 2015)
Page 8 January 6, 2015
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Sector Comment
Relative Performance:Total Return Performance Summary
2015 YTD
2014
2013
2012
By Benchmark By Property Type By Mark
29.8%
17.8%
17.0%
7.2%
0% 10% 20% 30% 40%
Global REITs
US REITs
Cdn REITs
TSX Composite
Total Return
2.2%
2.5%
-5.5%
13.0%
-13% -8% -3% 2% 7% 12% 17%
Global REITs
US REITs
Cdn REITs
TSX Composite
Total Return
15.7%
-5.0%
-1.7%
-1.7%
-3.4%
-6.0%
-4.4%
-15% -10% -5% 0% 5% 10% 15% 20%
Hotel
Retirement/LTC
Diversified
Industrial
Office
Retail
Multi-Residential
Total Return
10%
33%
21%
23%
25%
15%
24%
0% 5% 10% 15% 20% 25% 30% 35%
Hotel
Retirement/LTC
Diversified
Industrial
Office
Retail
Multi-Residential
Total Return
-7.6%
-14% -12% -10% -8%
Large Cap (>$1.5 B)
Mid Cap ($500 M - $1.5B)
Small Cap ($1.5 B)
Mid Cap ($500 M -$1.5B)
Small Cap ($1.5 B)
Mid Cap ($500 M - $1.5B)
Small Cap ($1.5 B)
Mid Cap ($500 M - $1.5B)
Small Cap (
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Sector Comment Financials - Real Estate/REIT
Page 10 January 6, 2015
Price Performance:By Index and Name Last Week, Month, Quarter, Year
Price Change: Last Week Price Change: Last Month Price Change: Last 3 Months Price Change: Last 12 Months
REIT/REOC Ticker REIT/REOC Ticker REIT/REOC Ticker REIT/REOC Ticker
Dream Unlimited DRM 6.5% InnVest INN.UN 6.6% Brookfield Asset Mgmt (C$) BAM.A 17.2% Holloway HLC 53.3%
Northwest Healthcare Prop. NWH.UN 5.1% Tricon Capital TCN 6.2% Tricon Capital TCN 14.6% Brookfield Asset Mgmt (C$) BAM.A 43.4%
InterRent IIP.UN 4.3% Brookfield Asset Mgmt (C$) BAM.A 3.7% MSCI US REIT Index 14.2% Brookfield Asset Mgmt (US$) BAM 30.3%
Mainstreet Equity MEQ 3.5% FTSE NAREIT Global Index 3.1% Brookfield Property Part. BPY.UN 13.4% Milestone MST.UN 29.7%
Dream Office D.UN 3.5% MSCI US REIT Index 2.4% FTSE NAREIT Global Index 12.3% Brookfield Property Part. BPY.UN 27.9%
Milestone MST.UN 3.2% Regal RLC 2.2% Brookfield Asset Mgmt (US$) BAM 12.2% MSCI US REIT Index 27.3%
Dream Industrial DIR.UN 3.1% Brookfield Property Part. BPY.UN 2.1% InnVest INN.UN 10.6% WPT Industrial WIR'U 27.3%
Brookfield Asset Mgmt (C$) BAM.A 2.5% Leisureworld LW 2.0% Allied Properties AP.UN 10.3% FTSE NAREIT Global Index 27.1%
Tricon Capital TCN 2.5% Temple TPH 1.8% Granite Real Estate (C$) GRT.UN 9.6% InnVest INN.UN 25.3%
Cominar CUF.UN 2.3% American Hotel HOT.UN 1.8% Chartwell CSH.UN 8.8% Leisureworld LW 24.8%
H&R HR.UN 1.9% First Capital Realty FCR 1.7% InterRent IIP.UN 8.6% CAP REIT CAR.UN 19.9%
Regal RLC 1.8% Northwest Healthcare Prop. NWH.UN 1.6% CT REIT CRT.UN 8.5% Morguard Corp. MRC 19.1%
PIRET AAR.UN 1.8% Extendicare EXE 1.5% First Capital Realty FCR 7.8% Chartwell CSH.UN 19.1%
Leisureworld LW 1.7% Morguard MRT.UN 1.1% Calloway CWT.UN 7.4% Tricon Capital TCN 17.2%
InnVest INN.UN 1.6% S&P/TSX Composite* 0.9% WPT Industrial WIR'U 7.2% Regal RLC 16.4%
RetroCom RMM.UN 1.6% Granite Real Estate (C$) GRT.UN 0.5% CAP REIT CAR.UN 6.9% Allied Properties AP.UN 15.1%
Amica Mature Lifestyles ACC 1.6% Crombie CRR.UN 0.4% Regal RLC 5.3% InterRent IIP.UN 13.1%
Dream Global DRG.UN 1.5% Brookfield Asset Mgmt (US$) B AM 0.2% RioCan REI.UN 4.3% CT REIT CRT.UN 10.6%
Brookfield Canada (US$) BOXC 1.4% Morguard Residential MRG.UN 0.2% Granite Real Estate (US$) GRPU 4.3% Morguard MRT.UN 10.4%
Morguard Residential MRG.UN 1.3% Cominar CUF.UN 0.2% Morguard Corp. MRC 3.8% Calloway CWT.UN 9.7%
FTSE NAREIT Global Index 1.3% WPT Industrial WIR'U 0.0% Leisureworld LW 3.8% S&P/TSX Composite* 8.5%
CAP REIT CAR.UN 1.2% Inovalis INO.UN 0.0% Choice Properties CHP.UN 2.9% First Capital Realty FCR 8.2%
Allied Properties AP.UN 1.2% RioCan REI.UN -0.5% Milestone MST.UN 2.5% RioCan REI.UN 7.5%
Brookfield Canada (C$) BOX.UN 1.1% Dream Global DRG.UN -0.8% Holloway HLC 1.2% Granite Real Estate (C$) GRT.UN 7.3%
Crombie CRR.UN 1.0% Mainstreet Equity MEQ -0.8% H&R HR.UN 0.9% CREIT REF.UN 6.5%
S&P/TSX Composite* 1.0% Amica Mature Lifestyles ACC -1.1% Amica Mature Lifestyles ACC 0.9% Morguard Residential MRG.UN 6.0%
Melcor Developments MRD 0.9% BTB BTB.UN -1.3% S&P/TSX Capped REIT ** 0.9% BTB BTB.UN 5.6%
Extendicare EXE 0.9% InterRent IIP.UN -1.3% Crombie CRR.UN 0.7% S&P/TSX Capped REIT ** 5.1%
Killam Properties KMP 0.5% Allied Properties AP.UN -1.4% Killam Properties KMP -0.1% Boardwalk BEI.UN 4.2%Brookfield Asset Mgmt (US$) BAM 0.5% CAP REIT CAR.UN -1.5% Brookfield Canada (C$) BOX.UN -0.2% Mainstreet Equity MEQ 3.3%
Choice Properties CHP.UN 0.5% Morguard Corp. MRC -1.6% PIRET AAR.UN -0.2% H&R HR.UN 2.9%
BTB BTB.UN 0.4% Chartwell CSH.UN -1.6% S&P/TSX Composite* -0.2% Summit Industrial SMU.UN 2.7%
American Hotel HOT.UN 0.3% Calloway CWT.UN -1.6% Cominar CUF.UN -0.4% Brookfield Canada (C$) BOX.UN 2.6%
First Capital Realty FCR 0.1% CT REIT CRT.UN -1.9% Morguard MRT.UN -1.0% Cominar CUF.UN 2.1%
Artis AX.UN 0.1% Milestone MST.UN -1.9% Morguard Residential MRG.UN -1.7% Inovalis INO.UN 1.0%
Summit Industrial SMU.UN 0.0% PIRET AAR.UN -2.0% BTB BTB.UN -2.7% Choice Properties CHP.UN 0.9%
Calloway CWT.UN 0.0% Killam Properties KMP -2.1% Summit Industrial SMU.UN -3.8% Agellan Commercial ACR.UN -0.9%
S&P/TSX Capped REIT ** 0.0% RetroCom RMM.UN -2.2% Agellan Commercial ACR.UN -4.7% Dream Global DRG.UN -1.1%
