The BMO REIT Beat

Canadian Real Estate/REIT Weekly

(Week ending January 2, 2015)
Weekly Highlights

The S&P/TSX Capped REIT index was unchanged for the week ending January 2 while the S&P/TSX Composite was 1.0%. In
comparison, the MSCI U.S. REIT index (RMZ) was 0.1%. Over the last 12 months, the Canadian REIT index is 5.1% while
the RMZ is 27.3%. The 10-year CDN bond yield ended the week at 1.74%, which was down 16 bps over last week.
2014 Performance: For 2014, the S&P/TSX Capped REIT Index returned +10% on capital appreciation of 4% and yield of 6%.
REITs performed well in the first half of 2014 but lost some of the gains later in the year. The REIT index rose 9.2% to Aug 21,
due largely to an unanticipated 67 bps decline in 10-year GoC yields, and then declined 4.6% triggered initially by rate concerns
and exacerbated by tumbling oil prices. Cdn REITs materially lagged US REITs which returned +30%. See page 3 for more detail.
Relative Valuation Very Compelling: Cdn REITs are trading at 15.2x AFFO vs. the long-term average of 13.8x and a 6%
discount to NAV vs. a LTA premium of 3.4%. Cdn REITs now trade at a 5.9x discount to US REITs, one of the highest spreads in
over 15 years. Spreads to the 10-yr bonds are at 506 bps vs. the LTA of 373 bps, the highest level since 795 bps seen in 2009.
Noteworthy News

Top 5 Performers Last Week

Dream Industrial announced that Lenis Quan has been appointed as the
REITs new CFO effective today. Ms. Quan has experience in real estate
and the capital markets and was most recently the CFO of Gazit America.
She replaces John Todd who is leaving for personal reasons.
H&R REIT insider buyback activity: three insiders spent a total of
$935,835 buying back units during December, with President & CEO
Thomas Hofstedter responsible for most of the buying.
Axiometrics reported that the U.S. apartment market ended 2014 with the
strongest Q4 annual rent growth in nine years at 4.5% (preliminary
figures) vs. 4.1% in Q3/14 and 2.8% in Q4/13. This is the strongest Q4
since 2005 (+ 5.8%).
According to an article in the Calgary Herald, Colliers estimates the recent
sell-off in oil prices lifted Calgarys downtown office vacancy rate to 8.5%
in Q4/14, up from 7.7% in Q3/14 and 7.3% in Q4/13. Q4 office absorption
was negative 333,000 sf, with almost 200,000 sf in Class AA office.
Colliers expects negative 500,000 sf of absorption in 2015 as companies
trim office requirements and sublet space. (Link to Calgary Herald Article).
The Globe & Mail reported that due to the growing number of energy
players shelving expansion plans in the oil sands, lodging company Civeo
Corp.s occupancy is roughly half of what it was this time last year, forcing
them to shut down work camps and lay off employees. (Link to Globe &
Mails Article).

10%
8%

6.5%

6%

5.1%

4.3%

4%

3.5%

3.5%

MEQ

D.UN

2%
0%
DRM

NWH.UN IIP.UN

Index Com parison - Price Changes

2-Jan-15
Last
Wk

Last
Mth

Last
Qtr

Last
Year

% from AllTim e High

S&P/TSX Capped REIT Index

Index
Value
159.36

0.0%

-2.5%

0.9%

5.1%

-10.6%

S&P/TSX Financials

253.27

-0.2%

-2.0%

1.1%

9.3%

-3.6%

14,753.65

1.0%

0.9%

-0.2%

8.5%

-5.8%

S&P/TSX Com posite

333.41

-1.0%

1.4%

6.3%

13.8%

-34.6%

S&P 500

2,058.20

-1.5%

-0.4%

4.6%

12.3%

-1.5%

MSCI US REIT Index

1,134.21

-0.1%

2.4%

14.2%

27.3%

-8.1%

FTSE NAREIT Global Index

1,868.61

1.3%

3.1%

12.3%

27.1%

0.0%

S&P US Financials

Bottom 5 Underperformers Last Week

GRPU

HLC

WIR'U

ACR.UN

BEI.UN

-1.5%

-1.3%

0%
-1%

-2.9%

-2.7%

-3.4%

-2%
-3%
-4%

Source: Thomson Baseline, Bloomberg, BMO Capital Markets

Heather Kirk, CFA

(416) 359-4030
[email protected]

Troy MacLean, CFA

(416) 359-8366
[email protected]

Associates
Maria Benavente / Salim Ben Mansour / Zan Zhang
(416) 359-6943 / (416) 359-7441 / (416) 359-5767
[email protected] /
[email protected] / [email protected]

This report was prepared by an analyst(s) employed by BMO Nesbitt Burns Inc., and who is (are) not registered as a research analyst(s) under
FINRA rules. For disclosure statements, including the Analyst's Certification, please refer to pages 35 to 36.

Sector Comment

Financials - Real Estate/REITs

Table of Contents
2014 REITs Performance Review ........................................................................................................................................... 3
Research Comparables ............................................................................................................................................................. 5
Implied Bond Yield Watch ....................................................................................................................................................... 6
Relative Performance
Total Return Performance Summary .......................................................................................................................................... 9
Price Performance Last Week, Month, Quarter, Year........................................................................................................... 10
Valuation
Cdn REIT Current Valuation vs. Other Benchmark Indices .................................................................................................... 11
Canadian REIT Implied Cap Rates ........................................................................................................................................... 12
Historical Private Market Cap Rate Spreads to 10-yr GOC Bond and BBB Bonds by Property Type .................................. 13
Canadian REIT AFFO Yield Spreads....................................................................................................................................... 14
Canadian REIT Historical AFFO Multiple .............................................................................................................................. 15
Cdn REIT Yield and Multiple Spread vs. U.S. REITS ............................................................................................................ 16
Cdn REIT Yield and Multiple Spread vs. Banks...................................................................................................................... 17
Cdn REIT Yield and Multiple Spread vs. Telecom ................................................................................................................. 18
Current 2014E AFFO Multiple vs. Historical Average............................................................................................................ 19
Prem/Disc to NAV .................................................................................................................................................................... 20
Latest Disclosed IFRS Cap. Rates vs. Current Implied Cap. Rates ......................................................................................... 21
Other
Canadian Real Estate Mutual Fund Flows ............................................................................................................................ 22
Capital Raising & Cumulative Market Capitalization.............................................................................................................. 23
Capital Raising 2014 to 2015 YTD Summary....................................................................................................................... 24
Canadian Real Estate M&A 2012 and 2013 YTD Deals and IPO Performances.................................................................... 26
Average Daily Trading Volume, Last Week and Last Six Months.......................................................................................... 27
Net Insider Activity ................................................................................................................................................................... 28
Financial Position Summary ..................................................................................................................................................... 29
Financial Position: Mortgage Maturity Schedule ..................................................................................................................... 30
Financial Position: Debt to Total Assets .................................................................................................................................. 31
REIT & REOC Convertible Debentures................................................................................................................................... 32
REIT & REOC Preferred Shares .............................................................................................................................................. 33
2013 Return of Capital .............................................................................................................................................................. 34

Page 2 January 6, 2015

Sector Comment

Financials - Real Estate/REITs

2014 REITs Performance Review

2014 REIT performance had a strong start in the first part of the year, but delivered a weak
finish. The S&P/TSX Capped REIT Index rose 9.2% to August 21, due in part to an unexpected
67 bps decline in 10-year GoC yields. From August 21 to year end, the index declined 4.6%
triggered initially on concerns that rates could move higher exacerbated by the impact of
tumbling oil prices.
The top performing REITs delivered price appreciation of over 1530% and were dominated
by 1) U.S. weighted REITs which benefitted from an appreciating USD as well as 2) seniors
housing and apartment REITs which delivered above-average growth on solid fundamentals
and narrowing NAV discounts. Underperformers were down ~530% and tended to be
concentrated in the office market, which is grappling with new supply or to be weighted to
Western Canada which is forecast to face economic challenges due to plummeting oil prices.
Canadian REITs outperformed the S&P/TSX on a price performance basis by 200 bps in the
fourth quarter as energy stocks retreated from their earlier highs.

Quarterly Price Performance

Priced as at 31-Dec-2014
Name

Q4 2014

Q3 2014

Q2 2014

Q1 2014

Q4 2013

Q3 2013

Q2 2013

Q1 2013

S&P/TSX Real Estate Index

4.5%

0.7%

3.5%

5.2%

3.7%

-1.1%

-4.3%

1.3%

S&P/TSX REIT Index

-0.2%

-2.3%

2.5%

4.3%

1.7%

-4.4%

-8.3%

0.3%

S&P/TSX Index

-2.2%

-1.2%

5.7%

5.2%

6.5%

5.4%

-4.9%

2.5%

MSCI US REIT Index

13.1%

-4.0%

6.0%

8.9%

-1.8%

-3.9%

-2.5%

7.1%

Source: Bloomberg, BMO Capital Markets

S&P/TSX REIT Index vs. S&P/TSX Composite Index - Total Annual Returns
Canadian REIT Price Performance vs. US REITs and TSX Composite (Total Annual Returns)
S&P/TSX

S&P/TSX REIT

MSCI US REIT

140

MSCI US REIT

Total Annual Returns (Indexed to 100)

130

120

S&P/TSX REIT
Composite
110
S&P/TSX
Composite
100

90

80
Jan-14

Feb-14

Mar-14

Source: Bloomberg, BMO Capital Markets

Last Datapoint: December 31, 2014

Page 3 January 6, 2015

Apr-14

May-14

Jun-14

Jul-14

Aug-14

Sep-14

Oct-14

Nov-14

Dec-14

Sector Comment

Financials - Real Estate/REITs

Of note this year was the significant underperformance of Canadian REITs relative to U.S.
REITs. The MSCI US REIT Index returned 30% in 2014 vs 10% for the S&P TSX REIT index,
making it the worst year for Canadian REIT underperformance since 2000.

2014 Top and Worst Performers

Total Annual Returns

Price Returns

INN.UN

37%

MST.UN

MST.UN

36%

INN.UN

WIR'U

34%

RLC
LW

AP.UN
RUF'U

CSH.UN

19%

BPY-US

15%

AP.UN

14%

18%

IIP.UN

16%

IIP.UN

16%

MRT.UN

15%

CWT.UN

BTB.UN

19%

CAR.UN

MRT.UN

CWT.UN

19%

19%
16%

12%
10%
9%

RUF'U

15%

MRG.UN

21%

MRC

24%

CRT.UN

26%
23%

RLC

30%
25%

CAR.UN

WIR'U
LW

31%

CSH.UN

29%
28%

8%

GRT.UN

13%

7%

GRT.UN

12%

REI.UN

7%

REI.UN

12%

MRG.UN

6%

DRG.UN

11%

FCR

10%

BTB.UN

6%

REF.UN

6%

REF.UN

10%

FCR

SMU.UN

10%

MEQ

CUF.UN

9%

BEI.UN

BEI.UN

9%

DRG.UN

5%
4%
3%
2%

ACR.UN

9%

HR.UN

2%

HR.UN

8%

BOX.UN

1%

TN.UN

6%

CUF.UN

1%

BOX.UN

6%

SMU.UN

1%

6%

ACR.UN

CHP.UN
MEQ

4%

CHP.UN

0%
0%

KMP

4%

KMP

HOT.UN

3%

TN.UN

DIR.UN

3%

EXE

-4%
-5%

-2%
-3%

AX.UN

3%

AX.UN

EXE

3%

CRR.UN

-5%

CRR.UN

2%

DIR.UN

-5%

PLZ.UN

0%

HOT.UN

-5%

AAR.UN

0%

PLZ.un

-6%

MR.UN
F.UN
D.UN

MR.UN

-4%

NWH.UN

NPR.UN
PAR.UN
-40%

-8%

NPR.UN

-9%

RMM.UN

-13%
-14%
-16%

TPH

-20%

PAR.UN

-24%

-20%

-11%
-13%

ACC

-6%

ACC

-7%
-9%

D.UN

-5%

RMM.UN

TPH

AAR.UN

-3%
-3%

NWH.UN

0%

20%

Source: BMO Capital Markets, Bloomberg, Thomson One

Priced as at December 31, 2014

40%

-30%
-31%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

Source: BMO Capital Markets, Bloomberg, Thomson One

Priced as at December 31, 2014
Note: BMO Capital Markets is restricted on Summit Industrial REIT and True North Commercial REIT

Top performers within our universe in 2014 were primarily comprised of REITs with exposure
to robust economic growth in the U.S. (MST.UN and WIRU) as well as REITs in the senior
care/LTC sector (RLC and LW). The top five performing REITs were further elevated above
the rest of the pack when accounting for distributions and had an average yield of 8-9%. We
continue to expect strong performance from both REITs with U.S. exposure given diminished
Canadian GDP projections and tumbling energy markets, and senior care/LTC REITs with
favourable tailwinds from market fundamentals and demographic trends.
Worst performers included REITs with exposure to Western Canada and softening economic
conditions in the energy sector (TPH and NPR.UN), as well as REITs with operating challenges
and leverage that is above-average (PAR.UN, RMM.UN, and ACC). We expect REITs with
exposure to Western Canada as well as those with higher-than-average leverage to face greater
headwinds for performance compared to peers.

Page 4 January 6, 2015

Sector Comment

Financials - Real Estate/REITs

Real Estate Comparables

Basic Financial Data
Target

Ticker

2-Jan-15

Price

Rating

Return

Retail
Calloway
Choice Properties
Crombie
CT REIT
First Capital Realty
Partners
Plaza Retail
RetroCom
RioCan
Slate Retail
Sum/Weighted Average

CWT.UN
CHP.UN
CRR.UN
CRT.UN
FCR
PAR.UN
PLZ.UN
RMM.UN
REI.UN
SRT'U

$27.48
$10.65
$12.99
$12.16
$18.95
$3.71
$4.09
$3.91
$26.72
$10.35

$30.50
$11.25
$14.50
$12.00
$20.00
NR
NR
$5.00
$30.00
$12.00

OP
Mkt
Mkt
Mkt
Mkt
NR
NR
Mkt
OP
OP

16.8%
11.7%
18.5%
4.1%
10.1%
NR
NR
39.4%
17.6%
23.2%

Diversified
Agellan
Artis
BTB
Cominar
CREIT
FAM REIT
H&R
Melcor REIT
Morguard REIT
Sum/Weighted Average

ACR.UN
AX.UN
BTB.UN
CUF.UN
REF.UN
F.UN
HR.UN
MR.UN
MRT.UN

$8.67
$14.35
$4.71
$18.76
$45.90
$7.76
$21.95
$9.43
$18.09

$10.75
$17.00
NR
$20.60
$48.50
NR
$25.20
NR
$19.25

OP
OP
NR
Mkt
Mkt
NR
Mkt
NR
Mkt

Office
Allied Properties
Brookfield Canada
Dream Office
Dream Global
NorthWest Healthcare Prop.
Sum/Weighted Average

AP.UN
BOX.UN
D.UN
DRG.UN
NWH.UN

$37.68
$27.09
$25.44
$8.60
$9.28

$40.00
$29.50
NR
NR
$10.25

Industrial
Dream Industrial
PIRET
Summit
Granite REIT
WPT Industrial
Sum/Weighted Average

DIR.UN
AAR.UN
SMU.UN
GRT.UN
WIR'U

$8.43
$4.42
$5.81
$41.44
$10.95

Multi-Residential
Boardwalk
CAP REIT
InterRent
Killam Properties
Mainstreet Equity
Morguard NA Residential
Milestone (4)
Northern Prop
Pure Multi-family
True North Apartment
Sum/Weighted Average

BEI.UN
CAR.UN
IIP.UN
KMP
MEQ
MRG.UN
MST.UN
NPR.UN
RUF'U
TN.UN

Retirement/Long-Term Care
Amica Mature Lifestyles
ACC
Chartwell
CSH.UN
Extendicare
EXE
Leisureworld
LW
Regal Lifestyle
RLC
Sum/Weighted Average
Total/Weighted Average

(5)

Distribution/Dividend Metrics

Trading Multiples

Price
REIT/REOC

BMO Pot. Total Market

Cap
(mlns)

FFO

P/FFO

AFFO

P/AFFO

Historical

EV/
EBITDA
(15E)

Div/
Dist.

