Canadian REITs in general have still not recovered their pre-pandemic prices, but as the Canadian economy reopens, they are expected to recover strongly and get back to form. One name that really stands out to me in the Canadian REITs sector is Artis Real Estate Investment Trust (TSX:AX.UN, Financial).
Between May 11 and 21, the President and CEO of Artis, Samir Manji, invested over $6.8 million in his own company's stock. He purchased a total of 633,000 units at an average cost per unit of approximately $10.81 for an account in which he has control or direction over (Salamat Investment Corporation), increasing this particular account's position to 1,655,600 units. Artis pays its unitholders a monthly dividend distribution of 5 cents per trust unit, or 60 cents per unit yearly, equating to a current yield of 5.4%.
Manji recently took over the management of Artis, replacing the CEO and the board of trustees. In March, Artis released a business transformation plan to close the gap between its Net Asset Value (NAV) and its share price. The NAV represented by tangible book value and share price is around 40% currently. Manji believes that this gap can be closed in the medium term.
Artis plans to execute this strategy by selling assets and focusing on active management of value investments in the public markets which Artis feels are misunderstood, mismanaged and unappreciated. It will seek to:
• Monetize industrial portfolio with the goal of maximizing value on a tax-efficient basis
• Evaluate the sale of office and retail assets over the short-to-medium term
• Deploy proceeds into active capital markets investments and value-add investments and developments.
Artis's balance sheet is also in decent shape with debt-to-equity ratio of 1.02.
Manji's expertise
Manji is an experienced and successful real estate operator and CEO of Sand Piper Asset Management, a Vancouver-based private equity firm specializing in real estate, which owns 12.5% of Artis.
Manji was formerly the Chairman and Founder of Amica Mature Lifestyles Inc.. He built up the company before selling it to the Ontario Teachers' Pension Plan in December 2015 for $578 million.
I beleive that under the direction of an expert like Manji, Artis could deliver high-teen returns to shareholders in the next three to five years via efforts to close the gap between NAV and share price.
Disclosure: The author currently has no position in Artis REIT but is considering buying units.
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