MSCI US REIT Index RMZ -0.1% S&P/TSX Capped REIT ** -2.5% Northwest Healthcare Prop. NWH.UN -4.7% Killam Properties KMP -1.4%
Temple TPH -0.2% Granite Real Estate (US$) GRPU -2.6% CREIT REF.UN -4.8% Granite Real Estate (US$) GRPU -1.9%
CREIT REF.UN -0.2% H&R HR.UN -2.7% American Hotel HOT.UN -4.9% Artis AX.UN -2.8%
Morguard Corp. MRC -0.3% Brookfield Canada (C$) BOX.UN -2.9% Brookfield Canada (US$) BOXC -4.9% Extendicare EXE -3.2%
Partners PAR.UN -0.3% Boardwalk BEI.UN -3.4% Dream Global DRG.UN -5.4% Melcor Developments MRD -3.7%
Northern Prop. NPR.UN -0.5% Agellan Commercial ACR.UN -4.0% Mainstreet Equity MEQ -5.8% Crombie CRR.UN -4.0%
Granite Real Estate (C$) GRT.UN -0.6% Summit Industrial SMU.UN -4.0% Artis AX.UN -6.1% American Hotel HOT.UN -4.6%
Morguard MRT.UN -0.6% Choice Properties CHP.UN -4.5% Inovalis INO.UN -7.0% Dream Industrial DIR.UN -4.7%
RioCan REI.UN -0.6% Dream Industrial DIR.UN -4.5% Dream Industrial DIR.UN -7.1% PIRET AAR.UN -5.6%
CT REIT CRT.UN -0.7% Dream Office D.UN -4.6% RetroCom RMM.UN -8.2% Brookfield Canada (US$) BOXC -6.4%
Chartwell CSH.UN -0.9% Holloway HLC -5.4% Dream Office D.UN -8.3% Northwest Healthcare Prop. NWH.UN -11.0%
Inovalis INO.UN -1.0% CREIT REF.UN -5.6% Partners PAR.UN -8.6% Dream Office D.UN -11.5%
Brookfield Property Part. BPY.UN -1.2% Brookfield Canada (US$) BOXC -6.3% Boardwalk BEI.UN -10.3% Amica Mature Lifestyles ACC -13.6%
Boardwalk BEI.UN -1.3% Northern Prop. NPR.UN -7.2% Temple TPH -15.6% RetroCom RMM.UN -15.9%
Agellan Commercial ACR.UN -1.5% Dream Unlimited DRM -7.4% Northern Prop. NPR.UN -16.1% Northern Prop. NPR.UN -17.1
WPT Industrial WIR'U -2.7% Melcor Developments MRD -7.9% Melcor Developments MRD -19.8% Temple TPH -29.4%
Holloway HLC -2.9% Artis AX.UN -8.2% Extendicare EXE -19.9% Partners PAR.UN -30.7%
Granite Real Estate (US$) GRPU -3.4% Partners PAR.UN -11.7% Dream Unlimited DRM -21.2% Dream Unlimited DRM -40.6%
Simple Avg - All Real Estate 0.8% Simple Avg - All Real Estate -1.6% Simple Avg - All Real Estate -0.4% Simple Avg - All Real Estate 5.1%
Source: Thomson Baseline, Bloomberg, BMO Capital Markets
Last Datapoint: January 2, 2015
Note: BMO Capital Markets is Restricted on Summit Industrial REIT and True North Commercial REIT
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Valuation Comparisons:Cdn REIT Current Valuation vs. Other Benchmark Indices
-3.6x
0.8x4.3x
-2.4x 0.0x
-5.9x
1.2x
4.3x
-3.4x
0.3x
-8x
-6x
-4x
-2x
0x
2x
4x
6x
US REITs S&P/TSX Comp Cdn Banks Cdn Utilities Cdn Telecom
Premium/(Discount)-MultipleSpreadinPoints
Historical Spread
Current Spread
Note: Historical averages since 2004Source: BMO Capital Markets, Bloomberg
15
40
65
90
115
140
Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14
PriceOnlyPerformance(Indexedto100)
Canadian REIT Price Performance vs. US REITs and TSX Composite
Source: Bloomberg, BMO Capital MarketsLast Datapoint: January 2, 2015
MSCI US REIT
S&P/TSXComposite
Cdn REITs TroughValuation (Mar/09): Forward
AFFO multiple 9.3x (8.7%implied cap rate)
Cdn REITs PeakValuation (Q1/07):Fwd AFFO multiple
almost 20x(6% implied cap rate)
Cdn REITs CurrentValuation: 2015E AFFOmultiple 15.3x
(6.2% implied cap rate)
Implied Cap RateSpread to Gov'ts: 190 bps*
Implied Cap RateSpread to Gov'ts: 590 bps*
* Min/Max Cap Rate Spread was in Q3/07 (at 170 bps) and Q3/09 (at 590 bps)
Current Implied Cap RateSpread to Gov'ts: 448 bps
S&P/TSX REIT
Composite
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Valuation Comparisons: Canadian REIT Implied Cap Rate Spreads
0%
1%
2%
3%
4%
5%
6%
7%
Q1/98 Q3/99 Q1/01 Q3/02 Q1/04 Q3/05 Q1/07 Q3/08 Q1/10 Q3/11 Q1/13 Q3/14
Canadian REIT Implied Cap Rate* Spread to 10 Year Gov't Bond Yields
Current Spread: 448 bps
Source: BMO Capital MarketsLast Datapoint: January 2, 2015
* Private market data was used for Q1/98-Q4/05 Implied Cap Rate;wtd avg of All Cdn REITs used thereafter
Long Term Historical Avg. Spread: 363 bps
Q3/07 Min Spread: 171 bps
Q1/09 Max Spread: 587 bps
0%
1%
1%
2%
2%
3%
3%
4%
4%
Q1/98 Q3/99 Q1/01 Q3/02 Q1/04 Q3/05 Q1/07 Q3/08 Q1/10 Q3/11 Q1/13 Q3/14
Canadian REIT Implied Cap Rate* Spread to 10 Year BBB Corp Bond Yields
Current Spread: 266 bps
Source: BMO Capital MarketsLast Datapoint: January 2, 2015
Long Term Historical Avg. Spread: 188 bps
Q3/07 Min Spread: 41 bps
Q4/03 Max Spread: 349 bps
* Private market data was used for Q1/98-Q4/05 Implied Cap Rate;wtd avg of All Cdn REITs used thereafter
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Historical Private Market Cap Rate Spreads to 10-yr GOC Bond andBBB Bonds by Property Type
Private Market Data:
Population-Weighted Average National Private Market Historical Cap. Rate & Spread to C anadian 10 Year Gov't Bonds a nd BBB C orporates1
CBD Office Suburban Office A&B2 Industrial A&B Retail -Neighborhood Apartment -High Rise3 Na tiona l Spre ad Spre ad
Ave Cap Spread Ave Cap Spread Ave Cap Spread Ave Cap Spread Ave Cap Spread Average to 10-yr GOC Bond to BBB Bond
1992 9.4% 1.3% 10.8% 2.7% 10.6% 2.5% 10.2% 2.1% 9.8% 1.7% 10.1% 2.1% 0.2%
1993 9.6% 2.4% 11.4% 4.2% 10.7% 3.5% 10.3% 3.1% 10.2% 2.9% 10.4% 3.2% 1.9%
1994 9.8% 1.3% 11.0% 2.6% 10.5% 2.0% 10.3% 1.8% 10.8% 2.3% 10.5% 2.0% 1.2%
1995 9.6% 1.6% 12.3% 4.2% 10.3% 2.2% 10.2% 2.2% 10.7% 2.6% 10.6% 2.6% 1.4%
1996 9.4% 2.2% 10.3% 3.1% 9.9% 2.7% 10.4% 3.2% 8.6% 1.4% 9.7% 2.5% 1.5%
