Investment idea: H&R REIT

Hi everybody

I thought I would write tonight about a REIT that NCP believes could offer meaningful upside in the next 12-months and presents inventors with a compelling opportunity at a strong risk-reward entry point. H&R REIT (TSX: HR.UN) is one of Canada’s largest REITs and is the largest of the diversified names with a market capitalization of $2.5 billion (EV ~$6 billion). With diversified REITs out of favor, the discount gap on H&R is excessively large despite a high quality portfolio where US residential makes up nearly 50% of the fair market value. Add in industrial and that becomes closer to 70%. Meanwhile, the REIT trades at a discount that would be associated with a lower risk office portfolio despite a rather clear plan to execute on a disposition strategy which NCP believes offers new investors a chance to participate in a positive unit price to NAV correction as the disposition strategy continues.