Contents
Executive Summary ................................................................................................................................................ 4
H1/09: A Tale of Two Quarters ................................................................................................................................. 6
Top 5 Themes ......................................................................................................................................................... 9
Public Real Estate Market Continues to Lead the Private Sector ............................................................................ 15
Valuation - Well-off March Lows, but Still Below Historical Averages ...................................................................... 16
NAV Perspective - Little Relevance in the Current Environment ................................................................. 16
Multiple Perspective (P/FTM FFO)............................................................................................................. 17
Risk/Return Analysis ................................................................................................................................ 18
Our Thesis for 2009 and Beyond ........................................................................................................................... 19
Trading Perspective - BUY Killam Properties Inc. (BUY, $6.75 Target, Medium Risk) and Allied Properties REIT
(BUY, $16.25 Target, Medium Risk) ....................................................................................................................... 20
Property Sector Updates....................................................................................................................................... 21
Multi-Residential – Relative Calm within the Storm ..................................................................................... 21
Office – Downsizing of Jobs and Space Puts a Squeeze on Vacancy ...................................................... 23
Industrial – Reduced Economic Activity Takes a Bite out of the Sector ..................................................... 26
Retail – Standing up Well to the Headwinds...So Far ................................................................................. 27
Company Overview & Recommendation ................................................................................................................. 30
Allied Properties REIT ............................................................................................................................... 30
Boardwalk REIT ....................................................................................................................................... 31
Canadian Apartment Properties REIT ........................................................................................................ 32
Calloway REIT.......................................................................................................................................... 33
InterRent REIT ......................................................................................................................................... 34
Killam Properties ...................................................................................................................................... 35
Lanesborough REIT ................................................................................................................................. 36
Mainstreet Equity Corp. ............................................................................................................................ 37
Northern Property REIT ............................................................................................................................ 38
Pure Industrial Real Estate Trust ............................................................................................................... 39
Whiterock REIT ....................................................................................................................................... 40
Appendix 1: Valuation Summary Tables ............................................................................................................. 41-46
Appendix 2: Multi-Residential Markets - Ranked by YoY Vacancy Rate Change .................................................... 47
Appendix 3: Multi-Residential Markets - Ranked by YoY Average 2-Bedroom Rent Change ................................... 48
Appendix 4: CMHC Multi-Residential Outlook .................................................................................................... 49-55
Appendix 5: Rental Regulations in Canada ............................................................................................................. 56
Appendix 6: Home Ownership vs. Rental Accommodations - Average Renter’s Discount is 48% ............................ 56
Appendix 7: TWR Office/Industrial Market Outlook ............................................................................................ 57-64
Appendix 8: Q2/09 Earnings Calendar ................................................................................................................... 65