1997 8.9% 2.7% 10.4% 4.3% 9.5% 3.4% 9.8% 3.7% 8.9% 2.8% 9.5% 3.4% 2.4%
1998 8.6% 3.3% 9.2% 4.0% 9.3% 4.0% 9.4% 4.1% 8.5% 3.2% 9.0% 3.7% 2.6%
1999 8.8% 3.2% 9.0% 3.4% 9.3% 3.7% 9.6% 4.0% 8.3% 2.7% 9.0% 3.4% 1.9%
2000 9.1% 3.2% 9.6% 3.7% 9.6% 3.7% 9.8% 4.0% 8.1% 2.2% 9.2% 3.4% 1.6%
2001 8.7% 3.2% 10.0% 4.5% 9.5% 4.0% 9.8% 4.3% 7.9% 2.5% 9.2% 3.7% 1.6%
2002 8.6% 3.3% 10.1% 4.8% 9.4% 4.1% 10.0% 4.8% 7.6% 2.4% 9.1% 3.9% 1.9%
2003 9.0% 4.2% 10.5% 5.7% 9.2% 4.4% 9.9% 5.2% 7.7% 2.9% 9.2% 4.5% 3.1%
2004 8.6% 4.1% 9.6% 5.1% 8.2% 3.7% 8.5% 3.9% 7.3% 2.8% 8.5% 3.9% 2.8%
2005 7.4% 3.4% 9.2% 5.2% 7.5% 3.5% 7.6% 3.6% 6.8% 2.8% 7.7% 3.7% 2.6%
2006 6.6% 2.4% 7.5% 3.3% 7.1% 2.9% 7.2% 3.0% 6.5% 2.3% 7.0% 2.8% 1.7%
2007 6.3% 2.1% 6.9% 2.6% 6.8% 2.5% 6.9% 2.6% 5.8% 1.6% 6.5% 2.3% 0.9%
2008 6.6% 3.0% 7.3% 3.7% 6.8% 3.2% 7.3% 3.7% 6.1% 2.5% 6.8% 3.2% 0.5%
2009 7.4% 4.2% 8.2% 5.0% 8.0% 4.8% 8.2% 5.0% 6.5% 3.3% 7.7% 4.5% 1.5%
2010 6.9% 3.7% 7.9% 4.6% 7.5% 4.3% 7.4% 4.2% 6.3% 3.0% 7.2% 4.0% 2.2%
2011 6.2% 3.4% 7.3% 4.5% 7.0% 4.2% 6.9% 4.1% 5.8% 3.1% 6.6% 3.9% 1.8%
2012 5.7% 3.8% 6.9% 5.0% 6.7% 4.8% 6.5% 4.7% 5.1% 3.2% 6.2% 4.3% 2.0%
Q1/13 5.6% 3.8% 6.7% 4.9% 6.5% 4.6% 6.4% 4.5% 4.9% 3.1% 6.0% 4.2% 2.1%
Q2/13 5.6% 3.2% 6.9% 4.4% 6.5% 4.1% 6.4% 3.9% 4.9% 2.5% 6.1% 3.6% 1.5%
Q3/13 5.7% 3.1% 6.9% 4.3% 6.6% 4.1% 6.4% 3.9% 4.9% 2.4% 6.1% 3.6% 1.5%
Q4/13 5.7% 2.9% 6.9% 4.1% 6.6% 3.9% 6.4% 3.7% 5.2% 2.4% 6.2% 3.4% 1.5%
2013 5.6% 3.2% 6.8% 4.4% 6.6% 4.2% 6.4% 4.0% 5.0% 2.6% 6.1% 3.7% 1.7%
Q1/14 5.7% 3.3% 6.9% 4.4% 6.6% 4.2% 6.4% 4.0% 5.2% 2.7% 6.2% 3.7% 2.0%
Q2/14 5.7% 3.5% 6.9% 4.6% 6.5% 4.3% 6.4% 4.2% 5.2% 2.9% 6.1% 3.9% 2.4%
Q3/14 5.7% 3.6% 6.8% 4.6% 6.4% 4.3% 6.4% 4.3% 5.1% 3.0% 6.1% 3.9% 2.3%Current5 5.7% 4.0% 6.8% 5.0% 6.4% 4.7% 6.4% 4.7% 5.1% 3.4% 6.1% 4.4% 2.5%
Historical Average : 8.2% 3.0% 9.3% 4.1% 8.7% 3.5% 8.9% 3.7% 7.8% 2.6% 8.6% 3.4% 1.8%
Last 10 Year Average: 7.2% 3.4% 8.3% 4.5% 7.7% 3.9% 7.9% 4.1% 6.5% 2.7% 7.5% 3.7% 1.9%
Historical Max Spread: Gov't Bonds - 2003 (446 bps); BBB Corps - 2003 (314 bps)
Historical Min Sprea d: Gov't Bonds - 1992 (206 bps)/1994 (202 bps)/ 2007 (228 bps); BBB Corps - 1992 (22 bps)/ 2008 (50 bps)
National Includes: Vancouver, Calgary, Edmonton, Toronto, Ottawa, Montreal, Halifax 4
Source: Bloomberg, CBRE, Reuters, BMO Capital Markets
1. Annual 10 year bond yields represents the average of each trading day's close f or the year.
2. Suburban Office cap rates pre-2007 are estimated
3. 1992-1999 Apartment cap rates estimated
4. 1989-1999 & 2004 Exclude Ottawa & Halifax for w hich cap rates were not available
5. Current reflects latest available average cap. rates (Q3/14) and bond yields as of January 2, 2015
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
Apr-08 Sep-08 Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Aug-14
Canadian 10-yr Government Bond Yield
As at January 2, 2015 1.74%
Source: BMO Capital Markets, Thomson Baseline
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Valuation:Canadian REIT AFFO Yield Spreads
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-1
Canadian REIT AFFO Yields Spread to 10-Year Cda Gov't Yields
Hist. Avg Spread: 373 bps
Current Spread: 506 bps
Min spread: 66 bps
Maxspread:795 bps
Source: BMO Capital Markets, BloombergLast Datapoint: January 2, 2015
Spreads to 10-year Canadayields are currently ~133 bpsabove the historical average.
.
-1%
0%
1%
2%
3%
4%
5%
Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-1
Canadian REIT AFFO Yields Spread to BBB Corporate Bond Yields
Hist. Average Spread: 194 bps
Current Spread: 324 bps
Min spread: - 60 bps
Max spread:476 bps
Source: BMO Capital Markets, BloombergLast Datapoint: January 2, 2015
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Sector Comment Financials - Real Estate/REIT
Page 15 January 6, 2015
4%
5%
6%
7%
8%
9%
10%
11%
12%
Mar-05 Nov-05 Jul-06 Mar-07 Nov-07 Jul-08 Mar-09 Nov-09 Jul-10 Mar-11 Nov-11 Jul-12 Mar-13 Nov-13 Jul-14
Canadian REIT AFFO Yield vs. S&P/TSX Composite Earnings Yield
Cdn REITs AFFO Yield S&P/TSX Composite Earnings YieldSource: Bloomberg, BMO Capital MarketsLast Datapoint: January 2, 2015
Current Spread: 33 bps
Peak Spread: 266 bps
Valuation:Canadian REIT Historical AFFO Multiple
4x
6x
8x
10x
12x
14x
16x
18x
20x
22x
24x
26x
Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14
AFFOMultiple
Canadian REIT Historical AFFO Multiple
Source: BMO Capital Markets* Pre-2006 Historical #s include RioCan, CREIT, H&R, Summit, Cominar and CAP; Fwd #s include all REITs in our coverage universeLast datapoint: January 2, 2015
Average ForwardAFFO Multiple = 13.8x
Peak = 19.7x
Current = 15.3
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Valuation:Canadian REIT Yield and Multiple Spread to U.S. REITs
(8)
(6)
(4)
(2)
-
2
4
Dec-98 Q3/02 May-05 May-06 May-07 May-08 May-09 May-10 May-11 May-12 May-13 May-14
MultipleSpread(Points)
Fwd AFFO Multiple Spread: Canadian vs. US REITs
Mult iple Spread (Point s) Hist. Average Multiple Spread
Source: BMO Capital Markets, Thomson Baseline
Current Discount: -5.9 pts
Hist. Average (Forward) Spread : -3.5 points
Last Datapoint: January 2, 2015
Canadian REIT valuationsare now very compellingrelative to their U.S.counterparts.
Canadian REITs trade at anaverage discount to U.S.REITs of ~6x P/AFFO.