NAV Metrics

Current

10-yr

AFFO

AFFO

Yield

Bond
Spread

Payout
('15E)

Yield
('15E)

NAV

Leverage Metrics

NAV
Cap
Rate

Implied

Debt/

Cap
Rate

Assets(1)

Debt/

Cash Int.

Net Debt/

MVA
(BMO)(2)

Coverage
'15E

EBITDA
'15E(3)

43.2%
45.1%
52.6%
49.1%
48.3%
66.7%
55.8%
56.4%
43.7%
56.5%
46.2%

42.6%
45.5%
51.3%
48.3%
46.0%
n/a
n/a
59.1%
43.0%
59.4%
45.2%

2.8x
3.5x
2.5x
3.1x
2.2x
n/a
n/a
2.2x
3.0x
3.6x
2.9x

7.9x
7.4x
8.7x
7.3x
9.5x
n/a
n/a
9.6x
8.0x
8.9x
8.1x

8.2%
7.0%
n/a
6.9%
6.0%
n/a
6.5%
n/a
7.0%
6.6%

52.4%
49.6%
67.9%
56.4%
37.2%
47.6%
47.5%
46.0%
44.9%
47.3%

53.6%
48.0%
n/a
57.6%
37.3%
n/a
43.4%
n/a
50.4%
45.9%

3.4x
2.9x
n/a
2.5x
3.4x
n/a
2.7x
n/a
2.7x
2.8x

7.2x
8.2x
n/a
9.3x
6.8x
n/a
7.9x
n/a
7.7x
7.9x

6.1%
5.4%
6.5%
7.0%
6.8%

5.8%
6.1%
n/a
n/a
7.0%
6.0%

34.6%
42.7%
47.3%
57.0%
51.8%
43.5%

31.7%
42.9%
n/a
n/a
58.0%
38.5%

3.4x
2.2x
n/a
n/a
2.5x
2.8x

6.4x
11.0x
n/a
n/a
9.4x
8.6x

-18.9%
-3.9%
R
1.3%
1.8%
-3.4%

6.7%
6.5%
R
8.6%
7.0%

7.4%
6.6%
R
n/a
6.9%
6.9%

52.7%
48.6%
R
22.4%
50.6%
36.5%

52.3%
48.1%
R
n/a
51.0%
50.2%

3.1x
3.0x
R
n/a
3.3x
3.1x

8.1x
7.8x
R
n/a
7.8x
7.9x

$71.70
$26.75
$6.50
$12.25
$46.00
$13.20
$12.80
$28.60
$5.41
$9.06

-13.5%
-5.3%
-6.8%
-15.9%
-18.0%
-24.2%
-19.3%
-17.6%
-14.0%
-14.1%
-12.5%

5.1%
5.1%
5.4%
5.9%
5.5%
5.8%
6.4%
7.2%
6.5%
5.7%

5.5%
5.2%
5.6%
6.4%
n/a
n/a
7.1%
8.0%
n/a
n/a
5.9%

35.8%
47.1%
50.3%
53.6%
50.0%
57.0%
51.9%
46.7%
62.5%
62.9%
45.5%

37.3%
46.5%
51.1%
54.6%
n/a
n/a
51.2%
45.3%
n/a
n/a
44.1%

3.5x
2.7x
2.7x
2.7x
n/a
n/a
2.9x
3.5x
n/a
n/a
3.1x

8.0x
9.8x
12.5x
10.2x
n/a
n/a
8.8x
7.1x
n/a
n/a
8.9x

$8.25
$11.40
$7.75
$12.25
$8.75

-15.8%
4.0%
-15.1%
14.4%
2.9%
1.2%

6.8%
7.0%
n/a
8.8%
7.2%

7.2%
6.8%
n/a
8.2%
7.1%
7.1%

64.8%
55.2%
51.1%
57.6%
59.7%
55.8%

63.6%
50.1%
n/a
54.9%
54.6%
52.3%

2.0x
2.4x
n/a
3.4x
2.6x
2.5x

13.3x
8.3x
n/a
8.3x
9.1x
8.7x

Prem/
(Disc)

2014E 2015E 2014E

2015E

2014E 2015E 2014E

2015E

P/AFFO

$3,730
$4,088
$1,696
$2,206
$4,090
$96
$377
$311
$8,382
$209
$25,186

$1.94
$0.91
$1.09
$0.97
$1.03
$0.42
$0.30
$0.43
$1.64
$0.86

$2.00
$0.93
$1.12
$1.01
$1.07
$0.45
$0.33
$0.46
$1.72
$1.38

14.2x
11.7x
11.9x
12.5x
18.4x
8.8x
13.5x
9.1x
16.3x
12.0x
14.8x

13.7x
11.5x
11.6x
12.0x
17.7x
8.3x
12.5x
8.6x
15.5x
7.5x
14.2x

$1.83
$0.73
$0.91
$0.73
$0.91
$0.30
$0.27
$0.33
$1.51
$0.71

$1.89
$0.75
$0.92
$0.76
$0.95
$0.34
$0.30
$0.36
$1.58
$1.18

15.0x
14.7x
14.4x
16.7x
20.8x
12.6x
15.4x
11.7x
17.7x
14.5x
16.9x

14.5x
14.3x
14.1x
16.0x
19.9x
11.1x
13.7x
10.7x
16.9x
8.7x
16.1x

14.2x
n/a
13.8x
n/a
17.5x
n/a
n/a
n/a
17.4x
n/a

16.7x
14.8x
15.0x
14.9x
20.2x
n/a
n/a
12.4x
18.7x
13.7x
17.3x

$1.60
$0.65
$0.89
$0.66
$0.86
$0.25
$0.25
$0.45
$1.41
$0.76

5.8%
6.1%
6.9%
5.5%
4.5%
6.7%
6.1%
11.5%
5.3%
7.3%
5.6%

4.1%
4.4%
5.1%
3.7%
2.8%
5.0%
4.4%
9.8%
3.5%
5.6%
3.9%

85%
87%
97%
87%
88%
75%
84%
124%
89%
64%
88%

6.9%
7.0%
7.1%
6.3%
5.0%
9.0%
7.3%
9.3%
5.9%
11.4%
6.3%

$29.60
$10.45
$14.35
$11.25
$18.90
$5.62
$4.40
$5.00
$25.80
$12.00

-7.2%
1.9%
-9.5%
8.1%
0.3%
-34.0%
-7.0%
-21.8%
3.6%
-13.7%
-0.1%

6.0%
6.2%
6.3%
6.3%
5.9%
6.8%
7.0%
6.9%
5.9%
7.4%

6.3%
6.0%
6.5%
6.0%
5.8%
n/a
n/a
7.5%
5.7%
7.9%
6.0%

32.9%
26.0%
NR
17.6%
9.5%
NR
21.0%
NR
11.7%

$203
$1,949
$160
$2,953
$3,321
$117
$6,375
$203
$1,124
$16,405

$1.16
$1.41
$0.48
$1.85
$2.94
$0.81
$1.86
$0.89
$1.65

$1.25
$1.47
$0.54
$1.89
$2.97
$0.96
$1.82
$0.96
$1.72

7.5x
10.1x
9.9x
10.1x
15.6x
9.6x
11.8x
10.6x
11.0x
11.9x

6.9x
9.7x
8.8x
9.9x
15.4x
8.1x
12.1x
9.8x
10.5x
11.8x

$0.86
$1.19
$0.39
$1.56
$2.55
$0.69
$1.67
$0.76
$1.25

$0.93
$1.25
$0.44
$1.62
$2.59
$0.84
$1.63
$0.82
$1.31

10.1x
12.1x
12.1x
12.0x
18.0x
11.2x
13.1x
12.4x
14.5x
13.8x

9.3x
11.5x
10.6x
11.6x
17.7x
9.2x
13.4x
11.4x
13.8x
13.6x

9.9x
13.8x
n/a
13.8x
15.4x
n/a
13.5x
n/a
13.2x

11.8x
15.2x
n/a
14.8x
18.6x
n/a
17.8x
n/a
14.6x
16.8x

$0.78
$1.08
$0.42
$1.47
$1.75
$0.75
$1.35
$0.68
$0.96

8.9%
7.5%
8.9%
7.8%
3.8%
9.7%
6.2%
7.2%
5.3%
6.2%

7.2%
5.8%
7.2%
6.1%
2.1%
7.9%
4.4%
5.4%
3.6%
4.4%

83%
86%
95%
91%
67%
89%
83%
82%
73%
81%

10.7%
8.7%
9.4%
8.6%
5.6%
10.8%
7.4%
8.7%
7.2%
7.5%

$10.75
$16.80
$4.92
$20.60
$45.52
$9.63
$25.30
$10.90
$22.50

-19.3%
-14.6%
-4.3%
-8.9%
0.8%
-19.4%
-13.2%
-13.5%
-19.6%
-10.2%

7.5%
6.5%
7.3%
6.7%
6.0%
7.5%
6.1%
6.5%
6.3%

OP
Mkt
NR
NR
Mkt

10.0%
13.5%
NR
NR
19.1%

$2,813
$2,527
$2,770
$956
$431
$9,498

$2.08
$1.56
$2.86
$0.87
$0.98

$2.33
$1.49
$2.84
$0.88
$0.97

18.1x
17.4x
8.9x
9.9x
9.5x
14.0x

16.2x
18.2x
9.0x
9.7x
9.6x
13.7x

$1.74
$1.27
$2.41
$0.77
$0.79

$1.99
$1.17
$2.39
$0.79
$0.77

21.7x
21.3x
10.6x
11.1x
11.8x
16.8x

18.9x
23.3x
10.7x
10.9x
12.0x
16.5x

15.0x
17.6x
13.6x
n/a
14.1x

18.3x
20.5x
n/a
n/a
14.8x
19.0x

$1.46
$1.24
$2.24
$0.80
$0.80

3.9%
4.6%
8.8%
9.3%
8.6%
6.3%

2.1%
2.8%
7.1%
7.6%
6.9%
4.5%

71%
106%
94%
101%
104%
92%

5.3%
4.3%
9.4%
9.2%
8.3%
6.8%

$35.00
$33.00
$33.38
$9.69
$10.25

7.7%
-17.9%
-23.8%
-11.2%
-9.5%
-11.0%

$10.40
$5.15
R
NR
$11.00

OP
OP
R
NR
OP

31.7%
23.6%
R
NR
6.8%

$645
$848
$136
$1,948
$322
$3,899

$0.95
$0.37
R
$3.30
$0.99

$0.99
$0.38
R
$3.42
$1.05

8.9x
11.8x
R
12.5x
11.0x
11.6x

8.5x
11.8x
R
12.1x
10.5x
11.2x

$0.76
$0.31
R
$3.08
$0.77

$0.81
$0.33
R
$3.19
$0.82

11.0x
14.4x
R
13.4x
14.1x
13.2x

10.4x
13.5x
R
13.0x
13.3x
12.6x

12.1x
12.0x
R
n/a
n/a

13.8x
15.5x
R
n/a
14.5x
14.6x

$0.70
$0.31
R
$2.30
$0.70

8.3%
7.1%
R
5.6%
6.4%
6.5%

6.6%
5.3%
R
3.8%
4.7%
4.8%

87%
95%
R
72%
85%
81%

9.6%
7.4%
R
7.7%
7.5%
8.0%

$10.40
$4.60
R
$40.89
$10.75

$62.04
$25.33
$6.06
$10.31
$37.70
$10.00
$12.17
$23.57
$4.65
$7.78

$72.50
$26.75
$6.50
$11.75
NR
NR
$13.50
$30.00
NR
NR

Mkt
OP
OP
Mkt
NR
NR
OP
Mkt
NR
NR

20.1%
10.3%
10.9%
19.8%
NR
NR
16.3%
34.2%
NR
NR

$3,227
$2,842
$350
$622
$395
$465
$749
$750
$162
$251
$9,814

$3.38
$1.58
$0.32
$0.72
$2.22
$0.93
$0.98
$2.37
$0.45
$0.69

$3.60
$1.66
$0.41
$0.76
$2.55
$0.99
$1.06
$2.57
$0.50
$0.76

18.3x
16.1x
18.9x
14.4x
17.0x
10.8x
10.5x
10.0x
10.4x
11.2x
15.5x

17.2x
15.3x
14.8x
13.5x
14.8x
10.1x
9.8x
9.2x
9.3x
10.2x
14.4x

$3.07
$1.40
$0.27
$0.62
$1.93
$0.74
$0.78
$2.01
$0.41
$0.61

$3.27
$1.49
$0.36
$0.67
$2.23
$0.82
$0.87
$2.19
$0.45
$0.67

20.2x
18.1x
22.0x
16.7x
19.5x
13.5x
13.3x
11.7x
11.4x
12.8x
17.6x

19.0x
17.0x
17.0x
15.3x
16.9x
12.2x
11.9x
10.8x
10.3x
11.6x
16.2x

18.7x
15.7x
n/a
15.8x
n/a
n/a
11.8x
13.3x
n/a
n/a

19.4x
19.4x
20.2x
16.7x
n/a
n/a
14.3x
13.4x
n/a
n/a
18.3x

$2.04
$1.18
$0.22
$0.60
$0.00
$0.60
$0.65
$1.63
$0.38
$0.70

3.3%
4.7%
3.6%
5.8%
n/a
6.0%
5.3%
6.9%
8.1%
9.0%
4.7%

1.5%
2.9%
1.9%
4.1%
n/a
4.3%
3.6%
5.2%
6.3%
7.2%
3.0%

62%
79%
62%
89%
n/a
73%
69%
74%
83%
105%
73%

5.3%
5.9%
5.9%
6.5%
5.9%
8.2%
8.4%
9.3%
9.7%
8.6%
6.4%

$6.95
$11.86
$6.58
$14.02
$9.00

$8.25
$12.50
NR
$15.00
$9.20

Mkt
OP
NR
OP
Mkt

24.7%
9.9%
NR
13.4%
10.0%

$214
$2,101
$579
$508
$281
$3,684

$0.48
$0.78
$0.72
$1.13
$0.76

$0.54
$0.84
$0.71
$1.19
$0.83

14.5x
15.3x
9.2x
12.4x
11.8x
13.6x

12.8x
14.0x
9.3x
11.8x
10.9x
12.7x

$0.40
$0.68
$0.64
$1.32
$0.72

$0.44
$0.74
$0.59
$1.37
$0.76

17.5x
17.4x
10.3x
10.6x
12.4x
15.0x

15.6x
15.9x
11.2x
10.3x
11.9x
14.1x

16.6x
13.3x
n/a
10.2x
n/a

19.0x
16.1x
n/a
15.9x
15.9x
16.2x

$0.42
$0.54
$0.48
$0.90
$0.70

6.0%
4.6%
7.3%
6.4%
7.8%
5.6%

4.3%
2.8%
5.6%
4.7%
6.0%
3.8%

94%
73%
81%
66%
93%
76%

6.4%
6.3%
9.0%
9.7%
8.4%
7.3%

$68,486

NAV

13.8x

13.3x

15.9x

15.3x

17.3x

5.7%

4.0%

84%

6.8%

-6.0%

6.2%

42.9%

45.1%

2.9x

8.3x

Simple Average

12.3x

11.5x

14.5x

13.4x

16.1x

6.7%

4.9%

85%

7.8%

-9.8%

6.7%

50.7%

49.4%

2.9x

8.7x

Median

11.7x

10.9x

13.4x

13.0x

15.7x

6.4%

4.7%

86%

7.7%

-11.2%

6.7%

50.6%

50.3%

2.8x

8.2x

(1) Last reported quarter debt to total assets (including convertible debentures) adjusted for post-quarter announcements for companies in our coverage universe. Debt to GBV (at historical cost) for Amica, Leisureworld, Extendicare, Regal, Chartwell.
(2) Debt to market value of asset (including convertible debentures) based on BMO's NAV estimate ( portfolio value calculation based on BMO's 12-month forward NOI estimate and cap rate).
(3) Net debt includes convertible debentures
(4) MST.un, WIR'U, SRT'U and RUF'U. FFO, AFFO and NAV estimates are in US dollars, or all other amounts in Canadian dollars
(5) Sum/Weighted Average includes data of restricted names
Source: BMO Capital Markets, Company Reports, First Call Estimates (for non-covered companies);
Note: BMO Capital Markets is restricted on Summit Industrial REIT and True North Commercial REIT
Stock Rating System: OP Outperform; Mkt Market Perform; Und. Underperform; R Restricted; NR Not Rated; (S) Speculative.

