Conference Co-Chair:
Neil Downey, Managing Director & Real Estate Analyst,
     RBC Capital Markets
 

 A brief presentation on the continuing evolution of the REIT market in Canada. What has the relationship been between interest rate cycles and REIT valuations? Is the REIT universe growing or shrinking?

Speaker:
Carolyn Blair, Managing Director,
     RBC Capital Markets Real Estate Group Inc.
 

Demand for high-quality real estate investments has continued to grow unabated in the wake of higher occupancy rates and rents for most product types, increasing cash flows, and escalating replacement costs for quality buildings. There are, however, certain potentially opposing forces to this backdrop, including North American interest rates that continue to climb, escalating energy and other commodity prices, and housing markets that are appear to be leveling off. 

This session will provide an investor focused perspective on where REITs potentially fit into investors’ portfolios.

• Do sector pullbacks provide a good time to buy high quality REITs?

• You may be a good stock but are you a good business? How do institutional buyers evaluate a REIT? Are pension funds under-invested in REITs?

•  How much in the performance of REITs, is market lift vs. rewarding internal strategy? How do you price a REIT? For example, market trends, interest rates, debt to equity ratios, construction and development activity.  How sophisticated would you consider the Canadian REIT market to be?

•  How do Canadian individual investors view REITs?

• How is risk being defined in today’s market? How does it apply to REITs?

Moderator & Conference Co-Chair:
Michael Emory, President & CEO, Allied Properties REIT

Panel:
Kevin Hall, Senior Portfolio Manager, Canadian Equity Investments,
     Guardian Capital LP

Karine MacIndoe, Director, Real Estate/REITs & Hospitality Research,
     BMO Capital Market

Dr. Greg MacKinnon, Associate Professor of Finance,
     Sobey School of Business, Saint Mary’s University, co-author of a study
     on optimal investment allocation for Real Property Association of
     Canada

 

The REIT structure has become mainstream around the world. An increasing number of REIT-like vehicles have been adopted worldwide as enabling legislation has made numerous advances in various countries. In many markets, REITs are providing strong investment returns, outperforming local equity indices in several instances in the past few years. Global real estate funds can now effectively create a portfolio of REITs around the world as well as looking for arbitrage opportunities to narrow the valuation gap. This session will provide a strategic update and insights on the current major trends in REIT markets around the world.

Moderator:

Ron Cheshire, Vice President,
     Portfolio Manager & CIO, Presima Inc.

This session will be conducted as an interactive discussion between the moderator and the panel of experts and analysts as they provide a contrast and compare each REIT market within a global context. They will comment on the following trends:     

Business Models: Specialization vs. Diversification

Most US companies specialize in one (or occasionally two related) property types; whereas companies in many other countries do not. Is the propensity to be diversified by property type the result of geographic and land business boundaries and being more confined, thus limiting the opportunity set for each property type? How much benefit is there to being diversified by property type?  Is geographical specialization just a convenient argument for small companies who will grow out of that argument?

REIT Legislation: Benefits vs. Costs

REIT legislation is regarded as a catalyst for growth and performance in countries that adopt it, but there are costs in the form of exit taxes and restrictions on activity. Does or could it facilitate IPO activity, M&A activity, external growth? What are the cash flow benefits and costs? Are there ways around the cash flow impacts? Are the rules something companies can live with, or do they interfere with business models? Does it attract new shareholder interest? Domestic?  International?

Current Outlook and Return Prospects: Translating Fundamentals Into Company Performance

Cap rate shifts and multiple expansion are largely behind the U.S. in many markets, so that leaves fundamentals, value creation efforts and technical factors to drive stock performance. What is the state of your markets, occupancies, market rents, mark-to-market/reversion prospects? What is the direction of your markets? Demand? Supply? What are companies doing to create value? Funds management is all the rage; do you believe in this income stream? Why or why not? Are technical factors like capital flows affecting your market? 

Risks: Going Global Is Not Free 

What are the key risks in your markets? Economic? Political? Legislative?  Capital markets? Currency? What are the key risks within your business model?  Management? Governance? Execution? Are these risks being priced into your markets and companies properly?

Trends in U.S. Real Estate Securitization: Has the REIT Market Peaked?

The long standing U.S. REIT market appears to have reached a new threshold as the trend for leveraged buyouts and privatization of public companies is overtaking the interest of greater securitization and launching new real estate IPOs. What have been the key factors responsible for these directions? Who are the initiators? What are the valuation issues in taking REITs private? To what extent do U.S. REITs have greater global interest as they pursue growth and opportunities and lower their domestic asset allocation to 40%?