-2
-1
0
1
2
3
4
5
6
Jan-06 Sep-06 May-07 Jan-08 Sep-08 May-09 Jan-10 Sep-10 May-11 Jan-12 Sep-12 May-13 Jan-14 Sep-14
Spread(%)
Yield Spread: Canadian REITs vs. US REITs
Last pricing date: January 2, 2015Source: BMO Capital Markets, Bloomberg
Hist. Avg = 192 bps
peak differential: 355 bps
current differential: 204 bp
trough differential: -66 bps
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Valuation:Canadian REIT Yield and Multiple Spread to Banks
(5)
(3)
(1)
1
3
5
7
9
Dec-98 Q3/02 May-05 May-06 May-07 May-08 May-09 May-10 May-11 May-12 May-13 May-14
MultipleSpread(Points)
Multiple Spread: Cdn REITs (Fwd AFFO) vs. Banks (P/E)
Multiple Spread (Points)
Hist. Average Multiple Spread
Source: BMO Capital Markets, Thomson Baseline
Current Premium: 4.3 pt
Hist. Average (Forward) Spread : 4.3 points
Last Datapoint: January 2, 2015
0
1
2
3
4
5
6
7
8
Jan-06 Sep-06 May-07 Jan-08 Sep-08 May-09 Jan-10 Sep-10 May-11 Jan-12 Sep-12 May-13 Jan-14 Sep-14
Spread(%)
Yield Spread: Canadian REITs vs. Banks
current differential: 185 bp
Last pricing date: January 2, 2015Source: Bloomberg, BMO Capital Markets
peak differential: 706 bps
Hist. Avg = 232 bps
trough differential: 44 bps
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Valuation:Canadian REIT Yield and Multiple Spread to Telecom
(15)
(10)
(5)
-
5
10
Q2/02 Q4/03 Apr-05 Oct -05 Apr-06 Oct -06 Apr-07 Oct-07 Apr-08 Oct -08 Apr-09 Oct -09 Apr-10 Oct -10 Apr-11 Oct -11 Apr-12 Oct -12 Apr-13 Oct -13 Apr-14 Oct -14
MultipleSpread(Points)
Multiple Spread: Cdn REITs (Fwd AFFO) vs. Telecom (P/E)
Multiple Spread (Points)
Hist. Average Multiple Spread
Source: BMO Capital Markets, Thomson Baseline
Current Premium: 0.3 pts
Hist. Average (Forward) Discount : 0.0 points
Last Datapoint: January 2, 2015
-1
0
1
2
3
4
5
6
7
8
9
10
Jan-06 Sep-06 May-07 Jan-08 Sep-08 May-09 Jan-10 Sep-10 May-11 Jan-12 Sep-12 May-13 Jan-14 Sep-14
Spread(%)
Yield Spread: Canadian REITs vs. Telecom
Last pricing date: January 2, 2015Source: Bloomberg, BMO Capital Markets
peak differential: 882 bps
Hist. Avg = 147 bpscurrent differential: 95 bp
trough differential: -12 bps
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Relative Valuation:Current 2015E AFFO Multiple vs. Historical Average
14.3x 14.5x14.1x
19.9x
10.7x
16.0x
8.7x
16.9x
9.3x
11.5x 11.6x
13.8x
17.7x
13.4x 13.5x
10.4x
13.3x
18.9x
23.3x
12.0x
19.0x
17.0x
15.3x
17.0x
11.9x
10.8x
15.6x 15.9x
10.3x
11.9x
0x
2x
4x
6x
8x
10x
12x
14x
16x
18x
20x
22x
24x
26x
CHP
CWT
0.4x
CRR
0.3x
FCR
2.3x
RMM
-0.6x
CRT
SRT
REI-0.5x
ACR
AX
-2.3x
CUF-2.2x
MRT0.6x
REF
2.3x
HR
-0.1x
AAR
1.5x
DIR
-1.7x
WIR
AP
3.9x
BOX
5.6x
NWH
-2x
BEI0.3x
CAR
1.3x
KMP
-0.4x
IIP
0.9x
MST
NPR
-2.5x
ACC
-0.9x
CSH
2.6x
LW
0.1x
R L C
0 9
Retail Diversified Industrial Office Multi-residential Seniors
His tori ca l Average Current 2015E AFFO Mult ip le
Current 2015E AFFO Multiple vs. Historical Average
Source: BMO Capital Markets
Spread
Note:1) Hist avg. multiples are reflective of predecessor company multiple for BOX.UN up until conversion to a REIT in May 2010.2) CHP, ACR, CRT, SRT, WIR, MST and SMU (Restricted) historical averages not presented due to relatively shorter history.3) IIP.UN, MST.UN, and RLC historical averages are based on available information since coverage initiation.
14.9x
13.9x
15.6x
12.1x
15.9x
12.8x
14.4x
12.9x
18.1x
11.9x
15.2x
13.4x
0x
2x
4x
6x
8x
10x
12x
14x
16x
18x
20x
Retail Diversified Office Industrial Multi-Residential Seniors
2015E AFFO Multiples by Property Type: Current vs. Historical Average
Hist Average Current AverageSource: BMO Capital Markets
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Relative Valuation:Prem/(Disc) to NAV
2%
-7%
-9%
0%
-22%
8%
-14%
4%
-19%
-15%
-9%
-20%
1%
-13%
-4%
-19%
2%
8%
-18%
-9%
-13%
-5%
-16%
-7%
-19%-18%
-16%
4%
14%
3%
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
CHP
CWT
-6.8
%
CRR
-3.4
%
FCR
1.2
%
RMM
-13.8
%
CRT
SRT
REI
-4.7
%
ACR
AX
-10.1
%
CUF
-11.4
%
MRT
-1.4
%
REF
-3.6
%
HR
-5.7
%
AAR
-6.5
%
DIR
-7.6
%
WIR
AP
4.4
%
BOX
0.1
%
NWH
-10.2
%
BEI
-14.8
%
CAR
-5.1
%
KMP
-8.2
%
IIP
3.9
%
MST
NPR
-23.3
%
ACC
-4.5
%
CSH
3.1
%
LW
9.8
%
R L C
3 6
%
Retail Diversified Industrial Office Multi-residential Seniors
Historical NAV Prem/Disc (Median) Current NAV Prem/Disc
Source: BMO Capital Markets, SNL Financial
Spread
*Historical NAV Prem/Disc median based on latest coverage universe or consensus data, since later of 2006 or IPO.ACR, MST, WIR, CRT, SRT, CHP and SMU (Restricted) historicals were excluded due to shorter duration.
Current vs. Historical Premium/Discount to NAV
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
Dec-97
Apr-98
Aug-98
Dec-98
Apr-99
Aug-99
Dec-99
Apr-00
Aug-00
Dec-00
Apr-01
Aug-01
Dec-01
Apr-02
Aug-02
Dec-02
Apr-03
Aug-03
Dec-03
Apr-04
Aug-04
Dec-04
Apr-05
Aug-05
Dec-05
Apr-06
Aug-06
Dec-06
Apr-07
Aug-07
Dec-07
Apr-08
Aug-08
Dec-08
Apr-09
Aug-09
Dec-09
Apr-10
Aug-10
Dec-10
Apr-11
Aug-11
Dec-11
Apr-12
Aug-12
Dec-12
Apr-13
Aug-13
Dec-13
Apr-14
Aug-14
Historical Prem/(Disc) to NAV ChartCanadian REITs - Weighted Average
Long-Term Average NAV Premium: 3.4%
Peak NAVPremium: 29.5%
Trough NAVDiscount: -22.7%
Source: BMO Capital MarketsLast datapoint: January 2, 2015
Current NAV Discount: -6.0%
NAV Discount:-19.3%
NAV Discount:-14.0%
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Sector Comment Financials - Real Estate/REIT
Page 21 January 6, 2015
Relative Valuation:Latest Disclosed IFRS Cap Rates vs. Current Implied Cap Rates
6.0% 6.3%
6.5%
5.8%
7.5%
6.0%
7.9%
5.7%
8.2%
7.0%6.9% 7.0%
6.0%
6.5%6.6%
7.4%
6.9%
5.8%
6.1%
7.0%
5.6%
5.2%
6.4%
5.6%
7.1%
8.0%
7.2%
6.8%
8.2%
7.1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
CHP CWT CRR FCR RMM CRT SRT REI ACR AX CUF MRT REF HR AAR DIR WIR AP BOX NWH BEI CAR K MP IIP MST NPR ACC CSH LW RLC
Retail Diversified Industrial Office Multi-residential Seniors
Implied Cap Rate IFRS Cap Rate
Implied Cap Rates vs. Latest Disclosed IFRS Cap Rates
Source: BMO Capital Markets
*CSH.UN, RLC, LW, and ACC do not provide IFRS fair value cap rate updates.