Page 5 January 6, 2015

Sector Comment

Financials - Real Estate/REITs

Implied Bond Yield Watch

The following is an update of the implied bond yield analysis we performed on June 24, 2013. Given how intimately tied REIT prices have been to bond market moves and
interest rate expectations, we believe it will be useful to track implied bond yields more regularly. At the time of our June analysis, we estimated the market was pricing in a
3.2% 10-year bond yield. We estimate that the market is currently pricing in a 2.8% 10-year bond yield.
What We Did (Pricing and Bond Yield as of January 2, 2015)

Establish the Historical Spread: We calculated the historical AFFO yield vs. 10-year Canadian government bond spread for each of our coverage names. Our
coverage universe trades at an average spread of ~540 bps to the 10-year Canada bond and individual names trade at an average range of 260800 bps.

Apply Historical Spread and Target 10-Year Bond to Current REIT Prices: We assume that REITs should trade at their average spread to the 10-year and then
back into what 10-year bond yield is implied by current REIT pricing. We have used the average spreads unique to each of the REITs in our universe.

Determine the Bond Yield Implied in Current REIT Prices: Lets use Calloway REIT as an example in the table below. The close on January 2 of $27.48
equates to an AFFO yield of 7.0% (calculated as 1/ P/AFFO multiple). If we assume that Calloway REIT should revert to its mean spread of 430 bps, then the
REITs current unit price is pricing in a 10-year bond yield of ~2.7% (in column G).

Determine What Price REITs Should Be Trading at Assuming a 2.16% 10-year Bond: In column J, we calculated the price each REIT should trade at if we
assume reversion to average spreads and a projected bond yield of 2.16%, which is the average 10-year bond yield estimated by BMO Capital Markets Economics
for 2015. What we are getting at is whether a continued rise in bond yields is already priced in. Based on this analysis, REITs in our coverage universe range from
21% overvalued to 28% undervalued (column K) in the context of a 2.16% 10-year bond.

Conclusion: If bonds yield move up to less than 2.8%, then current REIT pricing is reasonable, in our view.
Caveats: 1) The analysis in the table on the following page assumes that spreads revert to the mean, when history has shown that spreads can vary widely based on market
conditions. As shown on page 14, AFFO yield spreads have ranged from a low of 66 bps to a high of 795 bps. At present, spreads are 133 bps above their historical average
based on 2015E AFFO. 2) We have also assumed our AFFO forecasts do not change either positively because of greater economic growth, or negatively due to higher
interest rates and a higher cost of equity.

Page 6 January 6, 2015

Sector Comment

Financials - Real Estate/REITs

Coverage Universe
Brookfield Cda. REIT
Allied Properties
Chartwell
CREIT
Leisureworld
PIRET
Retrocom
First Capital Realty
Morguard
Crombie
Calloway
RioCan
Killam Properties
Dream Industrial
Amica Mature Lifestyles
H&R
CAP REIT
NorthWest Healthcare Prop.
Boardwalk
Artis
Cominar
Northern Prop.
REIT Average

(1 / C)

(D - 1.74%)

(D - F)

(F + 2.16%)

(1 / H)

(B x I)

(J / A - 1)

Price
2-Jan-15

2015E
P/AFFO

AFFO
Yield

AFFO - 10yr
Current
Spread

AFFO - 10yr
Hist.
Spread

Bond Yield
Implied by
Current Price

Projected
Yield @
2.16%

Projected
P/AFFO @
2.16%

Justifiable
Price @
2.16%

Prem/(Disc) to
Justifiable
Price

$27.09
$37.68
$11.86
$45.90
$14.02
$4.42
$3.91
$18.95
$18.09
$12.99
$27.48
$26.72
$10.31
$8.43
$6.95
$21.95
$25.33
$9.28
$62.04
$14.35
$18.76
$23.57

23.3x
19.0x
15.9x
17.4x
10.3x
13.0x
10.8x
19.8x
13.5x
13.8x
14.4x
16.7x
14.9x
10.6x
15.6x
13.0x
17.0x
11.7x
19.0x
11.5x
11.6x
10.7x

4.3%
5.3%
6.3%
5.8%
9.7%
7.7%
9.2%
5.0%
7.4%
7.2%
7.0%
6.0%
6.7%
9.5%
6.4%
7.7%
5.9%
8.6%
5.3%
8.7%
8.6%
9.4%

2.6%
3.5%
4.6%
4.0%
8.0%
5.9%
7.5%
3.3%
5.7%
5.5%
5.2%
4.2%
5.0%
7.7%
4.7%
6.0%
4.2%
6.8%
3.5%
7.0%
6.9%
7.6%

3.1%
3.7%
4.6%
3.8%
7.8%
5.4%
6.9%
2.6%
4.9%
4.6%
4.3%
3.2%
3.9%
6.2%
3.3%
4.4%
2.8%
4.9%
2.0%
4.5%
4.5%
4.5%

1.2%
1.5%
1.7%
2.0%
1.9%
2.3%
2.4%
2.4%
2.5%
2.7%
2.7%
2.8%
2.9%
3.3%
3.1%
3.3%
3.1%
3.7%
3.3%
4.2%
4.1%
4.8%

5.2%
5.9%
6.7%
5.9%
10.0%
7.6%
9.0%
4.8%
7.0%
6.7%
6.5%
5.4%
6.0%
8.3%
5.5%
6.6%
5.0%
7.0%
4.2%
6.7%
6.6%
6.7%

19.2X
16.9X
14.8X
16.9X
10.0X
13.2X
11.1X
20.8X
14.3X
14.9X
15.5X
18.5X
16.6X
12.0X
18.2X
15.2X
20.1X
14.2X
23.9X
14.9X
15.1X
14.9X

$22.32
$33.53
$11.08
$44.56
$13.66
$4.48
$4.00
$19.88
$19.09
$13.98
$29.57
$29.66
$11.52
$9.60
$8.11
$25.66
$30.00
$11.32
$78.35
$18.61
$24.38
$32.96

21%
12%
7%
3%
3%
-1%
-2%
-5%
-5%
-7%
-7%
-10%
-10%
-12%
-14%
-14%
-16%
-18%
-21%
-23%
-23%
-28%

5.4%

4.4%

2.8%

6.5%

16.0x

-7.8%

Source: BMO Capital Markets

AFFO yield spread over Canada

10-yr government bond

Page 7 January 6, 2015

Price at which REITs should trade

if rates move to 2.16% and spreads
revert to historical averages

Sector Comment

Financials - Real Estate/REITs

Implied Bond Yield - 10-year Canada Bond Yield Spreads:

Monthly Spreads
Implied Bond Yield
3.50%
3.2%

3.3%
3.1%

3.0%

3.00%

10-yr Bond Yield

3.1%

3.1%

2.9%

2.9%
2.7%

2.0% 2.44% 2.45%

1.50%

2.6%

2.79%

2.50%
2.00%

2.8%

1.7%

2.62% 2.56%

2.42%

2.55%
2.34%

2.43% 2.44% 2.41%

2.7%
2.5%

2.9%

2.8%
2.6%

2.6%

2.8%

2.6%

2.4%

2.30% 2.25%

2.06%

2.11%

2.15%
1.99%

2.05%

1.93%

1.70%

1.79% 1.74%

1.00%
Apr-13

Jun-13

Aug-13

Oct-13

Dec-13

Feb-14

Apr-14

Jun-14

Aug-14

Oct-14

Dec-14

Source: BMO Capital Markets, Bloomberg, Thomson One (Priced as at January 2, 2015)

Weekly Spreads
1.60%
1.40%
1.20%
1.00%
0.80%
0.60%
0.40%

Current Spread: 106 bps

0.20%
0.00%
Sep-13

Oct-13

Nov-13

Dec-13

Jan-14

Feb-14

Source: BMO Capital Markets, Bloomberg, Thomson One (Priced as at January 2, 2015)

Page 8 January 6, 2015

Mar-14

Apr-14

May-14

Jun-14

Jul-14

Aug-14

Sep-14

Oct-14

Nov-14

Dec-14

Jan-15

Sector Comment

Financials - Real Estate/REITs

Relative Performance:
Total Return Performance Summary
By Benchmark

TSX Composite

By Property Type
Multi-Residential

0.9%

By Market Cap

-0.1%

Retail

2015 YTD

Cdn REITs

0.7%

-0.3%

Hotel
1.0%

2.0%

-1.5%

-1.0%

-0.5%

0.0%

0.5%

Multi-Residential

10.6%

Cdn REITs

10.4%

1.0%

0.0%

1.0%

Total Return

11.9%

Small Cap (<$500 M)

4.6%

5.5%

Industrial

Mid Cap ($500 M - $1.5B)

11.7%

13.1%

30.4%

Diversified

6.9%

Retirement/LTC

14.7%

Global REITs

0%

5%

10%

15%

20%

25%

30%

35%

0.0%

5.0%

10.0%

15.0%

13.0%

Multi-Residential

-5.5%

Small Cap (<$500 M)

Office

US REITs

2.5%

Global REITs

2.2%

Diversified

12%

17%

Large Cap (>$1.5 B)

15.7%

-15%

-10%

-5%

0%

5%

10%

Multi-Residential

Office

-8%

-6%

-4%

-2%

0%

Mid Cap ($500 M $1.5B)

20%

30%

33%

Hotel
40%

Total Return

Source: Bloomberg, Thomson One, BMO Capital Markets

20%

17%

21%

Retirement/LTC
29.8%

Glo bal RE ITs

Page 9 January 6, 2015

-10%

Total Return

25%
23%

Diversified

17.8%

10%

-12%

Small Cap (<$500 M)

15%

Industrial

0%

-14%

20%

24%

Retail
17.0%

US RE ITs

15%

-1.4%

Total Return

7.2%

Cdn RE ITs

-7.6%

-1.7%
-5.0%

Total Return

TSX Co mp osite

-2.7%

Mid Cap ($500 M - $1.5B)

-1.7%

Retirement/LTC

7%

10.0%

-3.4%

Hotel
2%

6.0%

-6.0%

Industrial

-3%

2.0%
Total Return

-4.4%

Retail

-8%

-2.0%

20.0%

Total Return

TSX Composite

-13%

10.7%

8.1%

Total Return

Cdn REITs

Large Cap (>$1.5 B)

16.1%

Hotel

2012

-1.0%

1.5%

3.7%

Office

US REITs

2013

0.7%

Total Return

Retail

2014

Large Cap (>$1.5 B)

-0.8%

Total Return

TSX Composite

-0.2%

0.8%

0.8%

0.0%

Mid Cap ($500 M - $1.5B)

0.1%

Diversified
Retirement/LTC

Global REITs

0.2%

0.4%

Industrial
1.5%

US REITs

Small Cap (<$500 M)

0.4%

Office

Large Cap (>$1.5 B)

21%

10%
0%

5%

10%

15%

20%

Total Return

25%

30%

35%

0%

5%

10%
Total Return

15%

20%

25%

14.0%

Sector Comment

Financials - Real Estate/REITs

Price Performance:
By Index and Name Last Week, Month, Quarter, Year
Price Change:
REIT/REOC
Dream Unlimited
Northwest Healthcare Prop.
InterRent
Mainstreet Equity
Dream Office
Milestone
Dream Industrial
Brookfield Asset Mgmt (C$)
Tricon Capital
Cominar
H&R
Regal
PIRET
Leisureworld
InnVest
RetroCom
Amica Mature Lifestyles
Dream Global
Brookfield Canada (US$)
Morguard Residential
FTSE NAREIT Global Index
CAP REIT
Allied Properties
Brookfield Canada (C$)
Crombie
S&P/TSX Composite*
Melcor Developments
Extendicare
Killam Properties
Brookfield Asset Mgmt (US$)
Choice Properties
BTB
American Hotel
First Capital Realty
Artis
Summit Industrial
Calloway
S&P/TSX Capped REIT **
MSCI US REIT Index
Temple
CREIT
Morguard Corp.
Partners
Northern Prop.
Granite Real Estate (C$)
Morguard
RioCan
CT REIT
Chartwell
Inovalis
Brookfield Property Part.
Boardwalk
Agellan Commercial
WPT Industrial
Holloway
Granite Real Estate (US$)

Last Week
Ticker
DRM
NWH.UN
IIP.UN
MEQ
D.UN
MST.UN
DIR.UN
BAM.A
TCN
CUF.UN
HR.UN
RLC
AAR.UN
LW
INN.UN
RMM.UN
ACC
DRG.UN
BOXC
MRG.UN
CAR.UN
AP.UN
BOX.UN
CRR.UN
MRD
EXE
KMP
BAM
CHP.UN
BTB.UN
HOT.UN
FCR
AX.UN
SMU.UN
CWT.UN
RMZ
TPH
REF.UN
MRC
PAR.UN
NPR.UN
GRT.UN
MRT.UN
REI.UN
CRT.UN
CSH.UN
INO.UN
BPY.UN
BEI.UN
ACR.UN
WIR'U
HLC
GRPU

Simple Avg - All Real Estate

6.5%
5.1%
4.3%
3.5%
3.5%
3.2%
3.1%
2.5%
2.5%
2.3%
1.9%
1.8%
1.8%
1.7%
1.6%
1.6%
1.6%
1.5%
1.4%
1.3%
1.3%
1.2%
1.2%
1.1%
1.0%
1.0%
0.9%
0.9%
0.5%
0.5%
0.5%
0.4%
0.3%
0.1%
0.1%
0.0%
0.0%
0.0%
-0.1%
-0.2%
-0.2%
-0.3%
-0.3%
-0.5%
-0.6%
-0.6%
-0.6%
-0.7%
-0.9%
-1.0%
-1.2%
-1.3%
-1.5%
-2.7%
-2.9%
-3.4%

Price Change: Last Month

REIT/REOC
Ticker
InnVest
INN.UN
Tricon Capital
TCN
Brookfield Asset Mgmt (C$) BAM.A
FTSE NAREIT Global Index
MSCI US REIT Index
Regal
RLC
Brookfield Property Part.
BPY.UN
Leisureworld
LW
Temple
TPH
American Hotel
HOT.UN
First Capital Realty
FCR
Northwest Healthcare Prop. NWH.UN
Extendicare
EXE
Morguard
MRT.UN
S&P/TSX Composite*
Granite Real Estate (C$)
GRT.UN
Crombie
CRR.UN
Brookfield Asset Mgmt (US$) BAM
Morguard Residential
MRG.UN
Cominar
CUF.UN
WPT Industrial
WIR'U
Inovalis
INO.UN
RioCan
REI.UN
Dream Global
DRG.UN
Mainstreet Equity
MEQ
Amica Mature Lifestyles
ACC
BTB
BTB.UN
InterRent
IIP.UN
Allied Properties
AP.UN
CAP REIT
CAR.UN
Morguard Corp.
MRC
Chartwell
CSH.UN
Calloway
CWT.UN
CT REIT
CRT.UN
Milestone
MST.UN
PIRET
AAR.UN
Killam Properties
KMP
RetroCom
RMM.UN
S&P/TSX Capped REIT **
Granite Real Estate (US$)
GRPU
H&R
HR.UN
Brookfield Canada (C$)
BOX.UN
Boardwalk
BEI.UN
Agellan Commercial
ACR.UN
Summit Industrial
SMU.UN
Choice Properties
CHP.UN
Dream Industrial
DIR.UN
Dream Office
D.UN
Holloway
HLC
CREIT
REF.UN
Brookfield Canada (US$)
BOXC
Northern Prop.
NPR.UN
Dream Unlimited
DRM
Melcor Developments
MRD
Artis
AX.UN
Partners
PAR.UN

6.6%
6.2%
3.7%
3.1%
2.4%
2.2%
2.1%
2.0%
1.8%
1.8%
1.7%
1.6%
1.5%
1.1%
0.9%
0.5%
0.4%
0.2%
0.2%
0.2%
0.0%
0.0%
-0.5%
-0.8%
-0.8%
-1.1%
-1.3%
-1.3%
-1.4%
-1.5%
-1.6%
-1.6%
-1.6%
-1.9%
-1.9%
-2.0%
-2.1%
-2.2%
-2.5%
-2.6%
-2.7%
-2.9%
-3.4%
-4.0%
-4.0%
-4.5%
-4.5%
-4.6%
-5.4%
-5.6%
-6.3%
-7.2%
-7.4%
-7.9%
-8.2%
-11.7%

