morguard financial corporation
safety in numbers Morguard Financial Corporation is a source of stability in a volatile world by anne hedin
C
harles Dillingham, vice president and portfolio manager of Morguard Financial Corporation, looks out the window of the Morguard Toronto office at the protesters gathered next door, where the G20 Conference is in progress. Dillingham and his associate Kate MacDonald are putting the finishing touches on the launch of the Morguard Sunstone Real Estate Income Fund, designed to satisfy demand in the retail marketplace for high, stable monthly distributions. The G20 backdrop is a vivid reminder of the recent financial turmoil in global markets and the uncertainties facing both developed and developing economies. In the midst of this turmoil, Canadian real estate continues to be a source of relative stability, providing
competitive, sustainable income flows to investors. “With one week remaining to close, we have surpassed our minimum investment requirement and momentum continues to build,” MacDonald reports. Dillingham explains why the Canadian real-estate sector remained stronger and safer than the United States market. “We were not exposed to the same level of risk, and we have since made a good recovery,” he says. “Most real estate in Canada is doing well. In the US, while there are signs of improvement in some areas, many uncertainties remain. With the exception of some soft pockets in the industrial markets of Québec and Ontario, Canadian real estate has shown very little weakness. As a result, cash flows have remained steady and
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the capital markets have improved, allowing investors to trust the integrity of the distributions going forward. Not only can good quality REITs [real estate investment trusts] raise the bond and equity money that they need to improve their balance sheets, but—if they want to sell a property—there is actually more money out there seeking investments than there is property to buy.” He continues, saying that recently “the stronger property-operating fundamentals and financing conditions available in Canada, coupled with higher yields and strong Canadian dollar, have encouraged us to maintain overweight positions in Canadian REITs. US REIT yields are very low relative to historical averages and to US treasuries. This fact, combined with the apparent high multiples, suggests US REITs are trading at rich price levels.” For this reason, Dillingham believes that Canadian REITs and real-estate securities offer one of the best risk/return options available in today’s volatile markets. “The credit markets have come back, and REITs and real-estate
the way we think > “Real estate is a highly localized business. Within the Morguard Group, we have developed our own network of information sources. Our presence in every major Canadian regional market, plus the expertise and insight of our staff of 1,250 realestate professionals keeps us tuned to local market conditions, enabling our securities group to respond to risks and opportunities early.” Charles Dillingham, vice president and portfolio manager.
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– charles dillingham advantage
J A N / F E B 2011
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