Notes:1. CAR and KMP IFRS Cap Rates are est imated based on property weightings of apartments and MHCs.2. IFRS Cap Rates reflect latest reported quarter.
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Page 22 January 6, 2015
Canadian Real Estate Mutual Fund Flows
(100.00)
(50.00)
-
50.00
100.00
150.00
200.00
250.00
300.00
May-00 May-01 May-02 May-03 May-04 May-05 May-06 May-07 May-08 May-09 May-10 May-11 May-12 May-13 May-14
(Cdn$mil)
Mutual Fund Flows (Net Sales): Real Estate
Real Es tate Funds 12-month Normalized
Source: IFIC, BMO Capital Markets*12 month-rolling period normalized for peaks caused by Feb/March RRSP season Last Update: Dec/14
Funds Tracked for Mutual Fund FlowsAntares Real Estate Pool Fund Class A Manulife Global Real Estate Class Advisor Series
ASTRA Morgan Stanley Global Real Estate Manulife Global Real Estate Fund Advisor Series
ASTRA Presima Global Real Estate Enhanced Yield MFS Global Real Es tate Fund
BlackRock CDN Glbl Dev Real Est Idx Cl D Middlefield Can-Global REIT Income Fund
BMO Equal Weight REITs Index ETF (ZRE) Middlefield Real Estate Clas s Series A
BMO Equal Weight REITs Index ETF Inst MLI Pyramis Global Real Estate Fund
CDSPI Global Real Estate (Invesco) North American REIT Income Fund
Centurion Apartment REIT Purpose Duration Hedged Real Estate ETF (PHR)CIBC Canadian Real Estate Fund Purpose Duration Hedged Real Estate Fund A
Counsel Global Real Estate Series A Quadrus Global Real Estate Fund (London Cap) Quad
Des jardins Global Real Es tate Fund A Class REIT IndexP lus Income Fund
DFA Global Real Estate Securities Fund Class A Renaissance Global Real Estate Currency Neut Fd A
DFS B lackrock Global Real Estate Index Renais sanc e Global Real Es tate Fund Class A
Dynamic Global Real Estate Fund Series A Russ ell Global Real Es tate Pool Series A
Fidel ity Global Real Es tate Class Series A Scot ia Private Global Real Es tate Pool Pinnac le Sr
Fidelit y Global Real Estate Fund Series A Scot ia Private Real Es tate Income Pool I
First Asset Canadian REIT ETF (FRF) Sentry REIT Class Series A
First Asset REIT Income Fund Class A Sentry REIT Fund A
IA Ecoflex Real Estate Income Sprott Real Asset Class - Series A
Invesco Global Real Es tate Fund Series A Standard Life Global Real Es tate Fund A-Series
Investors Global Real Estate Fund Series C United Real Estate Investment Corporate Class A
iShares Global Real Estate Index ETF (CGR) United Real Estate Investment Pool Class W
iShares S&P/TSX Capped REIT Index ETF (XRE) Vanguard FTSE Canadian Capped REIT Index ETF (VRE)
as at December 2014
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Sector Comment Financials - Real Estate/REIT
Page 23 January 6, 2015
Canadian REITs Capital Raising and Market Capitalization Growth
$48 $55
$681
$2,961
$1,261
$467 $367
$1,869
$2,295
$1,792
$2,615
$3,710
$3,160$3,450
$980
$4,475
$5,588
$6,785
$10,449
$9,662
$9,135
$0
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
$5,000
$5,500
$6,000
$6,500
$7,000
$7,500
$8,000
$8,500
$9,000
$9,500
$10,000
$10,500
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
(C$millions)
Canadian Real Estate Capital Raising (1) 1994-2015 YTD
Equity (2) Convert ib le Debentures Unsecured Debentures Secured Mortgage Bonds Secured Debentures
Source: SEDAR, BMO Capital Markets
1) 2007+ incl. REIT & REOC capital raising; 1994-2006 includes REIT capital raising only2) Equity includes preferred shares/units in 2007-2014YTD where applicable (ie. BPO, RioCan)
2014 Total: $9,135 million
Secured Debentures:$322 million
Unsecured Debentures:$5,525 million
Convertible Debentures:$93 million
Preferred Equity:$300 million
Equity Issues:$2,895 million
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Dec-94 Dec-95 Dec-96 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-1
BMO Canadian REIT Index Market Capitalization ($ million)
Apartments Retail Office Industrial Diversified Seniors Housing Hotels Storage
Source: BMO Capital Markets
3 REITs at the end of1994:Riocan, CREIT,RealFundTtl Mkt Cap = $185MAvg Mkt Cap = $60M
12 REITs at the end of2000:Riocan, CREIT, H&R,Summit, CAP, CPL,ResREIT, Morguard,Cominar, Royal Host, CHIP,LegacyTtl Mkt Cap = $4.9BnAvg Mkt Cap = $410M
45 REITs at January 2015Ttl Mkt Cap = ~$62.6 Bln
Avg Mkt Cap = ~$1.4 Bln
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Sector Comment Financials - Real Estate/REIT
Page 24 January 6, 2015
Capital Raising 2014 to 2015 YTD Summary
Summary of 2014 to 2015 YTD Debt & Equity Offerings / IPO's
Secured Debentures
Announcement Date REIT Coupon/Spread Details Gross Raise (mil) Total to Public
23-Jan-14 Leisureworld 3.474%/150 bps 7 years $322 $322
Total Secured Raised $322 $322
Unsecured Debentures
Announcement Date REIT Coupon/Spread Details Gross Raise (mil) Total to Public
10-Jan-14 First Capital Realty 4.79%/207 bps 10.6 years $150 $150
13-Jan-14 Cominar REIT 4.941%/275 bps 6.5 years $100 $100
14-Jan-14 Dundee 4.074%/210 bps 6 years $150 $150
16-Jan-14 RioCan REIT 3.62%/160 bps 6.5 years $150 $150
3-Feb-14 Choice Properties 3.498%/160 bps 7 years $250 $250
3-Feb-14 Choice Properties 4.293%/190 bps 10 years $200 $200
6-Feb-14 Calloway REIT 3.749%/187 bps 7 years $150 $150
28-Feb-14 Crombie REIT 3.962%/195 bps 7.3 years $100 $100
4-Mar-14 Cominar REIT 4.941%/260 bps 6.4 years $100 $100
5-Mar-14 First Capital Realty 4.79%/184 bps 10.5 years $75 $75
20-Mar-14 Artis REIT 3.753%/200 bps 5 years $125 $125
1 5-Apr-1 4 C ho ice Pro pe rti es (Seri es 5)2 3.0%/94 bps 2 years $300 $300
1 5-Apr-1 4 C ho ice Pro pe rti es (Seri es 6)2 3.0%/100 bps 3 years $200 $200
7 -May-14 C ho ice Pro pe rti es (Seri es 7)2 3.0%/128 bps 5.5 years $300 $300
7 -May-14 C ho ice Pro pe rti es (Seri es 8)2 3.6%/140 bps 6 years $300 $300
7 -May-14 C ho ice Pro pe rti es (Seri es 9)2 3.6%/155 bps 7.5 years $200 $200
7 -May-14 C ho ice Pro pe rti es (Seri es 10 )2 3.6%/167 bps 8.5 years $300 $300
22-May-14 RioCan REIT 3.746%/167 bps 8 years $150 $150
23-Jun-14 Granite 3.788%/185 bps 7 years $250 $250
8-Jul-14 First Capital Realty 4.323%/194 bps 11 years $200 $200
8-Jul-14 Calloway REIT 3.959%/175 bps 9 years $50 $0
15-Jul-14 Calloway REIT 3.73%/170 bps 8 years $150 $150
6-Aug-14 RioCan REIT 3.746%/171 bps 8 years $100 $100
10-Sep-14 Artis REIT 3.753%/198 bps 4.5 years $75 $75