Price Change: Last 3 Months

REIT/REOC
Ticker
Brookfield Asset Mgmt (C$) BAM.A
Tricon Capital
TCN
MSCI US REIT Index
Brookfield Property Part.
BPY.UN
FTSE NAREIT Global Index
Brookfield Asset Mgmt (US$) BAM
InnVest
INN.UN
Allied Properties
AP.UN
Granite Real Estate (C$)
GRT.UN
Chartwell
CSH.UN
InterRent
IIP.UN
CT REIT
CRT.UN
First Capital Realty
FCR
Calloway
CWT.UN
WPT Industrial
WIR'U
CAP REIT
CAR.UN
Regal
RLC
RioCan
REI.UN
Granite Real Estate (US$)
GRPU
Morguard Corp.
MRC
Leisureworld
LW
Choice Properties
CHP.UN
Milestone
MST.UN
Holloway
HLC
H&R
HR.UN
Amica Mature Lifestyles
ACC
S&P/TSX Capped REIT **
Crombie
CRR.UN
Killam Properties
KMP
Brookfield Canada (C$)
BOX.UN
PIRET
AAR.UN
S&P/TSX Composite*
Cominar
CUF.UN
Morguard
MRT.UN
Morguard Residential
MRG.UN
BTB
BTB.UN
Summit Industrial
SMU.UN
Agellan Commercial
ACR.UN
Northwest Healthcare Prop. NWH.UN
CREIT
REF.UN
American Hotel
HOT.UN
Brookfield Canada (US$)
BOXC
Dream Global
DRG.UN
Mainstreet Equity
MEQ
Artis
AX.UN
Inovalis
INO.UN
Dream Industrial
DIR.UN
RetroCom
RMM.UN
Dream Office
D.UN
Partners
PAR.UN
Boardwalk
BEI.UN
Temple
TPH
Northern Prop.
NPR.UN
Melcor Developments
MRD
Extendicare
EXE
Dream Unlimited
DRM

0.8%

Simple Avg - All Real Estate

-1.6%

Simple Avg - All Real Estate

Source: Thomson Baseline, Bloomberg, BMO Capital Markets

Last Datapoint: January 2, 2015
Note: BMO Capital Markets is Restricted on Summit Industrial REIT and True North Commercial REIT

Page 10 January 6, 2015

17.2%
14.6%
14.2%
13.4%
12.3%
12.2%
10.6%
10.3%
9.6%
8.8%
8.6%
8.5%
7.8%
7.4%
7.2%
6.9%
5.3%
4.3%
4.3%
3.8%
3.8%
2.9%
2.5%
1.2%
0.9%
0.9%
0.9%
0.7%
-0.1%
-0.2%
-0.2%
-0.2%
-0.4%
-1.0%
-1.7%
-2.7%
-3.8%
-4.7%
-4.7%
-4.8%
-4.9%
-4.9%
-5.4%
-5.8%
-6.1%
-7.0%
-7.1%
-8.2%
-8.3%
-8.6%
-10.3%
-15.6%
-16.1%
-19.8%
-19.9%
-21.2%

-0.4%

Price Change: Last 12 Months

REIT/REOC
Ticker
Holloway
HLC
Brookfield Asset Mgmt (C$)
BAM.A
Brookfield Asset Mgmt (US$) BAM
Milestone
MST.UN
Brookfield Property Part.
BPY.UN
MSCI US REIT Index
WPT Industrial
WIR'U
FTSE NAREIT Global Index
InnVest
INN.UN
Leisureworld
LW
CAP REIT
CAR.UN
Morguard Corp.
MRC
Chartwell
CSH.UN
Tricon Capital
TCN
Regal
RLC
Allied Properties
AP.UN
InterRent
IIP.UN
CT REIT
CRT.UN
Morguard
MRT.UN
Calloway
CWT.UN
S&P/TSX Composite*
First Capital Realty
FCR
RioCan
REI.UN
Granite Real Estate (C$)
GRT.UN
CREIT
REF.UN
Morguard Residential
MRG.UN
BTB
BTB.UN
S&P/TSX Capped REIT **
Boardwalk
BEI.UN
Mainstreet Equity
MEQ
H&R
HR.UN
Summit Industrial
SMU.UN
Brookfield Canada (C$)
BOX.UN
Cominar
CUF.UN
Inovalis
INO.UN
Choice Properties
CHP.UN
Agellan Commercial
ACR.UN
Dream Global
DRG.UN
Killam Properties
KMP
Granite Real Estate (US$)
GRPU
Artis
AX.UN
Extendicare
EXE
Melcor Developments
MRD
Crombie
CRR.UN
American Hotel
HOT.UN
Dream Industrial
DIR.UN
PIRET
AAR.UN
Brookfield Canada (US$)
BOXC
Northwest Healthcare Prop.
NWH.UN
Dream Office
D.UN
Amica Mature Lifestyles
ACC
RetroCom
RMM.UN
Northern Prop.
NPR.UN
Temple
TPH
Partners
PAR.UN
Dream Unlimited
DRM

Simple Avg - All Real Estate

53.3%
43.4%
30.3%
29.7%
27.9%
27.3%
27.3%
27.1%
25.3%
24.8%
19.9%
19.1%
19.1%
17.2%
16.4%
15.1%
13.1%
10.6%
10.4%
9.7%
8.5%
8.2%
7.5%
7.3%
6.5%
6.0%
5.6%
5.1%
4.2%
3.3%
2.9%
2.7%
2.6%
2.1%
1.0%
0.9%
-0.9%
-1.1%
-1.4%
-1.9%
-2.8%
-3.2%
-3.7%
-4.0%
-4.6%
-4.7%
-5.6%
-6.4%
-11.0%
-11.5%
-13.6%
-15.9%
-17.1%
-29.4%
-30.7%
-40.6%

5.1%

Sector Comment

Financials - Real Estate/REITs

Valuation Comparisons:
Cdn REIT Current Valuation vs. Other Benchmark Indices
6x
Historical Spread

4.3x
Current Spread

Premium/(Discount) - Multiple Spread in Points

4x

2x

1.2x
0.3x

4.3x

0.8x

0x
-3.6x

0.0x

-2.4x

-2x

-3.4x

-4x

-6x
-5.9x

-8x
US REITs

S&P/TSX Comp

Cdn Banks

Cdn Utilities

Cdn Telecom

Note: Historical averages since 2004

Source: BMO Capital Markets, Bloomberg

Canadian REIT Price Performance vs. US REITs and TSX Composite

140

Cdn REITs Peak

Valuation (Q1/07):
Fwd AFFO multiple
almost 20x
(6% implied cap rate)

Cdn REITs Current

Valuation: 2015E AFFO
multiple 15.3x
(6.2% implied cap rate)

Cdn REITs Trough

Valuation (Mar/09): Forward
AFFO multiple 9.3x (8.7%
implied cap rate)

Implied Cap Rate

Spread to Gov'ts: 190 bps*

Current Implied Cap Rate

Spread to Gov'ts: 448 bps

S&P/TSX
Composite

Implied Cap Rate

Spread to Gov'ts: 590 bps*

Price Only Performance (Indexed to 100)

115

90

65

S&P/TSX REIT
Composite

MSCI US REIT

40

15
Dec-06

Jun-07

Dec-07

Jun-08

Source: Bloomberg, BMO Capital Markets

Last Datapoint: January 2, 2015

Page 11 January 6, 2015

Dec-08

Jun-09

Dec-09

Jun-10

Dec-10

Jun-11

Dec-11

Jun-12

Dec-12

Jun-13

Dec-13

Jun-14

* Min/Max Cap Rate Spread was in Q3/07 (at 170 bps) and Q3/09 (at 590 bps)

Dec-14

Sector Comment

Financials - Real Estate/REITs

Valuation Comparisons: Canadian REIT Implied Cap Rate Spreads

Canadian REIT Implied Cap Rate* Spread to 10 Year Gov't Bond Yields
7%

Q1/09 Max Spread: 587 bps

6%

Current Spread: 448 bps

5%

4%

3%

Long Term Historical Avg. Spread: 363 bps

2%

1%

Q3/07 Min Spread: 171 bps

0%
Q1/98

Q3/99

Q1/01

Q3/02

Q1/04

Q3/05

Q1/07

Source: BMO Capital Markets

Last Datapoint: January 2, 2015

Q3/08

Q1/10

Q3/11

Q1/13

Q3/14

* Private market data was used for Q1/98-Q4/05 Implied Cap Rate;
wtd avg of All Cdn REITs used thereafter

Canadian REIT Implied Cap Rate* Spread to 10 Year BBB Corp Bond Yields
4%

Q4/03 Max Spread: 349 bps

4%

Current Spread: 266 bps

3%

Long Term Historical Avg. Spread: 188 bps

3%

2%

2%

1%

1%

Q3/07 Min Spread: 41 bps

0%
Q1/98

Q3/99

Q1/01

Source: BMO Capital Markets

Last Datapoint: January 2, 2015

Page 12 January 6, 2015

Q3/02

Q1/04

Q3/05

Q1/07

Q3/08

Q1/10

Q3/11

Q1/13

Q3/14

* Private market data was used for Q1/98-Q4/05 Implied Cap Rate;
wtd avg of All Cdn REITs used thereafter

Sector Comment

Financials - Real Estate/REITs

Historical Private Market Cap Rate Spreads to 10-yr GOC Bond and
BBB Bonds by Property Type
Private Market Data:
1
Population-Weighted Average National Private Market Historical Cap. Rate & Spread to Canadian 10 Year Gov't Bonds and BBB Corporates
CBD Office
Suburban Office A&B2
Industrial A&B
Retail -Neighborhood Apartment -High Rise 3 National
Ave Cap Spread
Ave Cap Spread
Ave Cap Spread
Ave Cap Spread
Average
Ave Cap Spread
9.4%
1.3%
10.8%
2.7%
10.6%
2.5%
10.2%
2.1%
9.8%
1.7%
10.1%
1992
9.6%
2.4%
11.4%
4.2%
10.7%
3.5%
10.3%
3.1%
10.2%
2.9%
10.4%
1993
9.8%
1.3%
11.0%
2.6%
10.5%
2.0%
10.3%
1.8%
10.8%
2.3%
10.5%
1994
9.6%
1.6%
12.3%
4.2%
10.3%
2.2%
10.2%
2.2%
10.7%
2.6%
10.6%
1995
9.4%
2.2%
10.3%
3.1%
9.9%
2.7%
10.4%
3.2%
8.6%
1.4%
9.7%
1996
8.9%
2.7%
10.4%
4.3%
9.5%
3.4%
9.8%
3.7%
8.9%
2.8%
9.5%
1997
8.6%
3.3%
9.2%
4.0%
9.3%
4.0%
9.4%
4.1%
8.5%
3.2%
9.0%
1998
8.8%
3.2%
9.0%
3.4%
9.3%
3.7%
9.6%
4.0%
8.3%
2.7%
9.0%
1999
9.1%
3.2%
9.6%
3.7%
9.6%
3.7%
9.8%
4.0%
8.1%
2.2%
9.2%
2000
8.7%
3.2%
10.0%
4.5%
9.5%
4.0%
9.8%
4.3%
7.9%
2.5%
9.2%
2001
8.6%
3.3%
10.1%
4.8%
9.4%
4.1%
10.0%
4.8%
7.6%
2.4%
9.1%
2002
9.0%
4.2%
10.5%
5.7%
9.2%
4.4%
9.9%
5.2%
7.7%
2.9%
9.2%
2003
8.6%
4.1%
9.6%
5.1%
8.2%
3.7%
8.5%
3.9%
7.3%
2.8%
8.5%
2004
7.4%
3.4%
9.2%
5.2%
7.5%
3.5%
7.6%
3.6%
6.8%
2.8%
7.7%
2005
6.6%
2.4%
7.5%
3.3%
7.1%
2.9%
7.2%
3.0%
6.5%
2.3%
7.0%
2006
6.3%
2.1%
6.9%
2.6%
6.8%
2.5%
6.9%
2.6%
5.8%
1.6%
6.5%
2007
6.6%
3.0%
7.3%
3.7%
6.8%
3.2%
7.3%
3.7%
6.1%
2.5%
6.8%
2008
7.4%
4.2%
8.2%
5.0%
8.0%
4.8%
8.2%
5.0%
6.5%
3.3%
7.7%
2009
6.9%
3.7%
7.9%
4.6%
7.5%
4.3%
7.4%
4.2%
6.3%
3.0%
7.2%
2010
6.2%
3.4%
7.3%
4.5%
7.0%
4.2%
6.9%
4.1%
5.8%
3.1%
6.6%
2011
5.7%
3.8%
6.9%
5.0%
6.7%
4.8%
6.5%
4.7%
5.1%
3.2%
6.2%
2012
5.6%
3.8%
6.7%
4.9%
6.5%
4.6%
6.4%
4.5%
4.9%
3.1%
6.0%
Q1/13
5.6%
3.2%
6.9%
4.4%
6.5%
4.1%
6.4%
3.9%
4.9%
2.5%
6.1%
Q2/13
5.7%
3.1%
6.9%
4.3%
6.6%
4.1%
6.4%
3.9%
4.9%
2.4%
6.1%
Q3/13
5.7%
2.9%
6.9%
4.1%
6.6%
3.9%
6.4%
3.7%
5.2%
2.4%
6.2%
Q4/13
5.6%
3.2%
6.8%
4.4%
6.6%
4.2%
6.4%
4.0%
5.0%
2.6%
6.1%
2013
5.7%
3.3%
6.9%
4.4%
6.6%
4.2%
6.4%
4.0%
5.2%
2.7%
6.2%
Q1/14
5.7%
3.5%
6.9%
4.6%
6.5%
4.3%
6.4%
4.2%
5.2%
2.9%
6.1%
Q2/14
5.7%
3.6%
6.8%
4.6%
6.4%
4.3%
6.4%
4.3%
5.1%
3.0%
6.1%
Q3/14
5.7%
4.0%
6.8%
5.0%
6.4%
4.7%
6.4%
4.7%
5.1%
3.4%
6.1%
Current5
8.2%
3.0%
9.3%
4.1%
8.7%
3.5%
8.9%
3.7%
7.8%
2.6%
8.6%
Historical Average:
7.2%
3.4%
8.3%
4.5%
7.7%
3.9%
7.9%
4.1%
6.5%
2.7%
7.5%
Last 10 Year Average:
Historical Max Spread: Gov't Bonds - 2003 (446 bps); BBB Corps - 2003 (314 bps)
Historical Min Spread: Gov't Bonds - 1992 (206 bps)/1994 (202 bps)/ 2007 (228 bps); BBB Corps - 1992 (22 bps)/ 2008 (50 bps)
National Includes: Vancouver, Calgary, Edmonton, Toronto, Ottawa, Montreal, Halifax 4
Source: Bloomberg, CBRE, Reuters, BMO Capital Markets

Spread
to 10-yr GOC Bond
2.1%
3.2%
2.0%
2.6%
2.5%
3.4%
3.7%
3.4%
3.4%
3.7%
3.9%
4.5%
3.9%
3.7%
2.8%
2.3%
3.2%
4.5%
4.0%
3.9%
4.3%
4.2%
3.6%
3.6%
3.4%
3.7%
3.7%
3.9%
3.9%
4.4%
3.4%
3.7%

Spread
to BBB Bonds
0.2%
1.9%
1.2%
1.4%
1.5%
2.4%
2.6%
1.9%
1.6%
1.6%
1.9%
3.1%
2.8%
2.6%
1.7%
0.9%
0.5%
1.5%
2.2%
1.8%
2.0%
2.1%
1.5%
1.5%
1.5%
1.7%
2.0%
2.4%
2.3%
2.5%
1.8%
1.9%

1. Annual 10 year bond yields represents the average of each trading day's close for the year.
2. Suburban Office cap rates pre-2007 are estimated
3. 1992-1999 Apartment cap rates estimated
4. 1989-1999 & 2004 Exclude Ottaw a & Halifax for w hich cap rates w ere not available
5. Current reflects latest available average cap. rates (Q3/14) and bond yields as of January 2, 2015

4.5%

Canadian 10-yr Government Bond Yield

4.0%

3.5%

3.0%

2.5%

2.0%

As at January 2, 2015 1.74%

1.5%
Apr-08

Sep-08

Mar-09

Sep-09

Mar-10

Source: BMO Capital Markets, Thomson Baseline

Page 13 January 6, 2015

Sep-10

Mar-11

Sep-11

Mar-12

Sep-12

Mar-13

Sep-13

Mar-14

Aug-14

Sector Comment

Financials - Real Estate/REITs

Valuation:
Canadian REIT AFFO Yield Spreads
Canadian REIT AFFO Yields Spread to 10-Year Cda Gov't Yields
10%

Max
spread:
795 bps

9%

Spreads to 10-year Canada

yields are currently ~133 bps
above the historical average.

