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Boardwalk Real Estate Investment Trust (BEI.UN)
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European Residential Real Estate Investment Trust (ERE.UN)
ERE.UN has a decent debt position, and there are some concerns with the European economy and current recessions. Its distribution yield is now 5.9% while shares have declined over the past year. It is making good progress on repaying debts, although its Funds From Operations (FFO) to debt and interest payments have been declining. It focuses on residential properties, which we feel have good potential, and its valuation is now at a 1.0X price to book. Its balance sheet is decent. We would be OK with slow accumulation, but would keep an eye on future results to ensure it is moving in the right direction.
BEI.UN is expected to see strong revenue and earnings growth this year. Its yield is smaller than ERE.UN at 1.8%, but its valuation is also cheap, at a 0.9X price to book. Free cash flows are strong and it has been repurchasing shares recently. Its FFO to interest coverage ratios have been slightly declining, but still within a good range. We would be comfortable with BEI.UN here, and believe there is room to run given the cheap valuation and expectations for continued growth.