17-Sep-14 Cominar REIT 3.62%/197 bps 4.5 years $300 $300
17-Sep-14 Cominar REIT 3-mo. CDOR + 108 bps 2 years $250 $250
18-Sep-14 Ventas 3.0%/127 bps 5.0 years $400 $0
18-Sep-14 Ventas 4.125%/240 bps 10.0 years $250 $0
8-Dec-14 Cominar REIT 4.250%/255 bps 7.0 years $200 $200
Total Unsecured Raised $5,525 $4,825
Convertible Debentures1
Announcement Date REIT Coupon Details Gross Raise (mil) Total to Public
29-May-14 True North Apartment 5.75% 5 years $23 $23
3-Sep-14 NorthWest Intl. Healthcare Prop. 7.25% 5 years $35 $35
12-Nov-14 Melcor REIT 5.50% 5 years $35 $35
Total Converts Raised $93 $93
Preferred Equity1
Announcement Date REIT Interest Shares Offered Gross Raise (mil) Total to Public7-Oct-14 Brookfield Office Properties (BPY) 4.75% 12.0 $300 $300
Total Pref Equity Raised $300 $300
Source: Company Press Releases, BMO Capital Markets
Notes:
1. Amounts include o/a options - final amounts could change. Does not include issuances of Class B units
2. Secondary offering
3. BMO is restricted on Summit Industrial REIT and True North Commercial REIT
4. Total proceeds include a $250 million bought deal of trust units and a concurrent $250 million private placement of trust units to Ivanho Cambridge
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Sector Comment Financials - Real Estate/REIT
Page 25 January 6, 2015
Capital Raising 2014 to 2015 YTD Summary (Continued)
Equity Issues1, 3
Announcement Date REIT Offer Price Units (mil) Gross Raise (mil) Total to Public
8-Jan-14 PIRET $4.55 16.4 $75 $75
26-Feb-14 Regal $7.75 3.0 $23 $23
17-Mar-14 WPT Industrial $9.30 2.7 $32 $25
24-Mar-14 Milestone Apartments $10.40 6.6 $69 $69
8-Apr-14 Dream Unlimited $15.70 3.7 $58 $5815-Apr-14 HealthLease $10.00 7.5 $75 $75
16-Apr-14 Melcor REIT $10.65 2.2 $23 $23
22-Apr-14 FAM REIT 3 $8.85 2.7 $24 $18
30-Apr-14 NorthWest Intl. Heathcare Prop. $2.05 11.2 $23 $23
12-May-14 Artis REIT $16.10 7.1 $115 $115
15-May-14 Sum mit Indus trial REIT 3 $5.80 5.0 $29 $29
15-May-14 AHIP $10.35 4.5 $46 $46
20-May-14 Regal Lifestyle $7.65 4.1 $31 $31
21-May-14 Crombie REIT $13.25 7.5 $100 $60
29-May-14 BTB REIT $4.55 5.6 $25 $25
18-Jun-14 PIRET $4.60 38.8 $178 $178
9-Jul-14 Pure Multi-Family REIT $5.06 6.4 $32 $32
16-Jul-14 Retrocom REIT $4.30 12.1 $52 $52
17-Jul-14 Dream Global REIT2 $9.15 8.6 $79 $79
17-Jul-14 Dream Office REIT2 $28.70 4.5 $128 $128
12-Aug-14 Allied Properties $35.30 4.9 $173 $173
18 -Au g-1 4 Tru e N orth C om me rci al REIT 3 $6.55 1.9 $13 $13
26-Aug-14 Cominar REIT $19.00 28.3 $538 $288
3-Sep-14 First Capital Realty $19.06 5.3 $100 $80
17-Sep-14 Slate Retail REIT $11.75 4.3 $50 $50
25-Sep-14 PRO REIT $2.30 13.2 $31 $21
6-Oct-14 Milestone Apartments $11.50 10.0 $115 $115
6-Oct-14 American Hotel Income Properties $10.45 4.8 $50 $50
17-Oct-14 Inovalis REIT $9.30 4.0 $37 $37
27-Oct-14 Firm Capital Property Trust $5.35 1.9 $10 $0
5-Nov-14 NorthWest Intl. Heathcare Prop. $2.15 16.0 $35 $35
6-Nov-14 CHC Realty Capital Corp. $0.11 98.6 $11 $0
6-Nov-14 InnVest REIT $5.25 22.8 $120 $73
10-Nov-14 Killam Properties $10.55 4.4 $46 $46
11-Nov-14 Nobel REIT $0.80 17.5 $14 $12
11-Nov-14 CREIT $49.00 2.9 $144 $144
13-Nov-14 RioCan REIT $26.25 4.8 $126 $126
1 1-D ec-1 4 Tru e N orth Com me rci al REIT 3 $6.15 5.1 $31 $31
15-D ec-14 Sum mit Indus trial REIT3 $5.85 5.9 $35 $35
Total Equity Raised $2,895 $2,492
Total Capital Raised $9,135 $8,031
Source: Company Press Releases, BMO Capital Markets
Notes:
1. Amounts include o/a options - final amounts could change. Does not include issuances of Class B units
2. Secondary offering
3. BMO is restricted on Summit Industrial REIT and True North Commercial REIT
4. Total proceeds include a $250 million bought deal of trust units and a concurrent $250 million private placement of trust units to Ivanho Cambridge
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Sector Comment Financials - Real Estate/REIT
Page 26 January 6, 2015
Canadian Real Estate M&A 20122015 Deals and Relative Performanceof 20122015 IPOs
Equity Enterprise Implied Close price 20 Day VWAP
Value ($mm)Value
($mm)Cap. Rate % C hange % Change St atus
Aug-14 HealthLease Properties Health Care REIT $529 $1,034 12.3x 13.7x ~7% 31.2% 32.0% Completed
Aug-14 Huntingdon Capital Slate Properties $131 $210 na na na 11.8% na Completed
Jun-14 BLF REIT FTQ / 8881723 Canada Inc. $25 $97 na na na 27.1% 33.4% Completed
May-14 Royal Host Inc. Holloway Lodging Corporation $23 $157 7.4x 46.7x ~8% 14.8% 13.6% Completed
Sep-13 Brookfield Offic e Pr oper ties Brookfi eld Property Partners ~ $11 bil lion ~ $25 billion 27.7x 33.9x na 21.3% 20.8% Completed
Mar-13 C2C Industrial Dundee Industrial REIT $84 $226 na na 6.4%-6.7%2
31.1% 28.3% Completed
Mar-13 KEYreit3
Plazacorp $124 $325 17.4x 19.4x 6.8% 35.1% 35.1% Completed
Feb-13 Primaris REIT H&R REIT/KingSett-led Consortium $2,780 $5,000 17.5x 20.1x mid-5% 20.0% 20.4% Completed
Apr-12 TransGlobe REIT3
Starlight / Daniel Drimmer $1,029 $2,059 13.8x 17.6x mid-5% 15.4% 19.3% Completed
Apr-12 GT Canada Medical Prop4
NVPI / NorthWest Healthcare REIT $38 $87 na na 7.0% 47.2% na Completed
Jan-12 Whiterock REIT3 Dundee REIT $600 $1,400 12.3x 14.5x 6.5% 13.6% 20.0% Completed
May-12 Gazit America Gazit-Globe/First Capital Realty $165 $449 na na na 46.0% 49.0% Completed
Nov-11 Canmarc REIT 3 Cominar REIT $900 $1,900 13.8x 16.3x 6.8% 24.2% na Completed
2012-2015 Average 16.8x 27.3x 6.6% 26.1% 27.2%
Historical Average 13.7x 19.8x 7.6% 22.4% 31.3%
1. BMO Capital Markets is restricted on Summit Industrial REIT and True North Commercial REIT2. 6.7% cap rate includes property management fee income3. Based on forward consensus estimates
4. As part of the transaction, NVPI retained the management platform/shell of GT C anada, and sold all the assets to Northwest Healthcare REIT for $87.3M (on a neutral/equivalent basis)Source: Company Reports, BMO Capital Markets
2014
2013
2012
Canadian Real Estate M&A 2012 - 2015 Deals
Date
AnnouncedTarget Acquirer
P/FFO
(FY1)
P/AFFO
(FY1)
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Sector Comment Financials - Real Estate/REIT
Page 27 January 6, 2015
Canadian REIT/REOC Average Daily Trading Volume (Last Week)
0
250,000
500,000
750,000
1,000,000
1,250,000
1,500,000
1,750,000
2,000,000
RoyalHost
Brookfield(C$)
Brookfield(U$)
Huntingdon
BOX(U$)
Lakeview
Holloway
MorguardCorp.
MainstreetEquity
MelcorREIT
BOX(C$)
Agellan
TrueNorth
BrookfieldRes(C$)
WPTIndustrial
FAM
AmicaMatureLifestyles
MorguardREIT
Partners
AmericanHotels
InterRent
MelcorDevelopments
Granite(C$)
KillamProperties
BTB
NorthernProp.
MorguardRes
BrookfieldPropertyPartners
Regal
NorthwestHealtchare
Temple
Lanesborough
CREIT
PlazaRetail
Leisureworld
TriconCapital
Calloway
ChoiceProperties
AverageTradingVolume
AlliedProperties
CAPREIT
FirstCapitalRealty
InnVest
RetroCom
Crombie
DundeeInternational
DundeeIndustrial
Boardwalk
Chartwell
Artis
Dundee
Cominar
Extendicare
BrookfieldRes(U$)
PIRET
Source: Bloomberg, BMO Capital MarketsLast Update: January 2, 2015
BMO Capital Markets is Restricted on Summit Industrial REIT, and True North Commercia
Canadian REIT/REOC Average Daily Trading Volume (Last Six Months)
0
250,000
500,000
750,000
1,000,000
1,250,000
1,500,000
RoyalHost
BOX(U$)
MorguardCorp.
MainstreetEquity
Lakeview
MelcorREIT
Lanesborough
MelcorDevelopments
BrookfieldRes(C$)
Holloway
Huntingdon
BOX(C$)
Agellan
FAM
InterRent
WPTIndustrial
TrueNorth
AmicaMatureLifestyles
MorguardRes
MorguardREIT
Partners
AmericanHotels
Regal
Granite(C$)
NorthernProp.
BTB
NorthwestHealtchare
Leisureworld
PlazaRetail
ChoiceProperties
Boardwalk
Temple
CREIT
InnVest
KillamProperties
DundeeIndustrial
AverageTradingVolume
AlliedProperties
BrookfieldRes(U$)
Calloway
RetroCom
FirstCapitalRealty
CAPREIT
Crombie
BrookfieldPropertyPartners
TriconCapital
Artis
Chartwell
Dundee
Extendicare
DundeeInternational
Cominar
H&R
RioCan
Source: Bloomberg, BMO Capital MarketsLast Update: January 2, 2015
BMO Capital Markets is Restricted on Summit Industrial REIT, and True North Commercia
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Sector Comment Financials - Real Estate/REIT
Page 28 January 6, 2015
Net Insider Activity
0
50
100
150
200
250
300
-$6,000,000
-$4,000,000
-$2,000,000
$0
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
$16,000,000
Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14
(IndexPrice)
($value)
Net Insider Activity ($Value) - 12 month Rolling Average* vs. S&P/TSX Capped REIT Index
Source: SEDI, Ink Research, BMO Capital MarketsLast Updated: January 2, 2015
S&P/TSX Capped REIT Index
Net Insider Activity ($value)12 month Rolling Average
*normalized for outlier transaction activity including:BAM purchase of 47.5 million shares of BPO in Aug/2010 and KingSett sale of 8.2 million units of PMZ.UN in Sep/2010,Morguard Corp. buy of 870K MRG units in Mar/2013 and Alony-Hetz sale of $3.5 million units of FCR in May/2013 in order toderive a stable trend.
(5,500,000) (4,500,000) (3,50 0,000) (2,50 0,000) (1,500,000) (500,000) 500,000 1,500,000 2,500,000 3,500,000 4,500,000 5,500,000
CWTRMM
INNMRGRYLSMU
TNTPH
ACC
MRTAARRLCCRTDIR
ACRREFHLPBTB
DIIIP
CSHLW
MSTNPRHOTAXREI
BPOCUFINO
CAREXEBOX
DCRR
HRBEI
KMPAPPAR
NWHPLZFCR
Units/Shares
2014 to 2015 YTD Aggregate "Net" Insider Buying and Selling of Equity
Source: SEDI, INK Research, BMO Capital MarketsLast Updated: January 2, 2015
*INN.UN - NOT SHOWN TO SCALEKingsett Capital (Jon Love) acquired ~1.7 million units between theprices of $5.24 and $5.29 in April 2014.
Note: BMO Capital Markets is Restricted on Summit Industrial REIT and True North Commercial REIT
Methodology: Insider buying/selling and NCIB activity are reported for Canadian REITs in our coverage/tracking universe. Oreported activity excludes share/unit purchases under employee ownership plans. Insider selling activity through option exercisealso excluded from the chart above, as these sale transactions are sometimes used as a funding source for the related optioexercise.
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Sector Comment
Financial Position: Mortgage Maturity Schedule
4.2%
4.8%
3.7%
4.2%
3.4%
4.2%
5.3%
3.7%
4.9%
3.6%
4.8%
4.5%
4.8%
4.4%
3.9%
5.1%
4.9%
3.3%
3.9% 3.9% 3.8%
4.2%
3.7%
4.6%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Agellan
Allied
Amica
Artis
Boardwalk
BrookfieldCda.
Calloway
CAPREIT
Chartwell
ChoiceProperties
Cominar
CREIT
Crombie
CTREIT
DreamIndustrial
FirstCapital
H&R
InterRent
KillamProperties
Leisureworld
Milestone
MorguardREIT
NorthernProp.
NorthWestHealthcare
% of Mortgages Expiring 2014 % of Mortgages Expir ing 2015 % of Mortgages Expiring 2016 Weighted Avg. Interest Rate (RH)
Note: BMO Capital Markets is
Page 30 January 6, 2015
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Sector Comment
Page 31 January 6, 2015
Financial Position: Debt to Total Assets
35%
36%
37%
43%
43%
44%
45%
45%
47%47%
48%
49%
50%
50%
50%
51%
52%
52%
52%
52%
52%
53%
53%
54%
55%56%
56%
58%
59%
60
25% 35% 45% 55%
Allied Properties
Boardwalk
CREIT
Brookfield Cda. REIT
Calloway
RioCan
Morguard REIT
Choice Properties
Northern Prop.CAP REIT
First Capital Realty
CT REIT
H&R
Artis
InterRent
WPT Industrial
NorthWest Healthcare Prop.
Milestone
Summit
PIRET
Agellan
Crombie
Dream Industrial
Killam Properties
Chartwell**Cominar
Retrocom
Leisureworld**
Slate Retail REIT
Regal**
Amica Mature Lifestyles**
Source: BMO Capital Markets, Company reports* Financial position data as of last reported quarter adjusted for post-quarter announcements** Debt to GBV (at historical cost) for Amica, Leisureworld, Regal, Chartwell.
Note: BMO Capital Markets is
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Sector Comment
REIT & REOC Preferred Shares
(C$, unless otherwise indicated) 2-Jan-15 Percent Size Coupon Issue Call Conv.
Price Change (MM) Rate Yield Date Date Date Detailed P
Select REIT & REOC Preferred Shares
Artis REIT - A $24.60 -- $86.3 5.25% 5.3% Aug-12 Sep-17 N/A 5.25% Cum
Artis REIT - C $23.00 0.2% $75.0 5.25% 5.8% Sep-12 Mar-18 N/A 5.25% Cum
Artis REIT - E $19.30 (1.0%) $100.0 4.75% 6.0% Mar-13 Mar-18 N/A 5.25% Cum
Brookfield Office Properties - F $25.40 -- $200.0 6.00% 5.8% Sep-02 Sep-09 Mar-13 6.00% Cum
Brookfield Office Properties - H $25.28 -- $200.0 5.75% 5.7% Oct-03 Dec-11 Dec-15 5.75% Cum
Brookfield Office Properties - J $25.08 (0.1%) $200.0 5.00% 5.0% Apr-04 Jun-10 Dec-14 5.00% CumBrookfield Office Properties - K $25.52 (1.8%) $150.0 5.20% 5.1% Oct-04 Dec-12 Dec-16 5.20% Cum
Brookfield Office Properties - N $25.53 (0.2%) $275.0 6.15% 6.0% Jan-10 Jun-16 N/A 6.15% Cum
Brookfield Office Properties - P $25.60 (0.4%) $300.0 5.15% 5.0% Oct-10 Mar-17 N/A 5.15% Cum
Brookfield Office Properties - R $25.47 -- $250.0 5.10% 5.0% Sep-11 Sep-16 N/A 5.10% Cum
Brookfield Office Properties - T $25.57 (1.0%) $250.0 4.60% 4.5% Sep-12 Dec-18 N/A 6.00% Cum
RioCan - A $25.32 -- $125.0 5.25% 5.2% Jan-11 Mar-16 N/A 5.25% Cum
RioCan - C $25.97 0.3% $149.5 4.70% 4.5% Nov-11 Jun-17 N/A 4.70% Cum
Source: BMO Capital Markets Note: BMO Capital Markets is
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Sector Comment
2013 Return of Capital
0% 20% 40% 60%
InterRent
Milestone
BTB
Partners
Retrocom
True North
Northwest HealthCare Properties
Crombie
Artis
CAP
PIRET
Morguard NA Residential
Chartwell
WPT Industrial
Summit II
Cominar
Dundee Industrial
HealthLease Properties
Allied Properties
Calloway
Dundee
Dundee International
Brookfield Canada
H&R
Morguard
Agellan
CT Reit
BoardwalkNorthern Property
Choice Properties
Pure Multi-family
InnVest
Riocan
CREIT
Source: Company Website & Reports, BMO Capital Markets Note: BMO Capital Markets is R
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Sector Comment Financials - Real Estate/REIT
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IMPORTANT DISCLOSURES
Analyst's Certification
I, Heather Kirk, CFA, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers.also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in thireport.
