RE: Northern ComfortI looked into MRD quite seriously ... I just found better alternatives.. I have about 10% of my portfolio in real estate my self because I agree it is a very undervalued sector ... but I always like to find something that is not as subject to the down turns in the cycle... What I found and have like I say invested about 10% of my portfolio in is two select residential REITS .... namely REE.UN and CAR.UN ... why do I like these so much??
Although they are relatively new startups (3 or 4 years) they are both strictly apartment REITs that are buying up apartments in high employment areas of the country ... right now they are primarily in Greater Ontario. They are currently buying some of the apartments at 40% of what it would cost to build new. I bought a while back but they are still a pretty good value .. they pay back most of the cash flow thereby paying a monthly dividend that currently equates to about 9%. This dividend goes up as rent increases, they add properties by debt financing that is linked to very safe cash flows, and they are also adding e-services for their renters which will soon generate more revenues. Vacancies in the areas they are buying into are very stable with very little fluctuations. As there is little land around in these highly populated areas and these two REITS are buying up a significant amount of the existing apartments in the area, barrier to competition is pretty significant. At todays type of pricing you get around a 9% dividend that grows say 5 or 10% annually ... so even if the yield never decreases (I doubt it gets too much more than 9% in todays interest climate) one should be able to expect a total return of at least 14% (9+5) --- and if the market ever recognizes the security of the dividend they provide and/or interest rates go down one stands to make a very nice gain on top of this.
If one could ever be confident of some kind of a catalyst (such as a buyout) coming about over the next year or two with MRD -- I am sure that one would do terrifically well with it ... I just cannot confidently say that I see anything coming about in that regard .. and there is a down side (such as the economy going into a slump .. something which I believe is totally unpredictable regardless of how rosey or bleak things look) ... basically, I hate downside and insist that I win 100% of the time.