John Lutzius, CEO, Green Street Advisors, Inc. (Newport Beach, CA)

The European REIT Market: Will It Continue To Be the Best Performing Region

In Europe, REITs are established in Belgium, the Netherlands and France with REIT legislation having been introduced in 2007 in the United Kingdom and Germany. How is the face of real estate investment changing in Europe? What are the key factors driving the REIT market in Continental Europe? Since the United Kingdom represents 9% of the global real estate securities market, what impact is the structural change that is beginning in that market having on the investment universe across Europe and more globally?

Dick Boer, Director, Property Research, Kempen & Co (Amsterdam)
 

Overview of Asian and Australian REITs: What Is the Next Direction For These Two Distinct Markets?

While the Australian REIT is solidly established and highly respected, the Asia REIT market is just beginning to evolve. While J-REITs and S-REITs have led the way, other Asian countries now have REIT legislation in place including Hong Kong, Korea, Malaysia and Taiwan. Are the REIT IPOs in Asia, for example, coupled with the economic growth in China and India attracting strong investor interest? What is the current status of the REIT market in Australia? What are the key factors driving this market? 

José Lanuza, Division Director, Asian Property Research,
     Macquarie Securities (Hong Kong )

A View of Canadian REITs From a Global Context

How much attention is the Canadian REIT sector receiving from international investors? How does the performance and valuation of Canadian REITs compare with those of other markets on a global basis?

Michael Smith, Senior Vice President, Real Estate & Hospitality Analyst,
     National Bank Financial (Toronto)
 

Session A1

THE EVOLUTION OF SMALL REITS IN TODAY’S MARKET: WHAT ARE THE UNDERLYING STRATEGIES AND ARE THEY WORKING?

Over the past two years, there has been an increasing emergence of small or micro cap REITs with intentions to grow significantly. The trend appears to have been fuelled by a strong appetite for yield product by the public markets and the resulting cost of capital advantage that a small cap REIT would gain over similar smaller private real estate operators. Many of them have taken the Capital Pool Company (CPC) program as their entry into securitized real estate. This session will examine the experiences of some smaller REITs, what their key strategy has been, and how it is unfolding, notwithstanding the new SIFT rules and the potential volatility of the bond market.

Moderator:

Mark Edwards, Vice President & Director, Investment Banking,
     Canaccord Adams

Panel:

David Ehrlich, Partner, Stikeman Elliott LLP

Michel Léonard, President & CEO, BTB REIT

Dennis Mitchell, Portfolio Manager, Sentry Select Capital Corporation

Jim Tadeson, CEO, InStorage REIT

Session A2

THE GREAT DEBATES: PURE PLAY VS. DIVERSIFIED PLAY?  INTERNAL VS. EXTERNAL MANAGEMENT?

All REITs are not created equally. Some are considered to be “value creators” while others would be deemed to be “financial engineers”. Some are a “pure play” with a strong focus and competitive positioning while others are a “diversified play” operating in the deepest part of the stream and growing more rapidly. Some have a mandate to build a real estate investment, development and operating platform while others look for ways to be more creative and innovative. This panel will discuss and debate the challenges, risks and rewards of these various strategic options. A global context will also be taken into account. For example, despite the wide-spread push for internalized management within Canadian REITs over the past several years, many REIT jurisdictions around the world are externally managed. With U.S. passive investment subsidiary rules being more widely recognized, does external management have a new legitimacy? 

Moderator:

Patricia Koval, Partner, Torys LLP

Panel:

Roberto Geremia, President, Boardwalk REIT

Michael Knowlton, President & COO, Dundee REIT

Armin Martens, President & CEO, Artis REIT

The first part of this session will briefly examine the key questions emerging from the federal government’s income trust announcement last fall. What is now good and bad income? How will REITs have to adapt both their current operating structure and their future growth plans to fit within the new regime? What are some of the technical problems for conventional REITs? Can REITs specializing in hotels and seniors housing, find a way to restructure and continue to be strong players in the Canadian REIT market? What is the industry’s lobbying agenda?

The second part of the session will discuss the new and emerging accounting standards and their implications for REITs. For example, what does FVA mean for REITs, future IFRS accounting and their impact on debt covenants, the necessity to book Future Income Tax Provisions for many REITs. What are the implications of the new SIFT and accounting rules for REIT valuations?

Moderator:

Michael Brooks, Executive Director, Real Property Association of Canada

Panel:

Trevor Nakka, Partner, Deloitte LLP

Walter Pela, Partner, KPMG LLP
Evelyn Sutherland, CFO, Scott's REIT