InterRent Real Estate Investment Trust a fixer upper

Jan 9th, 2012 – 1 Comment

If management can drive growth the likelyhood of increased distributions to unit holders will contribute to higher prices for the units.


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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


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Hi Lou,

 My husband always took your advice seriously and since he has passed away I am trying to re invest his portfolio. What do you think of InterRent? I am looking for return on my investments i e dividends. Thanks ever so much. Have a good one.

Anonymous.

 

Dear Reader,

I am so sorry for your loss. My thoughts go with you and your family on the passing of your loved one.

InterRent Real Estate Investment Trust (IIP.UN TSX) is a small cap player, $110 million, in the multi-unit residential property segment. The smaller the cap of an investment the higher the level of risk associated with it. In the world of risk management size does matter.

The focus of the enterprise is to find run down assets, fix them up, lower the vacancy rate, and increase rents. Cleary the efforts of management have contributed greatly to the increase in the value of the units over the last year.

A review of the charts will provide better guidance on how to evaluate the risks and opportunities associated with IIP.UN.

 

The three year chart illustrates the advance that started in late March of 2011. There is support along the trend line and the 50 day moving average which has not been breached.

 

 

 

 

 

The MACD and RSI on the six month chart are both indicating that there is more gas left in the tank to fuel further gains. Before you hit the buy button let’s review some of the factors you should consider.

The small cap nature of the company has been identified as a risk factor. In addition the trading volume is somewhat choppy which adds another level of risk. Typically an investment with healthy liquidity provides for ease of entry and exit.

The market for fixer uppers provides many opportunities for the trust.  The search for undervalued properties to which  IIP.UN can apply capital and professional management offers many targets. As management drives growth the likelihood of increased distributions to unit holders will contribute to higher prices for the units.

If IIP.UN fits your investor profile and it is being considered as a component of a well structured portfolio of income producing assets then I would say it could be added into the higher risk tranche of your holdings. It is a case of buy high – sell higher.

Make it a profitable day and happy capitalism!

 

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