Artis Real Estate Investment Pref Shs Series E T.AX.PR.E

RBC Upgrades to Outperform - Target 14.50

[hawk35]

Our view: Upgrading to Outperform on the back of a significantly positive
shift in the REIT’s capital allocation strategy and operating focus. A critical
component of AX's new strategy is its 50% distribution cut. While this may
be painful for income-oriented investors, it gives AX much needed room
to buy back units, sells assets, lower leverage and fund developments. AX
also intends to become more focused, something we have long advocated.
Taken together, these initiatives should help close the large gap between
AX’s trading price and its NAV.

Upgrading to Outperform; reiterating $14.50 price target. Our price
target is based on a 5% discount to our $15.00 one year forward NAV.
While Q3 results were in line, we intend to revise our forecast following
commentary from the earnings call to better incorporate timing of capital
allocation (e.g., asset sales, debt repayment and unit repurchases).