Q: Hello, I sold ERE.UN recently but I want to keep a toe in the residential sector and was looking at KMP.UN, after reading a favorable report from a broker. The current valuation is interesting, among other points. What is your opinion of this REIT? Should I buy after the earnings release (Feb 14)? FYI, I know you like CAR.UN, but I am not interested at this point. Thanks.
5i Research Answer:
We would be fine buying KMP.UN for residential exposure. We try not to time any decision around a single quarter, but have no reason to worry the quarter will be bad. The last quarter was fine and we expect occupancy (98.5%) to stay high. Payout ratio is a very acceptable 62%. The units are not exactly cheap at 16X cash flow, and the distribution has not been increased since Sept. 2021, but cash flow is good and it is a well-managed REIT.