8%

Current Spread: 506 bps

7%

6%

5%

Hist. Avg Spread: 373 bps

4%

3%

2%

1%

Min spread: 66 bps

0%

Dec-98

Dec-99

Dec-00

Dec-01

Dec-02

Dec-03

Dec-04

Dec-05

Dec-06

Dec-07

Dec-08

Dec-09

Dec-10

Dec-11

Dec-12

Dec-13

Dec-14

Source: BMO Capital Markets, Bloomberg

Last Datapoint: January 2, 2015

5%

Max spread:
476 bps

Canadian REIT AFFO Yields Spread to BBB Corporate Bond Yields

Current Spread: 324 bps

4%

3%

Hist. Average Spread: 194 bps

2%

1%

0%

Min spread: - 60 bps

-1%

Dec-98

Dec-99

Dec-00

Dec-01

Source: BMO Capital Markets, Bloomberg

Last Datapoint: January 2, 2015

Page 14 January 6, 2015

Dec-02

Dec-03

Dec-04

Dec-05

Dec-06

Dec-07

Dec-08

Dec-09

Dec-10

Dec-11

Dec-12

Dec-13

Dec-14

Sector Comment

Financials - Real Estate/REITs

Canadian REIT AFFO Yield vs. S&P/TSX Composite Earnings Yield

12%

11%

10%

Current Spread: 33 bps

9%

8%

7%

Peak Spread: 266 bps

6%

5%

4%

Mar-05

Nov-05

Jul-06

Mar-07

Nov-07

Source: Bloomberg, BMO Capital Markets

Last Datapoint: January 2, 2015

Jul-08

Mar-09

Nov-09

Jul-10

Mar-11

Nov-11

Cdn REITs AFFO Yield

Jul-12

Mar-13

Nov-13

Jul-14

S&P/TSX Composite Earnings Yield

Valuation:
Canadian REIT Historical AFFO Multiple
Canadian REIT Historical AFFO Multiple
26x
24x

Peak = 19.7x

22x

AFFO Multiple

20x
18x

Current = 15.3x
Average Forward
AFFO Multiple = 13.8x

16x
14x
12x
10x
8x
6x
4x
Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14

Source: BMO Capital Markets

* Pre-2006 Historical #s include RioCan, CREIT, H&R, Summit, Cominar and CAP; Fwd #s include all REITs in our coverage universe
Last datapoint: January 2, 2015

Page 15 January 6, 2015

Sector Comment

Financials - Real Estate/REITs

Valuation:
Canadian REIT Yield and Multiple Spread to U.S. REITs

Fwd AFFO Multiple Spread: Canadian vs. US REITs

Multiple Spread (Points)

Canadian REIT valuations

are now very compelling
relative to their U.S.
counterparts.

Multiple Spread (Points)

Canadian REITs trade at an

average discount to U.S.
REITs of ~6x P/AFFO.

Hist. Average Multiple Spread

(2)

(4)

Hist. Average (Forward) Spread : -3.5 points

(6)

Current Discount: -5.9 pts

(8)
Dec-98

Q3/02

May-05

May-06

May-07

May-08

May-09

May-10

May-11

May-12

Source: BMO Capital Markets, Thomson Baseline

May-13

May-14

Last Datapoint: January 2, 2015

Yield Spread: Canadian REITs vs. US REITs

6

peak differential: 355 bps

Spread (%)

current differential: 204 bps

Hist. Avg = 192 bps

trough differential: -66 bps

-1

-2
Jan-06

Sep-06

May-07

Source: BMO Capital Markets, Bloomberg

Page 16 January 6, 2015

Jan-08

Sep-08

May-09

Jan-10

Sep-10

May-11

Jan-12

Sep-12

May-13

Jan-14

Sep-14

Last pricing date: January 2, 2015

Sector Comment

Financials - Real Estate/REITs

Valuation:
Canadian REIT Yield and Multiple Spread to Banks

Multiple Spread: Cdn REITs (Fwd AFFO) vs. Banks (P/E)

Multiple Spread (Points)

Current Premium: 4.3 pts

Hist. Average Multiple Spread

Hist. Average (Forward) Spread : 4.3 points

Multiple Spread (Points)

(1)

(3)

(5)
Dec-98

Q3/02

May-05

May-06

May-07

May-08

May-09

May-10

May-11

May-12

May-13

May-14

Last Datapoint: January 2, 2015

Source: BMO Capital Markets, Thomson Baseline

Yield Spread: Canadian REITs vs. Banks

8

peak differential: 706 bps

7

Spread (%)

Hist. Avg = 232 bps

current differential: 185 bps

0
Jan-06

trough differential: 44 bps

Sep-06

May-07

Source: Bloomberg, BMO Capital Markets

Page 17 January 6, 2015

Jan-08

Sep-08

May-09

Jan-10

Sep-10

May-11

Jan-12

Sep-12

May-13

Jan-14

Sep-14

Last pricing date: January 2, 2015

Sector Comment

Financials - Real Estate/REITs

Valuation:
Canadian REIT Yield and Multiple Spread to Telecom
Multiple Spread: Cdn REITs (Fwd AFFO) vs. Telecom (P/E)
10
Multiple Spread (Points)
Hist. Average Multiple Spread

Current Premium: 0.3 pts

Multiple Spread (Points)

(5)

Hist. Average (Forward) Discount : 0.0 points

(10)

(15)
Q2/02

Q4/03 Apr-05 Oct-05 Apr-06 Oct-06 Apr-07 Oct-07 Apr-08 Oct-08 Apr-09 Oct-09 Apr-10 Oct-10 Apr-11 Oct-11 Apr-12 Oct-12 Apr-13 Oct-13 Apr-14 Oct-14

Source: BMO Capital Markets, Thomson Baseline

Last Datapoint: January 2, 2015

Yield Spread: Canadian REITs vs. Telecom

10

peak differential: 882 bps

Spread (%)

current differential: 95 bps

Hist. Avg = 147 bps

trough differential: -12 bps

-1
Jan-06

Sep-06

May-07

Source: Bloomberg, BMO Capital Markets

Page 18 January 6, 2015

Jan-08

Sep-08

May-09

Jan-10

Sep-10

May-11

Jan-12

Sep-12

May-13

Jan-14

Sep-14

Last pricing date: January 2, 2015

Sector Comment

Financials - Real Estate/REITs

Relative Valuation:
Current 2015E AFFO Multiple vs. Historical Average
Current 2015E AFFO Multiple vs. Historical Average

26x

Historical Average

24x

Current 2015E AFFO Multiple

23.3x

22x
19.9x

20x

18.9x

18x

19.0x

17.7x

16.9x

16x

17.0x

17.0x

16.0x

15.6x 15.9x

15.3x

14.3x 14.5x
14.1x

13.8x
13.4x 13.5x

14x
12x

13.3x
12.0x

11.5x 11.6x

10.7x

11.9x

10x

11.9x
10.8x

10.4x

10.3x

9.3x

8.7x

8x
6x
4x

Retail

Diversified

Office

Seniors

Source: BMO Capital Markets

Note:
1) Hist avg. multiples are reflective of predecessor company multiple for BOX.UN up until conversion to a REIT in May 2010.
2) CHP, ACR, CRT, SRT, WIR, MST and SMU (Restricted) historical averages not presented due to relatively shorter history.
3) IIP.UN, MST.UN, and RLC historical averages are based on available information since coverage initiation.

2015E AFFO Multiples by Property Type: Current vs. Historical Average

20x

18.1x
18x

15.2x

16x

14.4x

15.9x

15.6x
14.9x

14x

13.4x

12.9x 13.9x
11.9x

12x

12.8x
12.1x

10x

8x

6x

4x

2x

0x

Retail
Source: BMO Capital Markets

Page 19 January 6, 2015

Diversified
Hist Average

Current Average

Office

Industrial

Multi-Residential

Seniors

RLC 0.9x

2.6x

0.1x
LW

ACC -0.9x

CSH

MST

Multi-residential

NPR -2.5x

0.9x
IIP

CAR 1.3x

KMP -0.4x

-2x

BEI 0.3x

NWH

AP 3.9x

Industrial

BOX 5.6x

WIR

AAR 1.5x

HR -0.1x

MRT 0.6x

REF 2.3x

AX -2.3x

CUF -2.2x

REI -0.5x

ACR

SRT

CRT

FCR

RMM -0.6x

0.3x

2.3x

CRR

CHP

CWT 0.4x

0x
Spread

DIR -1.7x

2x

Sector Comment

Financials - Real Estate/REITs

Relative Valuation:
Prem/(Disc) to NAV
Current vs. Historical Premium/Discount to NAV
Historical NAV Prem/Disc (Median)

Current NAV Prem/Disc

20%
14%

15%
10%

8%

8%
4%

4%

5%

2%

2%

1%

0%

3%

0%
-5%

-4%

-5%

-7%

-7%

-10%

-9%

-9%

-15%

-14%

-9%
-13%

-15%

-13%
-16%

-20%
-19%

-18%

-18%

-19%

-20%

-16%

-19%

Retail

Industrial

9.8%

3.6%
RLC

3.1%

Multi-residential

LW

-4.5%

CSH

3.9%
IIP

ACC

-8.2%
KMP

-23.3%

-5.1%

NPR

-14.8%
BEI

CAR

Office

MST

0.1%

-10.2%

BOX

NWH

4.4%
AP

WIR

-6.5%

-7.6%

AAR

Diversified

DIR

-3.6%

-5.7%
HR

-1.4%

REF

-11.4%
CUF

MRT

-10.1%
AX

REI

ACR

1.2%

-13.8%
RMM

SRT

-3.4%
CRR

FCR

CRT

-6.8%
CHP

Spread

CWT

-30%

-4.7%

-22%

-25%

Seniors

*Historical NAV Prem/Disc median based on latest coverage universe or consensus data, since later of 2006 or IPO.
ACR, MST, WIR, CRT, SRT, CHP and SMU (Restricted) historicals were excluded due to shorter duration.

Source: BMO Capital Markets, SNL Financial

Historical Prem/(Disc) to NAV Chart

Canadian REITs - Weighted Average
30%

Peak NAV
Premium: 29.5%

25%

Current NAV Discount: -6.0%

20%
15%
10%
5%

Long-Term Average NAV Premium: 3.4%

0%
-5%
-10%

Trough NAV
Discount: -22.7%

Source: BMO Capital Markets

Last datapoint: January 2, 2015

Page 20 January 6, 2015

Dec-14

Aug-14

Apr-14

Dec-13

Apr-13

Aug-13

Apr-12

Dec-11

Aug-11

Apr-11

Dec-10

Aug-10

Apr-10

Dec-09

Apr-09

Aug-09

Dec-08

Aug-08

Apr-08

Dec-07

Apr-07

Aug-07

Dec-06

Apr-06

Aug-06

Dec-05

Apr-05

Aug-05

Dec-04

Apr-04

Aug-04

Dec-03

Apr-03

Aug-03

Dec-02

Aug-02

Apr-02

Dec-01

Apr-01

Aug-01

Dec-00

Aug-00

Apr-00

Dec-99

Aug-99

Apr-99

Dec-98

Apr-98

Aug-98

Dec-97

-25%
-30%

NAV Discount:
-14.0%

NAV Discount:
-19.3%

Dec-12

-20%

Aug-12

-15%

Sector Comment

Financials - Real Estate/REITs

Relative Valuation:
Latest Disclosed IFRS Cap Rates vs. Current Implied Cap Rates
Implied Cap Rates vs. Latest Disclosed IFRS Cap Rates

10%

Implied Cap Rate

IFRS Cap Rate

9%
8.2%

7.5%

7.4%
7.0%

7%

6.9% 7.0%

6.5%
5.8%

6.0%

7.2%

7.1%
6.8%

6.6%

6.4%
6.1%
5.8%

6.0%

5.7%

7.1%

7.0%

6.9%
6.5%

6.0% 6.3%
6%

8.2%

8.0%

7.9%

8%

5.6%

5.6%
5.2%

5%

4%

3%

2%
CHP CWT CRR FCR RMM CRT SRT REI ACR AX CUF MRT REF
Retail

Diversified

HR AAR DIR WIR

Industrial

AP BOX NWH BEI CAR KMP

Office

Source: BMO Capital Markets

* CSH.UN, RLC, LW, and ACC do not provide IFRS fair value cap rate updates.
Notes:
1. CAR and KMP IFRS Cap Rates are estimated based on property weightings of apartments and MHCs.
2. IFRS Cap Rates reflect latest reported quarter.

Page 21 January 6, 2015

IIP MST NPR ACC CSH LW RLC

Multi-residential

Seniors

Sector Comment

Financials - Real Estate/REITs

Canadian Real Estate Mutual Fund Flows

Mutual Fund Flows (Net Sales): Real Estate

300.00

250.00

200.00

(Cdn $ mil)

150.00

100.00

50.00

(50.00)

Real Estate Funds

12-month Normalized

May-06

May-09

(100.00)
May-00

May-01

May-02

May-03

May-04

May-05

May-07

May-08

Source: IFIC, BMO Capital Markets

*12 month-rolling period normalized for peaks caused by Feb/March RRSP season

May-10

May-11

May-12

May-13

Last Update: Dec/14

Funds Tracked for Mutual Fund Flows

Antares Real Estate Pool Fund Class A
ASTRA Morgan Stanley Global Real Estate
ASTRA Presima Global Real Estate Enhanced Yield
BlackRock CDN Glbl Dev Real Est Idx Cl D
BMO Equal Weight REITs Index ETF (ZRE)
BMO Equal Weight REITs Index ETF Inst
CDSPI Global Real Estate (Invesco)
Centurion Apartment REIT
CIBC Canadian Real Estate Fund
Counsel Global Real Estate Series A
Desjardins Global Real Estate Fund A Class
DFA Global Real Estate Securities Fund Class A
DFS Blackrock Global Real Estate Index
Dynamic Global Real Estate Fund Series A
Fidelity Global Real Estate Class Series A
Fidelity Global Real Estate Fund Series A
First Asset Canadian REIT ETF (FRF)
First Asset REIT Income Fund Class A
IA Ecoflex Real Estate Income
Invesco Global Real Estate Fund Series A
Investors Global Real Estate Fund Series C
iShares Global Real Estate Index ETF (CGR)
iShares S&P/TSX Capped REIT Index ETF (XRE)
as at December 2014

Page 22 January 6, 2015

May-14

Manulife Global Real Estate Class Advisor Series

Manulife Global Real Estate Fund Advisor Series
MFS Global Real Estate Fund
Middlefield Can-Global REIT Income Fund
Middlefield Real Estate Class Series A
MLI Pyramis Global Real Estate Fund
North American REIT Income Fund
Purpose Duration Hedged Real Estate ETF (PHR)
Purpose Duration Hedged Real Estate Fund A
Quadrus Global Real Estate Fund (London Cap) Quad
REIT IndexPlus Income Fund
Renaissance Global Real Estate Currency Neut Fd A
Renaissance Global Real Estate Fund Class A
Russell Global Real Estate Pool Series A
Scotia Private Global Real Estate Pool Pinnacle Sr
Scotia Private Real Estate Income Pool I
Sentry REIT Class Series A
Sentry REIT Fund A
Sprott Real Asset Class - Series A
Standard Life Global Real Estate Fund A-Series
United Real Estate Investment Corporate Class A
United Real Estate Investment Pool Class W
Vanguard FTSE Canadian Capped REIT Index ETF (VRE)

