January 20, 2019

Pure Industrial Real Estate Trust AAR

The Pure Industrial Real Estate Trust (AAR) is perfect for investors who are looking to get specific and focused Canadian industrial specific real state exposure.  While the REIT is still relatively small with a market cap of just over $105 million, it has been helped by the fact that management has refused to charge administrative fees or take any capital out of investments until the trust is over the $200 million bar.  The trust is currently still fairly concentrated within the Calgary market (not a bad place to be based out of), they are working to diversify their real estate portfolio, while targeting properties that only fit their industrial criteria and are very close to 100% occupancy.  PIRET’s (the acronym wordplay –pirate/PIRET – being responsible for unique “ARR” symbol) debt is roughly 60% of its capital, which is not bad for start-up real estate investment trust.

 

Perhaps the biggest positive factor that AAR has going for it is the fact that its management company (Sunstone Industrial Advisers Inc.) is heavily invested in the trust (in addition to the payment considerations mentioned above).  Mr. Garner, the companies CEO has bluntly stated that investors can be confident that management has their best interests in mind because, “Management is putting its own skin in the game.”  Anytime a prospective investor sees good insider behaviour like this, it can only be considered positive.  Mr. Garner goes onto to note that, “One great thing about industrial real estate is that it’s incredibly stable… For people who are nervous and have missed the market rally, it’s a nice way to enter the equity market.”  Of course Garner is obviously slightly biased as to PIRET’s future prospects, his points are accurate nonetheless.

 

The Pure Industrial Real Estate Trust (AAR) recently purchased a parcel of land lovated in Caledon, Ontario.  It totals over 12 acres, and is 100% leased to a company named Kingspan that specialises in large-scale construction.  It has been a busy year for the young REIT as they have also scooped up properties in Vancouver, Guelph, Surrey, Moncton, Edmonton, and Winnipeg amongst others.  PIRET is definitely making bold moves in the name of diversifying their asset base, and becoming a more stable entity as they grow.

 

There is a strong argument to be made for now being the best time to get in on the Pure Industrial Real Estate Investment Trust (AAR).  Canada’s industrial economy, while not exactly healthy, is very attractive compared to the rest of the developed world (save maybe Australia) and this is an excellent way to get exposure to that sector of the economy.  Mr. Garber is correct in pointing out that industrial real estate with long-term clients, is amongst the most stable of investments.  The trust currently has a unit price of about $3.72, and this could rise substantially in the next couple of years if the excellent management of capital continues.  The current all-important yield is 8.10%, which is good-if-not-great among PIRET’s competitors.