13% Pullback = Another Purchase

Hey!

Recently a stock in my portfolio got hammered hard! Seems like the market overreacted and created a great buying opportunity. The stock was trading around the $48.50 mark and after announcing their 2nd quarter results the stock plummeted %12.93. Who and why?

Boardwalk REIT
Boardwalk REITCompany Description

Boardwalk Real Estate Investment Trust (the Trust) is an open-ended real estate investment trust (REIT). The Company is focused on the acquisition, refurbishment, management, ownership and development of multi-family residential communities within Canada. The Trust owns over 200 properties containing approximately 33,770 residential units within the Provinces of Alberta, Saskatchewan, Ontario and Quebec. Representing over 30 million net rentable square feet. Its assets represent a portfolio of residential real estate, both from the standpoint of geographic diversification and mix of asset type, which consists of mid-sized suburban and downtown apartment buildings, and regional, mid-sized community and neighborhood residential centers located in urban markets. Their residential properties in the portfolio are located in Montreal and Quebec City, Quebec; London and Kitchener, Ontario; Saskatoon and Regina, Saskatchewan, and Edmonton, Grande Prairie, Banff, Red Deer and Calgary, Alberta

Why the Pullback?

Why did the stock pullback so much? Because their income was lower. It is actually that simple. Due to them deciding to go big and renovate a lot of units the first half of 2017. Roughly 2,300 units for the first half of the year. As of June 30,2017 1200 are still in reno’s, representing 1.7 million dollars in monthly rent they are missing out on. As a result, suite renovations have resulted in approximately 12% accretion in Net Asset Value and a return on cost of 8%.

June 2017 they had a 95.6 percent occupancy rate, which is showing a upward trend. While between July 2016 to March 2017 they had a occupancy rate of 94-93 percent. In addition they also feel Alberta’s economy is starting to rebound which is great since they own  a lot of units there. =)




Boardwalk REIT currently offers a 5.34% yield. The payout ratio is currently to high, but I believe that it’s warranted with that many units out of commission. So after this great pullback I decided to add another 89 units at $42.15 to the portfolio. This will add $200.25 to our forward dividend’s.

Matt at All About The Dividends did a great write up about the pullback of Boardwalk REIT aka RED FRIDAY. Therefore it made me look into them more as well. Check out his Article.

Conclusion

Sometimes the market throws ya a bone! As a result of the renovation’s I feel Boardwalk REIT is a great stock to own and is making moves to increase their profit margins per unit. Short term it looks bad. But by the end of year when all the renovations are complete and the profits increase you know I’ll be smiling!

Cheers!

 

You may also like...

12 Responses

  1. That’s just a very hard thing to do sometimes. The stock has fallen and you may worry that it’s going to keep falling. But, that’s how people make money in the stock market. You buy low and sell high. The fact of the matter is that you liked the stock when it was 12% higher and so you should love it at 12% lower because you can buy more shares at a lower price. So, when it goes back up (no guarantees), you make an even bigger profit. You obviously believe in this stock (which I’m not familiar with), and so I say you made an excellent choice picking up more shares at a lower price.

    Good luck.
    Dividend Portfolio recently posted…How I Invested $15,000My Profile

  2. Broadwalk is on my watch list. It’s a solid company! Great buy!

  3. Nice purchase I feel the renovations will definitely help their bottom line and improve the vacancy %. Thank you for putting a link in your post to my blog post.

  4. dividendgeek says:

    Question on google I see a negative EPS (EPS -0.93). Is this not a concern?

    I also looked at your portfolio, looks solid man. Seems like Canadian stocks pay much more in terms of yield 🙂
    dividendgeek recently posted…Dividends & ExpensesMy Profile

    • Hey geek. Thanks well thats yield on cost.( so with their raises and dips in price) This quarter they were negative but with all the units under renos and noone living in them at the time, i think its understandable. Once they are done they will rent out for even more.

  5. PCI –

    Congrats on your purchase. If you bought it once at X and they have strong fundamentals going forward and you understand the business, why not buy some if it goes temporarily on sale? Nice job.

    -Lanny

  6. Leo T. Ly says:

    I own quite a few shares of Boardwalk and is definitely feeling this blow of this pull back. It happened once already within the last year and I missed that opportunity. I am going to load up a bit more this time.
    Leo T. Ly recently posted…Basic Investment ConceptsMy Profile

Leave a Reply

Your email address will not be published. Required fields are marked *

CommentLuv badge

%d bloggers like this: