Canadian Apartment Properties Real Estate Investment Trust T.CAR.UN

RE:RE:RE:RE:RE:RE:RE:RE:More BNS

[Mephistopheles3]

The other REIT i'm very bullish on right now is H&R which had a nice pop.  It's strategy long-term is residential/industrial, but it has a way to get there, but it's trading at such a discount, that it's a steal. 

In response to your comments, I would agree with you.  The leases are all typically one year leases which means that when you have your churn of tenants which is about 20% per year, you get a big boost because of how much rent control keeps the rent from going up.  In the past, CAR would be getting double digit increases on the churn on top of their 1-2% annual increases from regular tenants.  

Rental rates in Canada are at an all-time high - https://rentals.ca/national-rent-report  where you can see the rent rates in CAR's top markets of Vancouver and GTA are sky high now.  This bodes well for future churn, although this number has been really low in 2020-2021 with the pandemic.

One thing to keep in mind with CAR's tenants is that they were more impacted by the pandemic than most people realize and that I think they were really letting on.  Something like 80% of their tenants are 30 or under and a big part of them are international students/professionals working downtown.  When the pandemic hit, a lot of these students did remote and professionals went and lived with their parents.  This resulted in rental rates being quite low in 2021, despite housing prices being out of control.  When you look at each quarter for CAR, you will see that their overall rent increases in 2021 are actually quite low - this is why I believe they fell out of favor and the stock price has struggled. 

Much of that is reversed now with students back in school and the downtown core starting to fill up again.  Occupancy is back to all time high and housing shortage is not getting any better which means the rental market will be really strong (which you can see in that rental report I linked).  So I think Residential REIT's are in a really good place for the next two years or so.

The other reason I like CAR over InterRent is the exposure to Europe through ERES.  That subsidiary is just stupid how much money it prints.  They are able to borrow long-term at 0.9% and earn 3-4% cap. rates on their properties.  ERES is currently trading on the TSX at a 52 week high while CAR is trading close to a 52 week low.   There is just a large disconnect there and I think CAR, despite being a TSX60 company does not have much in the way of followers because of how quiet it is.  I think we have a relatively low risk 10-20% gain across the next 12 months.