Sector Comment

Financials - Real Estate/REITs

Canadian REITs Capital Raising and Market Capitalization Growth

Canadian Real Estate Capital Raising (1) 1994-2015 YTD

2014 Total: $9,135 million

Secured Debentures:
$322 million

Equity (2)

Convertible Debentures

Unsecured Debentures

Secured Mortgage Bonds

Secured Debentures
$10,449

$10,500
$10,000

Unsecured Debentures:
$5,525 million

$9,135

$9,000
$8,500

Convertible Debentures:
$93 million

$8,000
$7,500
$6,785

$7,000

Preferred Equity:
$300 million

$6,500

(C$ millions)

Equity Issues:
$2,895 million

$9,662

$9,500

$6,000

$5,588

$5,500
$5,000

$4,475

$4,500
$3,710

$4,000
$2,961

$3,000

$2,615
$2,295

$2,500

$1,869

$2,000

$1,792

$1,261

$1,500
$681

$1,000
$500

$3,450
$3,160

$3,500

$48

$55

1994

1995

$980
$467

$367

1999

2000

$0

$0
1996

1997

1998

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

1) 2007+ incl. REIT & REOC capital raising; 1994-2006 includes REIT capital raising only
2) Equity includes preferred shares/units in 2007-2014YTD where applicable (ie. BPO, RioCan)

Source: SEDAR, BMO Capital Markets

BMO Canadian REIT Index Market Capitalization ($ million)

70,000
Apartments

Retail

Office

Industrial

Diversified

Seniors Housing

Hotels

Storage

45 REITs at January 2015

Ttl Mkt Cap = ~$62.6 Bln
Avg Mkt Cap = ~$1.4 Bln

60,000

50,000
12 REITs at the end of
2000:
Riocan, CREIT, H&R,
Summit, CAP, CPL,
ResREIT, Morguard,
Cominar, Royal Host, CHIP,
Legacy
Ttl Mkt Cap = $4.9Bn
Avg Mkt Cap = $410M

40,000

30,000

20,000

3 REITs at the end of

1994:
Riocan, CREIT,
RealFund
Ttl Mkt Cap = $185M
Avg Mkt Cap = $60M

10,000

Dec-94 Dec-95 Dec-96 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14
Source: BMO Capital Markets

Page 23 January 6, 2015

Sector Comment

Financials - Real Estate/REITs

Capital Raising 2014 to 2015 YTD Summary

Summary of 2014 to 2015 YTD Debt & Equity Offerings / IPO's
Secured Debentures
Announcement Date
23-Jan-14
Total Secured Raised

REIT
Leisureworld

Coupon/Spread
3.474%/150 bps

Details
7 years

Gross Raise (mil)

$322

Total to Public
$322

$322

$322

Unsecured Debentures
Announcement Date
10-Jan-14
13-Jan-14
14-Jan-14
16-Jan-14
3-Feb-14
3-Feb-14
6-Feb-14
28-Feb-14
4-Mar-14
5-Mar-14
20-Mar-14

REIT
First Capital Realty
Cominar REIT
Dundee
RioCan REIT
Choice Properties
Choice Properties
Calloway REIT
Crombie REIT
Cominar REIT
First Capital Realty
Artis REIT

Coupon/Spread
4.79%/207 bps
4.941%/275 bps
4.074%/210 bps
3.62%/160 bps
3.498%/160 bps
4.293%/190 bps
3.749%/187 bps
3.962%/195 bps
4.941%/260 bps
4.79%/184 bps
3.753%/200 bps

Details
10.6 years
6.5 years
6 years
6.5 years
7 years
10 years
7 years
7.3 years
6.4 years
10.5 years
5 years

Gross Raise (mil)

$150
$100
$150
$150
$250
$200
$150
$100
$100
$75
$125

Total to Public
$150
$100
$150
$150
$250
$200
$150
$100
$100
$75
$125

3.0%/94 bps
3.0%/100 bps
3.0%/128 bps

2 years
3 years
5.5 years

$300
$200
$300

$300
$200
$300

3.6%/140 bps
3.6%/155 bps

6 years
7.5 years

$300
$200

$300
$200

3.6%/167 bps
3.746%/167 bps
3.788%/185 bps
4.323%/194 bps
3.959%/175 bps
3.73%/170 bps
3.746%/171 bps
3.753%/198 bps
3.62%/197 bps
3-mo. CDOR + 108 bps
3.0%/127 bps
4.125%/240 bps
4.250%/255 bps

8.5 years
8 years
7 years
11 years
9 years
8 years
8 years
4.5 years
4.5 years
2 years
5.0 years
10.0 years
7.0 years

$300
$150
$250
$200
$50
$150
$100
$75
$300
$250
$400
$250
$200
$5,525

$300
$150
$250
$200
$0
$150
$100
$75
$300
$250
$0
$0
$200
$4,825

REIT
True North Apartment
NorthWest Intl. Healthcare Prop.
Melcor REIT

Coupon
5.75%
7.25%
5.50%

Details
5 years
5 years
5 years

Gross Raise (mil)

$23
$35
$35
$93

Total to Public
$23
$35
$35
$93

REIT
Brookfield Office Properties (BPY)

Interest
4.75%

Shares Offered
12.0

Gross Raise (mil)

$300
$300

Total to Public
$300
$300

15-Apr-14
15-Apr-14
7-May-14

Choice Properties (Series 5)2

Choice Properties (Series 6)2
Choice Properties (Series 7)2

7-May-14
7-May-14

Choice Properties (Series 8)2

Choice Properties (Series 9)2

7-May-14
22-May-14
23-Jun-14
8-Jul-14
8-Jul-14
15-Jul-14
6-Aug-14
10-Sep-14
17-Sep-14
17-Sep-14
18-Sep-14
18-Sep-14
8-Dec-14
Total Unsecured Raised
Convertible Debentures

Announcement Date
29-May-14
3-Sep-14
12-Nov-14
Total Converts Raised
Preferred Equity

Choice Properties (Series 10)

RioCan REIT
Granite
First Capital Realty
Calloway REIT
Calloway REIT
RioCan REIT
Artis REIT
Cominar REIT
Cominar REIT
Ventas
Ventas
Cominar REIT

Announcement Date
7-Oct-14
Total Pref Equity Raised

Source: Company Press Releases, BMO Capital Markets

Notes:
1. Amounts include o/a options - final amounts could change. Does not include issuances of Class B units
2. Secondary offering
3. BMO is restricted on Summit Industrial REIT and True North Commercial REIT
4. Total proceeds include a $250 million bought deal of trust units and a concurrent $250 million private placement of trust units to Ivanho Cambridge

Page 24 January 6, 2015

Sector Comment

Financials - Real Estate/REITs

Capital Raising 2014 to 2015 YTD Summary (Continued)

Equity Issues

1, 3

Announcement Date
8-Jan-14
26-Feb-14
17-Mar-14
24-Mar-14
8-Apr-14
15-Apr-14
16-Apr-14
22-Apr-14
30-Apr-14
12-May-14
15-May-14
15-May-14
20-May-14
21-May-14
29-May-14
18-Jun-14
9-Jul-14
16-Jul-14
17-Jul-14
17-Jul-14
12-Aug-14
18-Aug-14
26-Aug-14
3-Sep-14
17-Sep-14
25-Sep-14
6-Oct-14
6-Oct-14
17-Oct-14
27-Oct-14
5-Nov-14
6-Nov-14
6-Nov-14
10-Nov-14
11-Nov-14
11-Nov-14
13-Nov-14
11-Dec-14
15-Dec-14
Total Equity Raised

REIT
PIRET
Regal
WPT Industrial
Milestone Apartments
Dream Unlimited
HealthLease
Melcor REIT
FAM REIT 3
NorthWest Intl. Heathcare Prop.
Artis REIT
Summit Industrial REIT 3
AHIP
Regal Lifestyle
Crombie REIT
BTB REIT
PIRET
Pure Multi-Family REIT
Retrocom REIT

Offer Price
$4.55
$7.75
$9.30
$10.40
$15.70
$10.00
$10.65
$8.85
$2.05
$16.10
$5.80
$10.35
$7.65
$13.25
$4.55
$4.60
$5.06
$4.30

Units (mil)
16.4
3.0
2.7
6.6
3.7
7.5
2.2
2.7
11.2
7.1
5.0
4.5
4.1
7.5
5.6
38.8
6.4
12.1

Gross Raise (mil)

$75
$23
$32
$69
$58
$75
$23
$24
$23
$115
$29
$46
$31
$100
$25
$178
$32
$52

Total to Public
$75
$23
$25
$69
$58
$75
$23
$18
$23
$115
$29
$46
$31
$60
$25
$178
$32
$52

Dream Global REIT2

Dream Office REIT2
Allied Properties

$9.15
$28.70
$35.30

8.6
4.5
4.9

$79
$128
$173

$79
$128
$173

True North Commercial REIT 3

Cominar REIT
First Capital Realty
Slate Retail REIT
PRO REIT
Milestone Apartments
American Hotel Income Properties
Inovalis REIT
Firm Capital Property Trust
NorthWest Intl. Heathcare Prop.
CHC Realty Capital Corp.
InnVest REIT
Killam Properties
Nobel REIT
CREIT
RioCan REIT
True North Commercial REIT 3
Summit Industrial REIT 3

$6.55
$19.00
$19.06
$11.75
$2.30
$11.50
$10.45
$9.30
$5.35
$2.15
$0.11
$5.25
$10.55
$0.80
$49.00
$26.25
$6.15
$5.85

1.9
28.3
5.3
4.3
13.2
10.0
4.8
4.0
1.9
16.0
98.6
22.8
4.4
17.5
2.9
4.8
5.1
5.9

$13
$538
$100
$50
$31
$115
$50
$37
$10
$35
$11
$120
$46
$14
$144
$126
$31
$35
$2,895

$13
$288
$80
$50
$21
$115
$50
$37
$0
$35
$0
$73
$46
$12
$144
$126
$31
$35
$2,492

$9,135

$8,031

Total Capital Raised

Source: Company Press Releases, BMO Capital Markets
Notes:
1. Amounts include o/a options - final amounts could change. Does not include issuances of Class B units
2. Secondary offering
3. BMO is restricted on Summit Industrial REIT and True North Commercial REIT
4. Total proceeds include a $250 million bought deal of trust units and a concurrent $250 million private placement of trust units to Ivanho Cambridge

Page 25 January 6, 2015

Sector Comment

Financials - Real Estate/REITs

Canadian Real Estate M&A 20122015 Deals and Relative Performance

of 20122015 IPOs
Canadian Real Estate M&A 2012 - 2015 Deals
Equity

Date
Announced

Target

Acquirer

Aug-14

HealthLease Properties

Health Care REIT

Aug-14

Huntingdon Capital

Slate Properties

Enterprise
Value
($mm)

P/FFO
(FY1)

$529

$1,034

12.3x

$131

$210

na

na

Value ($mm)

P/AFFO
(FY1)

Implied

Close price

20 Day VWAP

Cap. Rate

% Change

% Change

~7%

31.2%

32.0%

Completed

na

11.8%

na

Completed

Status

2014
13.7x

Jun-14

BLF REIT

FTQ / 8881723 Canada Inc.

$25

$97

na

na

May-14

Royal Host Inc.

Holloway Lodging Corporation

$23

$157

7.4x

46.7x

Sep-13

Brookfield Office Properties

Brookfield Property Partners

~$11 billion

~$25 billion

27.7x

Mar-13

C2C Industrial

Dundee Industrial REIT

$84

$226

na

na

na

27.1%

33.4%

Completed

~8%

14.8%

13.6%

Completed

2013

33.9x

na

21.3%

20.8%

Completed

6.4%-6.7% 2

31.1%

28.3%

Completed

Mar-13

KEYreit

Plazacorp

$124

$325

17.4x

19.4x

6.8%

35.1%

35.1%

Completed

Feb-13

Primaris REIT

H&R REIT/KingSett-led Consortium

$2,780

$5,000

17.5x

20.1x

mid-5%

20.0%

20.4%

Completed

Completed

2012
Apr-12

TransGlobe REIT 3

Starlight / Daniel Drimmer

$1,029

$2,059

13.8x

17.6x

mid-5%

15.4%

19.3%

Apr-12

GT Canada Medical Prop 4

NVPI / NorthWest Healthcare REIT

$38

$87

na

na

7.0%

47.2%

na

Completed

Jan-12

Whiterock REIT 3

Dundee REIT

$600

$1,400

12.3x

14.5x

6.5%

13.6%

20.0%

Completed

May-12

Gazit America

Gazit-Globe/First Capital Realty

$165

$449

na

na

na

46.0%

49.0%

Completed

Cominar REIT

$900

$1,900

13.8x

16.3x

6.8%

24.2%

na

Completed

6.6%
7.6%

26.1%
22.4%

27.2%
31.3%

Nov-11

2012-2015 Average
Historical Average

Canmarc REIT

16.8x
13.7x

27.3x
19.8x

1. BMO Capital Markets is restricted on Summit Industrial REIT and True North Commercial REIT
2. 6.7% cap rate includes property management fee income
3. Based on forward consensus estimates
4. As part of the transaction, NVPI retained the management platform/shell of GT Canada, and sold all the assets to Northwest Healthcare REIT for $87.3M (on a neutral/equivalent basis)
Source: Company Reports, BMO Capital Markets

Page 26 January 6, 2015

Source: Bloomberg, BMO Capital Markets

Page 27 January 6, 2015

PIRET

RioCan

H&R

Cominar

Dundee International

Extendicare

Dundee

Chartwell

Artis

Tricon Capital

Brookfield Property Partners

Crombie

CAP REIT

First Capital Realty

RetroCom

Calloway

Brookfield Res (U$)

Allied Properties

Average Trading Volume

Dundee Industrial

Killam Properties

InnVest

CREIT

Temple

Boardwalk

Choice Properties

Plaza Retail

Royal Host

Morguard Res

Northern Prop.

BTB

Killam Properties

Granite (C$)

Melcor Developments

InterRent

American Hotels

Partners

Morguard REIT

Amica Mature Lifestyles

FAM

WPT Industrial

Brookfield Res (C$)

True North

Agellan

BOX (C$)

Melcor REIT

Mainstreet Equity

Morguard Corp.

Holloway

Lakeview

BOX (U$)

Huntingdon

Brookfield (U$)

Brookfield (C$)

RioCan

H&R

PIRET

Brookfield Res (U$)

Extendicare

Cominar

Dundee

Artis

Chartwell

Boardwalk

Dundee Industrial

Dundee International

Crombie

RetroCom

InnVest

First Capital Realty

CAP REIT

Allied Properties

Average Trading Volume

Choice Properties

Calloway

Tricon Capital

Leisureworld

Plaza Retail

CREIT

Lanesborough

Temple

Northwest Healtchare

Regal

Brookfield Property Partners

Source: Bloomberg, BMO Capital Markets

Leisureworld

Northwest Healtchare

BTB

Northern Prop.

Granite (C$)

Regal

American Hotels

Partners

Morguard REIT

Morguard Res

Amica Mature Lifestyles

True North

WPT Industrial

InterRent

FAM

Agellan

BOX (C$)

Huntingdon

Holloway

Brookfield Res (C$)

Melcor Developments

Lanesborough

Melcor REIT

Lakeview

Mainstreet Equity

Morguard Corp.