I, Troy MacLean, CFA, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuerI also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in threport.
Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and theaffiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness in generating neideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service to clients.
Analysts employed by BMO Nesbitt Burns Inc. and/or BMO Capital Markets Limited are not registered as research analysts with FINRA (exceptionAlex Arfaei). These analysts may not be associated persons of BMO Capital Markets Corp. and therefore may not be subject to the NASD Rule 2711 an
NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.
Company Specific Disclosures
For Important Disclosures on the stocks discussed in this report, please go tohttp://researchglobal.bmocapitalmarkets.com/Public/Company_Disclosure_Public.aspx
Distribution of Ratings (September 30, 2014)
RatingCategory BMO Rating
BMOCM USUniverse*
BMOCM USIB Clients**
BMOCM USIB Clients***
BMOCMUniverse****
BMOCMIB Clients*****
StarmineUniverse
Buy Outperform 44.3% 18.0% 60.3% 43.9% 56.5% 56.0%
Hold Market Perform 52.5% 9.7% 38.5% 51.6% 42.1% 39.1%
Sell Underperform 3.2% 5.3% 1.3% 4.5% 1.4% 4.9%
* Reflects rating distribution of all companies covered by BMO Capital Markets Corp. equity research analysts.** Reflects rating distribution of all companies from which BMO Capital Markets Corp. has received compensation for Investment Banking services
percentage within ratings category.*** Reflects rating distribution of all companies from which BMO Capital Markets Corp. has received compensation for Investment Banking servic
as percentage of Investment Banking clients.**** Reflects rating distribution of all companies covered by BMO Capital Markets equity research analysts.***** Reflects rating distribution of all companies from which BMO Capital Markets has received compensation for Investment Banking services
percentage of Investment Banking clients.
Rating and Sector Key (as of April 5, 2013):
We use the following ratings system definitions:OP = Outperform - Forecast to outperform the analysts coverage universe on a total return basisMkt = Market Perform - Forecast to perform roughly in line with the analysts coverage universe on a total return basisUnd = Underperform - Forecast to underperform the analysts coverage universe on a total return basis on a total return basis(S) = speculative investment;
NR = No rating at this time;R = Restricted Dissemination of research is currently restricted.
BMO Capital Markets' seven Top 15 lists guide investors to our best ideas according to different objectives (CDN Large Cap, CDN Small Cap, US LargCap, US Small cap, Income, CDN Quant, and US Quant have replaced the Top Pick rating).
Prior BMO Capital Markets Ratings System (January 4, 2010April 5, 2013):
http://researchglobal.bmocapitalmarkets.com/documents/2013/prior_rating_system.pdf
Other Important DisclosuresFor Important Disclosures on the stocks discussed in this report, please go tohttp://researchglobal.bmocapitalmarkets.com/Public/Company_Disclosure_Public.aspx or write to Editorial Department, BMO Capital Markets, 3 TimeSquare, New York, NY 10036 or Editorial Department, BMO Capital Markets, 1 First Canadian Place, Toronto, Ontario, M5X 1H3.
Dissemination of Research
BMO Capital Markets Equity Research is available via our website https://research-ca.bmocapitalmarkets.com/Public/Secure/Login.aspxReturnUrl=/Member/Home/ResearchHome.aspx. Institutional clients may also receive our research via Thomson Reuters, Bloomberg, FactSet, anCapital IQ. Research reports and other commentary are required to be simultaneously disseminated internally and externally to our clients.
http://researchglobal.bmocapitalmarkets.com/Public/Company_Disclosure_Public.aspxhttp://researchglobal.bmocapitalmarkets.com/documents/2013/prior_rating_system.pdfhttp://researchglobal.bmocapitalmarkets.com/Public/Company_Disclosure_Public.aspxhttps://research-ca.bmocapitalmarkets.com/Public/Secure/Login.aspx?ReturnUrl=/Member/Home/ResearchHome.aspxhttps://research-ca.bmocapitalmarkets.com/Public/Secure/Login.aspx?ReturnUrl=/Member/Home/ResearchHome.aspxhttps://research-ca.bmocapitalmarkets.com/Public/Secure/Login.aspx?ReturnUrl=/Member/Home/ResearchHome.aspxhttps://research-ca.bmocapitalmarkets.com/Public/Secure/Login.aspx?ReturnUrl=/Member/Home/ResearchHome.aspxhttp://researchglobal.bmocapitalmarkets.com/Public/Company_Disclosure_Public.aspxhttp://researchglobal.bmocapitalmarkets.com/documents/2013/prior_rating_system.pdfhttp://researchglobal.bmocapitalmarkets.com/Public/Company_Disclosure_Public.aspx8/10/2019 BMO reit beat
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General Disclaimer
BMO Capital Markets is a trade name used by the BMO Investment Banking Group, which includes the wholesale arm of Bank of Montreal and subsidiaries BMO Nesbitt Burns Inc., BMO Capital Markets Limited in the U.K. and BMO Capital Markets Corp. in the U.S. BMO Nesbitt Burns InBMO Capital Markets Limited and BMO Capital Markets Corp are affiliates. Bank of Montreal or its subsidiaries (BMO Financial Group) has lendinarrangements with, or provide other remunerated services to, many issuers covered by BMO Capital Markets. The opinions, estimates and projectiocontained in this report are those of BMO Capital Markets as of the date of this report and are subject to change without notice. BMO Capital Markeendeavours to ensure that the contents have been compiled or derived from sources that we believe are reliable and contain information and opinions thare accurate and complete. However, BMO Capital Markets makes no representation or warranty, express or implied, in respect thereof, takes n
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The following applies if this research was prepared in whole or in part by Andrew Breichmanas, Iain Reid, Tony Robson, David Round, Edward Steror Brendan Warn: This research is not prepared subject to Canadian disclosure requirements. This research is prepared by BMO Capital MarkeLimited and subject to the regulations of the Financial Conduct Authority (FCA) in the United Kingdom. FCA regulations require that a firm providinresearch disclose its ownership interest in the issuer that is the subject of the research if it and its affiliates own 5% or more of the equity of the issueCanadian regulations require that a firm providing research disclose its ownership interest in the issuer that is the subject of the research if it and iaffiliates own 1% or more of the equity of the issuer that is the subject of the research. Therefore BMO Capital Markets Limited will disclose its and iaffiliates ownership interest in the subject issuer only if such ownership exceeds 5% of the equity of the issuer.
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BMO Capital Markets is a trade name used by BMO Financial Group for the wholesale banking businesses of Bank of Montreal, BMO Harris Bank N.(Member FDIC), BMO Ireland Plc, and Bank of Montreal (China) Co. Ltd. and the institutional broker dealer businesses of BMO Capital Markets Cor(Member SIPC), and BMO Capital Markets GKST Inc. (Member SIPC) in the U.S., BMO Nesbitt Burns Inc. (Member Canadian Investor Protection Fund)Canada, Europe and Asia, BMO Capital Markets Limited in Europe and Australia and BMO Advisors Private Limited in India.
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