BOX (U$)

Royal Host

Sector Comment
Financials - Real Estate/REITs

Canadian REIT/REOC Average Daily Trading Volume (Last Week)

2,000,000

1,750,000

1,500,000

1,250,000

1,000,000

750,000

500,000

250,000

BMO Capital Markets is Restricted on Summit Industrial REIT, and True North Commercial REIT
Last Update: January 2, 2015

Canadian REIT/REOC Average Daily Trading Volume (Last Six Months)

1,500,000

1,250,000

1,000,000

750,000

500,000

250,000

BMO Capital Markets is Restricted on Summit Industrial REIT, and True North Commercial REIT

Last Update: January 2, 2015

Sector Comment

Financials - Real Estate/REITs

Net Insider Activity

Net Insider Activity ($Value) - 12 month Rolling Average* vs. S&P/TSX Capped REIT Index
$16,000,000

300

$14,000,000
250

$12,000,000

$10,000,000
S&P/TSX Capped REIT Index

200

$6,000,000
150
$4,000,000

(Index Price)

($value)

$8,000,000

$2,000,000
100
$0

-$2,000,000

50

-$4,000,000
Net Insider Activity ($value)
12 month Rolling Average
-$6,000,000
Dec-07

0
Jun-08

Dec-08

Jun-09

Dec-09

Jun-10

Dec-10

Jun-11

Dec-11

Jun-12

Dec-12

Jun-13

Dec-13

Jun-14

Dec-14

Source: SEDI, Ink Research, BMO Capital Markets

Last Updated: January 2, 2015

*normalized for outlier transaction activity including:

BAM purchase of 47.5 million shares of BPO in Aug/2010 and KingSett sale of 8.2 million units of PMZ.UN in Sep/2010,
Morguard Corp. buy of 870K MRG units in Mar/2013 and Alony-Hetz sale of $3.5 million units of FCR in May/2013 in order to
derive a stable trend.

2014 to 2015 YTD Aggregate "Net" Insider Buying and Selling of Equity
FCR
PLZ
NWH
PAR
AP
KMP
BEI
HR
CRR
D
BOX
EXE
CAR
INO
CUF
BPO
REI
AX
HOT
NPR
MST
LW
CSH
IIP
DI
BTB
HLP
REF
ACR
DIR
CRT
RLC
AAR
MRT
ACC
TPH
TN
SMU
RYL
MRG
INN
RMM
CWT
(5,500,000)

*INN.UN - NOT SHOWN TO SCALE

Kingsett Capital (Jon Love) acquired ~1.7 million units between the
prices of $5.24 and $5.29 in April 2014.

(4,500,000)

(3,500,000)

(2,500,000)

(1,500,000)

(500,000)

500,000

1,500,000

2,500,000

3,500,000

4,500,000

5,500,000

Units/Shares
Source: SEDI, INK Research, BMO Capital Markets
Last Updated: January 2, 2015

Note: BMO Capital Markets is Restricted on Summit Industrial REIT and True North Commercial REIT

Methodology: Insider buying/selling and NCIB activity are reported for Canadian REITs in our coverage/tracking universe. Our
reported activity excludes share/unit purchases under employee ownership plans. Insider selling activity through option exercise is
also excluded from the chart above, as these sale transactions are sometimes used as a funding source for the related option
exercise.

Page 28 January 6, 2015

Sector Comment

Financials - Real Estate/REITs

Financial Position Summary

FINANCIAL DETAILS

Agellan
Allied Properties
Amica Mature Lifestyles
Artis
Boardwalk
Brookfield Cda. REIT
Calloway
CAP REIT
Chartwell
Choice Properties 5
Cominar
CREIT
Crombie
CT REIT
Dream Industrial
First Capital Realty
H&R6
InterRent 6
Killam Properties
Leisureworld
Milestone
Morguard REIT
Northern Prop.
NorthWest Healthcare Prop.
PIRET
Regal
Retrocom
RioCan
Slate Retail REIT
WPT Industrial

Rtg

Price
2-Jan-15

Mkt
Cap ($M)

Implied
Cap Rate

Debt/
Total
Assets1

OP
OP
Mkt
OP
Mkt
Mkt
OP
OP
OP
Mkt
Mkt
Mkt
Mkt
Mkt
OP
Mkt
Mkt
OP
Mkt
OP
OP
Mkt
Mkt
Mkt
OP
Mkt
Mkt
OP
OP
OP

$8.67
$37.68
$6.95
$14.35
$62.04
$27.09
$27.48
$25.33
$11.86
$10.65
$18.76
$45.90
$12.99
$12.16
$8.43
$18.95
$21.95
$6.06
$10.31
$14.02
$12.17
$18.09
$23.57
$9.28
$4.42
$9.00
$3.91
$26.72
$10.35
$10.95

$203
$2,813
$214
$1,949
$3,227
$2,527
$3,730
$2,842
$2,101
$4,088
$2,953
$3,321
$1,696
$2,206
$645
$4,090
$6,375
$350
$622
$508
$749
$1,124
$750
$431
$848
$281
$311
$8,382
$209
$322

8.2%
5.8%
7.2%
7.0%
5.5%
6.1%
6.3%
5.2%
6.8%
6.0%
6.9%
6.0%
6.5%
6.0%
7.4%
5.8%
6.5%
5.6%
6.4%
8.2%
7.1%
7.0%
8.0%
7.0%
6.6%
7.1%
7.5%
5.7%
7.9%
6.9%

52%
35%
65%
50%
36%
43%
43%
47%
55%
45%
56%
37%
53%
49%
53%
48%
47%
50%
54%
58%
52%
45%
47%
52%
49%
60%
56%
44%
57%
51%

54%
32%
64%
48%
37%
43%
43%
46%
50%
46%
58%
37%
51%
48%
52%
46%
43%
51%
55%
55%
51%
50%
45%
58%
48%
55%
59%
43%
59%
51%

7.2x
6.4x
13.3x
8.2x
8.0x
11.0x
7.9x
9.8x
8.3x
7.4x
9.3x
6.8x
8.7x
7.3x
8.1x
9.5x
7.9x
12.5x
10.2x
8.3x
8.8x
7.7x
7.1x
9.4x
7.8x
9.1x
9.6x
8.0x
8.9x
7.8x

81%
70%
84%
87%
62%
92%
84%
79%
72%
89%
94%
66%
95%
86%
88%
90%
80%
52%
86%
68%
76%
72%
72%
95%
92%
85%
113%
88%
62%
86%

3.4x
3.4x
2.0x
2.9x
3.5x
2.2x
2.8x
2.7x
2.4x
3.5x
2.5x
3.4x
2.5x
3.1x
3.1x
2.2x
2.7x
2.7x
2.7x
3.4x
2.9x
2.7x
3.5x
2.5x
3.0x
2.6x
2.2x
3.0x
3.6x
3.3x

$60,006

6.2%

46%

45%

8.3x

82%

2.9x

Total/Weighted Average:

Debt/
MVA
BMO2

2015E Net
Debt/
EBITDA3

AFFO
Payout
('15E)

Interest
% of Mort
Coverage due by end
2015E3
of 20147

PUD as a
% of
Assets 4

Access to
Gov't Backed
Debt/CMHC8

DBRS
Credit
Rating

0%
2%
44%
3%
10%
4%
3%
3%
3%
0%
4%
4%
0%
0%
3%
3%
2%
18%
4%
10%
0%
0%
8%
0%
0%
1%
7%
5%
0%
0%

0%
4%
2%
2%
0%
6%
4%
0%
1%
0%
1%
7%
0%
1%
0%
1%
1%
8%
3%
0%
0%
1%
4%
0%
5%
0%
1%
4%
0%
0%

No
No
Yes
No
Yes
No
No
Yes
Yes
No
No
No
No
No
No
No
No
Yes
Yes
Yes
Yes
No
Yes
No
No
No
No
No
No
No

not rated
BBB (low)
not rated
BBB (low)
not rated
BBB
BBB
not rated
not rated
BBB
BBB (low)
BBB
BBB (low)
BBB (high)
not rated
BBB (high)
BBB (high)
not rated
not rated
not rated
not rated
BB (high)
not rated
not rated
not rated
not rated
not rated
BBB (high)
not rated
not rated

3%

2%

(1) Last reported quarter debt to total assets (including convertible debentures) adjusted for post-quarter announcements for companies in our coverage universe. Debt to GBV (at historical cost) for Amica, Chartw ell, Leisurew orld, and Regal.
(2) Debt to market value of asset (including convertible debentures) based on BMO's NAV estimate (portfolio value calculation based on BMO's 12-month forw ard NOI estimate and cap rate).
(3) Calculated as trailing tw elve months.
(4) As at latest reported quarter, does not include Mezz Financing, Land Inventory or Development Pipeline.
(5) Choice Properties has ~0.6 million of GLA under various stages of pre-development at Q3/14.
(6) H&R and InterRent % of Mort based on Maturing Mortgages and Min. Principal Payments.
(7) Figures last reported as at Q3 2014
(8) Regal is undergoing the approval process to obtain access to CMHC financing on its entire portfolio.
Source: Company Reports, BMO Capital Markets

Page 29 January 6, 2015

Sector Comment

Financials - Real Estate/REITs

Financial Position: Mortgage Maturity Schedule

60.0%

6.0%
5.3%

5.1%

4.9%

4.8%

50.0%

4.8%
4.5%

4.2%

4.2%
40.0%

4.9%

4.9%

4.8%
4.4%

3.9%

3.7%

3.6%

3.4%

4.1%

4.0%

3.9% 3.9% 3.8%

3.9%
3.7%

4.3%

4.2%

4.2%

3.7%

5.0%

4.6%

3.4% 3.7%

4.0%

3.3%

% of Mortgages Expiring 2014

% of Mortgages Expiring 2015

% of Mortgages Expiring 2016

Weighted Avg. Interest Rate (RH)

WPT Industrial

Summit

Slate Retail REIT

RioCan

Retrocom

Regal

PIRET

NorthWest Healthcare

Northern Prop.

Morguard REIT

Milestone

Leisureworld

Killam Properties

InterRent

H&R

First Capital

Dream Industrial

CT REIT

Crombie

CREIT

Cominar

Choice Properties

Chartwell

CAP REIT

0.0%

Calloway

0.0%

Brookfield Cda.

1.0%

Boardwalk

10.0%

Artis

2.0%

Amica

20.0%

Allied

3.0%

Agellan

30.0%

Source: BMO Capital Markets, Company reports

* Financial position data as of Q3/14

Note: BMO Capital Markets is Restricted on Summit Industrial REIT and True North Commercial REIT

Page 30 January 6, 2015

Sector Comment

Financials - Real Estate/REITs

Financial Position: Debt to Total Assets

Amica Mature Lifestyles**
Regal**
Slate Retail REIT
Leisureworld**
Retrocom
Cominar
Chartwell**
Killam Properties
Dream Industrial
Crombie
Agellan
PIRET
Summit
Milestone
NorthWest Healthcare Prop.
WPT Industrial
InterRent
Artis
H&R
CT REIT
First Capital Realty
CAP REIT
Northern Prop.
Choice Properties
Morguard REIT
RioCan
Calloway
Brookfield Cda. REIT
CREIT
Boardwalk
Allied Properties
25%

65%
60%
59%
58%
56%
56%
55%
54%
53%
53%
52%
52%
52%
52%
52%
51%
50%
50%
50%
49%
48%
47%
47%
45%
45%
44%
43%
43%
37%
36%
35%
35%

45%

55%

65%

75%

Source: BMO Capital Markets, Company reports

* Financial position data as of last reported quarter adjusted for post-quarter announcements
** Debt to GBV (at historical cost) for Amica, Leisureworld, Regal, Chartwell.

Note: BMO Capital Markets is Restricted on Summit Industrial REIT and True North Commercial REIT

Page 31 January 6, 2015

Sector Comment

Financials - Real Estate/REITs

REIT & REOC Convertible Debentures

2-Jan-15
Closing Values

(C$, unless otherwise indicated)

2-Jan-15
Price

Percent
Change

Size
(MM)

Coupon
Rate

Yield to
Maturity

Issue
Date

Maturity
Date

Unit
Price

Conv.
Price

Current
Premium

Soft Call
Date
Trigger

Hard
Call Date

Payment Dates

Select REIT & REOC Convertible Debentures

Artis REIT - F
Artis REIT - G
BTB REIT - D
BTB REIT - E
Calloway REIT - 5.75%

$103.50
$102.50
$101.99
$100.00
$108.02

----0.0%

$86.3
$88.0
$23.0
$20.0
$60.0

6.00%
5.75%
8.00%
6.90%
5.75%

5.4%
5.4%
6.8%
6.7%
2.4%

Apr-10
Apr-11
Jan-11
Feb-13
Jan-10

Jun-20
Jun-18
Jan-16
Mar-20
Jun-17

$14.35
$14.35
$4.70
$4.70
$27.48

$15.50
$18.96
$5.00
$6.15
$25.75

11.8 %
35.4 %
8.5 %
30.9 %
1.2 %

31-Mar-14
30-Jun-14
31-Jan-14
31-Jan-14
30-Jun-13

$19.38
$23.70
$1.25
$1.25
$32.18

31-Mar-16
30-Jun-16
31-Jan-15
31-Jan-15
30-Jun-15

Jun-30
Jun-30
Jan-31
Jan-31
Jun-30

Dec-31
Dec-31
Jul-31
Jul-31
Dec-31

Chartwell Seniors Housing REIT - 5.70%

Cominar REIT - D
Cominar REIT - E
Crombie REIT - C
Crombie REIT - D
Crombie REIT - E
DREAM Industrial - 5.25%
DREAM Global REIT - 5.50%
Extendicare Inc. - 6.00%
First Capital Realty - 4.95%
First Capital Realty - 5.70%
First Capital Realty - 5.40%
First Capital Realty - 5.25%
First Capital Realty - 5.25%
First Capital Realty - 4.75%
First Capital Realty - 4.45%
H&R REIT - 5.90%
H&R REIT - 4.50%
InnVest REIT - D
InnVest REIT - E
InnVest REIT - F
InnVest REIT - G
Killam Properties - 5.65%
Killam Properties - 5.45%
Lanesborough REIT - G
Morguard REIT - 4.85%
Northwest International Healthcare - 7.25%
Partners - 5.50%
Plaza Retail REIT - 5.75%
Morguard NAR - 4.65%
Regal - 6.00%
Retrocom Mid-Market REIT - 6.75%
Retrocom Mid-Market REIT - 5.45%
Retrocom Mid-Market REIT - 5.50%
Temple Hotels Inc. - 7.00%
Temple Hotels Inc. - 7.25%
Temple Hotels Inc. - 7.75%
Temple Hotels Inc. - 8.00%
True North - 5.75%

$111.00
$101.50
$104.16
$103.95
$101.10
$102.50
$101.50
$100.00
$102.81
$101.25
$104.50
$101.15
$101.50
$101.95
$100.00
$98.40
$106.00
$101.85
$104.00
$100.75
$100.75
$103.90
$104.03
$103.50
$84.00
$103.01
$88.00
$88.00
$102.25
$101.90
$105.50
$100.41
$95.50
$90.11
$86.00
$89.00
$96.00
$99.00
$102.50

-------0.5%
--1.5%
-----------------------------

$135.0
$115.0
$86.3
$45.0
$60.0
$75.0
$86.3
$161.0
$126.5
$75.0
$50.0
$57.5
$57.5
$50.0
$52.5
$57.5
$100.0
$75.0
$50.0
$75.0
$50.0
$115.0
$57.5
$46.0
$25.7
$150.0
$35.0
$23.0
$34.0
$60.0
$25.0
$22.8
$40.0
$28.8
$38.0
$46.0
$34.5
$23.0
$23.0

5.70%
6.50%
5.75%
5.75%
5.00%
5.25%
5.25%
5.50%
6.00%
4.95%
5.70%
5.40%
5.25%
5.25%
4.75%
4.45%
5.90%
4.50%
6.75%
6.00%
5.75%
6.25%
5.65%
5.45%
9.50%
4.85%
7.25%
5.50%
5.75%
4.65%
6.00%
6.75%
5.45%
5.50%
7.00%
7.25%
7.75%
8.00%
5.75%

2.3%
5.3%
4.0%
4.5%
5.0%
4.8%
4.7%
5.5%
5.3%
4.5%
4.4%
5.3%
5.0%
4.7%
4.8%
4.9%
4.7%
3.6%
5.8%
6.0%
5.9%
5.4%
4.2%
4.4%
16.9%
4.1%
11.4%
9.5%
7.1%
3.6%
4.6%
6.0%
7.1%
7.7%
12.8%
12.6%
9.8%
9.1%
5.7%

Mar-12
Sep-09
Jan-10
Feb-10
Jul-12
Aug-13
Dec-12
Aug-11
Sep-12
Feb-12
Dec-09
Apr-11
Aug-11
Dec-11
May-12
Feb-13
Jul-10
Nov-11
Dec-09
Aug-10
Mar-11
Feb-13
Nov-10
Jun-11
Dec-06
Oct-12
Sep-14
Mar-13
Oct-13
Mar-13
Oct-13
Jul-10
Jun-11
May-13
Feb-13
Aug-12
Mar-12
Nov-11
Jun-14

Mar-18
Sep-16
Jun-17
Jun-17
Sep-19
Mar-21
Dec-19
Jul-18
Sep-19
Mar-17
Jun-17
Jan-19
Jan-19
Mar-18
Jul-19
Feb-20
Jun-20
Dec-16
Mar-16
Sep-17
Mar-18
Mar-19
Nov-17
Jun-18
Jun-18
Oct-17
Oct-19
Mar-18
Dec-18
Mar-18
Dec-18
Jul-15
Jun-18
Jun-20
Mar-18
Sep-17
Jun-17
Dec-16
Jun-19

$11.86
$18.76
$18.76
$12.99
$12.99
$12.99
$8.43
$8.60
$6.58
$18.95
$18.95
$18.95
$18.95
$18.95
$18.95
$18.95
$21.95
$21.95
$5.85
$5.85
$5.85
$5.85
$10.31
$10.31
$0.47
$18.09
$1.99
$3.71
$4.09
$10.00
$9.00
$3.91
$3.91
$3.91
$4.05
$4.05
$4.05
$4.05
$7.78

$11.00
$20.50
$25.00
$15.30
$20.10
$17.15
$13.80
$13.00
$11.25
$23.75
$18.75
$22.62
$23.77
$23.25
$26.75
$26.75
$23.50
$25.70
$5.70
$8.00
$9.45
$7.50
$13.40
$14.60
$7.00
$24.60
$2.60
$10.25
$5.75
$15.50
$9.75
$5.05
$8.10
$7.20
$7.80
$8.00
$7.04
$5.82
$9.30

3.0 %
10.9 %
38.8 %
22.4 %
56.4 %
35.3 %
66.2 %
51.2 %
75.8 %
26.9 %
3.4 %
20.7 %
27.3 %
25.1 %
41.2 %
38.9 %
13.5 %
19.3 %
1.3 %
37.8 %
62.7 %
33.2 %
35.2 %
46.6 %
nmf
40.1 %
15.0 %
143.1 %
43.8 %
57.9 %
14.3 %
29.7 %
97.8 %
65.9 %
65.6 %
75.8 %
66.9 %
42.3 %
22.6 %

31-Mar-15
30-Sep-12
30-Jun-13
31-Jan-13
30-Jun-15
14-Aug-16
31-Dec-10
31-Aug-14
30-Sep-15
31-Mar-15
30-Jun-13
31-Jan-15
31-Jan-15
31-Dec-15
31-Jul-15
28-Feb-16
30-Jun-14
30-Nov-14
1-Jan-14
30-Sep-13
31-Mar-14
1-Apr-16
30-Nov-13
30-Jun-14
31-Dec-09
1-Nov-15
1-Oct-12
1-Oct-12
1-Jan-17
1-Apr-16
31-Dec-16
31-Jul-13
30-Jun-14
30-Jun-16
31-Mar-16
30-Sep-15
31-Dec-14
31-Dec-14
30-Mar-10

$13.75
$25.63
$31.25
$19.13
$25.13
$21.44
$51.75
$16.25
$14.06
$29.69
$23.44
$28.28
$29.71
$29.06
$33.44
$33.44
$29.38
$32.13
$7.13
$10.00
$11.81
$7.25
$16.75
$18.25
$8.75
$30.75
$17.50
$17.50
$7.19
$19.38
$12.19
$6.31
$10.13
$9.00
$9.75
$10.00
$8.80
$7.28
$7.19

31-Mar-17
30-Sep-14
30-Jun-15
31-Jan-15
30-Jun-17
14-Aug-18
31-Dec-12
31-Aug-16
30-Sep-17
31-Mar-16
30-Jun-15
31-Jan-17
31-Jan-17
31-Dec-16
31-Jul-17
28-Feb-18
30-Jun-16
30-Nov-15
1-Jan-15
30-Sep-15
31-Mar-16
1-Apr-18
30-Nov-15
30-Jun-16
31-Dec-10
1-Nov-16
1-Oct-13
1-Oct-13
1-Jan-18
1-Apr-17
31-Dec-17
31-Jul-14
30-Jun-16
30-Jun-18
31-Mar-17
30-Sep-16
31-Dec-15
31-Dec-15
30-Mar-11

Mar-31
Mar-31
Jun-30
Jun-30
Mar-31
Mar-31
Jun-30
Jul-31
Mar-31
Mar-31
Mar-31
Mar-31
Mar-31
Mar-31
Mar-31
Mar-31
Jun-30
Jun-30
Mar-31
Mar-31
Mar-30
Mar-30
May-31
Jun-30
Jun-30
Jun-30
Mar-31
Mar-31
Jun-30
Jun-30
Jun-30
Jan-31
Jun-30
Jun-30
Jun-30
Jun-30
Jun-30
Jun-30
Mar-31

Sep-30
Sep-30
Dec-31
Dec-31
Sep-30
Sep-30
Dec-31
Jan-31
Sep-30
Sep-30
Sep-30
Sep-30
Sep-30
Sep-30
Sep-30
Sep-30
Dec-31
Dec-31
Sep-30
Sep-30
Sep-30
Sep-30
Nov-30
Dec-31
Dec-31
Dec-31
Sep-30
Sep-30
Dec-31
Dec-31
Dec-31
Jul-31
Dec-31
Dec-31
Dec-31
Dec-31
Dec-31
Dec-31
Sep-30

Source: BMO Capital Markets

Page 32 January 6, 2015

Note: BMO Capital Markets is Restricted on Summit Industrial REIT and True North Commercial REIT

Sector Comment

Financials - Real Estate/REITs

REIT & REOC Preferred Shares

(C$, unless otherwise indicated)

Select REIT & REOC Preferred Shares

Artis REIT - A
Artis REIT - C
Artis REIT - E
Brookfield Office Properties - F
Brookfield Office Properties - H
Brookfield Office Properties - J
Brookfield Office Properties - K
Brookfield Office Properties - N
Brookfield Office Properties - P
Brookfield Office Properties - R
Brookfield Office Properties - T
RioCan - A
RioCan - C

Source: BMO Capital Markets

Page 33 January 6, 2015

2-Jan-15
Price
$24.60
$23.00
$19.30
$25.40
$25.28
$25.08
$25.52
$25.53
$25.60
$25.47
$25.57
$25.32
$25.97

Percent
Change
-0.2%
(1.0%)
--(0.1%)
(1.8%)
(0.2%)
(0.4%)
-(1.0%)
-0.3%

Size
(MM)
$86.3
$75.0
$100.0
$200.0
$200.0
$200.0
$150.0
$275.0
$300.0
$250.0
$250.0
$125.0
$149.5

Coupon
Rate
5.25%
5.25%
4.75%
6.00%
5.75%
5.00%
5.20%
6.15%
5.15%
5.10%
4.60%
5.25%
4.70%

Yield
5.3%
5.8%
6.0%
5.8%
5.7%
5.0%
5.1%
6.0%
5.0%
5.0%
4.5%
5.2%
4.5%

Issue
Date
Aug-12
Sep-12
Mar-13
Sep-02
Oct-03
Apr-04
Oct-04
Jan-10
Oct-10
Sep-11
Sep-12
Jan-11
Nov-11

Call
Date
Sep-17
Mar-18
Mar-18
Sep-09
Dec-11
Jun-10
Dec-12
Jun-16
Mar-17
Sep-16
Dec-18
Mar-16
Jun-17

Conv.
Date

Detailed Preferred Share Description

N/A
N/A
N/A
Mar-13
Dec-15
Dec-14
Dec-16
N/A
N/A
N/A
N/A
N/A
N/A

5.25%
5.25%
5.25%
6.00%
5.75%
5.00%
5.20%
6.15%
5.15%
5.10%
6.00%
5.25%
4.70%

Cumulative 5-Year Rate Reset Preferred Trust Units, Series A

Cumulative 5-Year Rate Reset Preferred Trust Units, Series C
Cumulative 5-Year Rate Reset Preferred Trust Units, Series C
Cumulative Fixed Rate Preference Shares, Series F
Cumulative Fixed Rate Preference Shares, Series H
Cumulative Fixed Rate Preference Shares, Series J
Cumulative Fixed Rate Preference Shares, Series K
Cumulative 5-Year Rate Reset Preference Shares, Series N
Cumulative 5-Year Rate Reset Preference Shares, Series P
Cumulative 5-Year Rate Reset Preference Shares, Series R
Cumulative Fixed Rate Preference Shares, Series T
Cumulative 5-Year Rate Reset Preferred Trust Units, Series A
Cumulative 5-Year Rate Reset Preferred Trust Units, Series C

Note: BMO Capital Markets is Restricted on Summit Industrial REIT and True North Commercial REIT

Sector Comment

Financials - Real Estate/REITs

2013 Return of Capital

CREIT
Riocan
InnVest
Pure Multi-family
Choice Properties
Northern Property
Boardwalk
CT Reit
Agellan
Morguard
H&R
Brookfield Canada
Dundee International
Dundee
Calloway
Allied Properties
HealthLease Properties
Dundee Industrial
Cominar
Summit II
WPT Industrial
Chartwell
Morguard NA Residential
PIRET
CAP
Artis
Crombie
Northwest HealthCare Properties
True North
Retrocom
Partners
BTB
Milestone
InterRent

0%
Source: Company Website & Reports, BMO Capital Markets

Page 34 January 6, 2015

20%

40%

60%

80%

100%

Note: BMO Capital Markets is Restricted on Summit Industrial REIT and True North Commercial REIT

Sector Comment

Financials - Real Estate/REITs

IMPORTANT DISCLOSURES
Analyst's Certification
I, Heather Kirk, CFA, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I
also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this
report.
I, Troy MacLean, CFA, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers.
I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this
report.
Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and their
affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness in generating new
ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service to clients.
Analysts employed by BMO Nesbitt Burns Inc. and/or BMO Capital Markets Limited are not registered as research analysts with FINRA (exception:
Alex Arfaei). These analysts may not be associated persons of BMO Capital Markets Corp. and therefore may not be subject to the NASD Rule 2711 and
NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.
Company Specific Disclosures
For Important Disclosures on the stocks discussed in this report, please go to
http://researchglobal.bmocapitalmarkets.com/Public/Company_Disclosure_Public.aspx
Distribution of Ratings (September 30, 2014)
Rating
BMOCM US
BMOCM US
BMOCM US
BMOCM
BMOCM
Starmine
Category
BMO Rating
Universe*
IB Clients**
IB Clients***
Universe****
IB Clients*****
Universe
Buy
Outperform
44.3%
18.0%
60.3%
43.9%
56.5%
56.0%
Hold
Market Perform
52.5%
9.7%
38.5%
51.6%
42.1%
39.1%
Sell
Underperform
3.2%
5.3%
1.3%
4.5%
1.4%
4.9%
*
Reflects rating distribution of all companies covered by BMO Capital Markets Corp. equity research analysts.
**
Reflects rating distribution of all companies from which BMO Capital Markets Corp. has received compensation for Investment Banking services as
percentage within ratings category.
***
Reflects rating distribution of all companies from which BMO Capital Markets Corp. has received compensation for Investment Banking services
as percentage of Investment Banking clients.
**** Reflects rating distribution of all companies covered by BMO Capital Markets equity research analysts.
***** Reflects rating distribution of all companies from which BMO Capital Markets has received compensation for Investment Banking services as
percentage of Investment Banking clients.
Rating and Sector Key (as of April 5, 2013):
We use the following ratings system definitions:
OP = Outperform - Forecast to outperform the analysts coverage universe on a total return basis
Mkt = Market Perform - Forecast to perform roughly in line with the analysts coverage universe on a total return basis
Und = Underperform - Forecast to underperform the analysts coverage universe on a total return basis on a total return basis
(S) = speculative investment;
NR = No rating at this time;
R = Restricted Dissemination of research is currently restricted.
BMO Capital Markets' seven Top 15 lists guide investors to our best ideas according to different objectives (CDN Large Cap, CDN Small Cap, US Large
Cap, US Small cap, Income, CDN Quant, and US Quant have replaced the Top Pick rating).
Prior BMO Capital Markets Ratings System (January 4, 2010April 5, 2013):
http://researchglobal.bmocapitalmarkets.com/documents/2013/prior_rating_system.pdf
Other Important Disclosures
For Important Disclosures on the stocks discussed in this report, please go to
http://researchglobal.bmocapitalmarkets.com/Public/Company_Disclosure_Public.aspx or write to Editorial Department, BMO Capital Markets, 3 Times
Square, New York, NY 10036 or Editorial Department, BMO Capital Markets, 1 First Canadian Place, Toronto, Ontario, M5X 1H3.
Dissemination of Research
BMO Capital Markets Equity Research is available via our website https://research-ca.bmocapitalmarkets.com/Public/Secure/Login.aspx?
ReturnUrl=/Member/Home/ResearchHome.aspx. Institutional clients may also receive our research via Thomson Reuters, Bloomberg, FactSet, and
Capital IQ. Research reports and other commentary are required to be simultaneously disseminated internally and externally to our clients.

Page 35 January 6, 2015

Sector Comment

Financials - Real Estate/REITs

General Disclaimer
BMO Capital Markets is a trade name used by the BMO Investment Banking Group, which includes the wholesale arm of Bank of Montreal and its
subsidiaries BMO Nesbitt Burns Inc., BMO Capital Markets Limited in the U.K. and BMO Capital Markets Corp. in the U.S. BMO Nesbitt Burns Inc.,
BMO Capital Markets Limited and BMO Capital Markets Corp are affiliates. Bank of Montreal or its subsidiaries (BMO Financial Group) has lending
arrangements with, or provide other remunerated services to, many issuers covered by BMO Capital Markets. The opinions, estimates and projections
contained in this report are those of BMO Capital Markets as of the date of this report and are subject to change without notice. BMO Capital Markets
endeavours to ensure that the contents have been compiled or derived from sources that we believe are reliable and contain information and opinions that
are accurate and complete. However, BMO Capital Markets makes no representation or warranty, express or implied, in respect thereof, takes no
responsibility for any errors and omissions contained herein and accepts no liability whatsoever for any loss arising from any use of, or reliance on, this
report or its contents. Information may be available to BMO Capital Markets or its affiliates that is not reflected in this report. The information in this
report is not intended to be used as the primary basis of investment decisions, and because of individual client objectives, should not be construed as
advice designed to meet the particular investment needs of any investor. This material is for information purposes only and is not an offer to sell or the
solicitation of an offer to buy any security. BMO Capital Markets or its affiliates will buy from or sell to customers the securities of issuers mentioned in
this report on a principal basis. BMO Capital Markets or its affiliates, officers, directors or employees have a long or short position in many of the
securities discussed herein, related securities or in options, futures or other derivative instruments based thereon. The reader should assume that BMO
Capital Markets or its affiliates may have a conflict of interest and should not rely solely on this report in evaluating whether or not to buy or sell
securities of issuers discussed herein.
Additional Matters
To Canadian Residents: BMO Nesbitt Burns Inc. furnishes this report to Canadian residents and accepts responsibility for the contents herein subject to
the terms set out above. Any Canadian person wishing to effect transactions in any of the securities included in this report should do so through BMO
Nesbitt Burns Inc.
The following applies if this research was prepared in whole or in part by Andrew Breichmanas, Iain Reid, Tony Robson, David Round, Edward Sterck
or Brendan Warn: This research is not prepared subject to Canadian disclosure requirements. This research is prepared by BMO Capital Markets
Limited and subject to the regulations of the Financial Conduct Authority (FCA) in the United Kingdom. FCA regulations require that a firm providing
research disclose its ownership interest in the issuer that is the subject of the research if it and its affiliates own 5% or more of the equity of the issuer.
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extent that it refers to securities of Bank of Montreal. Any U.S. person wishing to effect transactions in any security discussed herein should do so
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BMO Financial Group (NYSE, TSX: BMO) is an integrated financial services provider offering a range of retail banking, wealth management, and investment and
corporate banking products. BMO serves Canadian retail clients through BMO Bank of Montreal and BMO Nesbitt Burns. In the United States, personal and
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BMO Capital Markets is a trade name used by BMO Financial Group for the wholesale banking businesses of Bank of Montreal, BMO Harris Bank N.A,
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