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Artis REIT: Liquidation Sale?

John Sheehy profile picture
John Sheehy


  • Artis 3/3 unit price is a 16% discount to IFRS Net Asset Value of $15.56/unit.
  • Artis trades at 8X 2020 FFO, well below the 15X average for all Canadian REITs.
  • The strategic initiatives announced in November 2018 have been aggressively implemented and the benefits are fully reflected in the unit price.
  • The share price now includes optimism about sale of the company.


Artis REIT (TSX:AX/UN)(OTC:ARESF) has provided a 53% total return since my December 2018 article. Strong 4Q19 operating results were led by a 40% y-o-y increase in NOI from US industrial properties. Since announcing its strategic initiatives in November 2018, Artis has provided a higher total return than most diversified REIT peers:

  1. Cominar (TSX:CUF/UN)(OTCPK:CMLEF)+42%
  2. Artis +39%
  3. iShares S&P/TSX REIT ETF (TSX:XEG)(IUSPF) +27%
  4. Morguard REIT (TSX:MRT/UN)(OTC:MGRUF) +14%
  6. Brookfield Property (TSX:BPY/UN)(BPY) +7%

The benefits of the 2018 plan are now well understood by the market and the unit price is what it is. The formation of a Special Committee and activist investor involvement should increase confidence that additional steps will be taken. BNN-Bloomberg reported on 2/28 that takeover discussions have taken place with several parties. A successful transaction should deliver at least CAD$15/unit while failure to reach an agreement could cause the units to fall back below CAD$12.


  • 4Q19 Operating Results
  • Relative Multiples
  • Strategic Initiative 1: Divestitures
  • Strategic Initiative 2: Buyback
  • Strategic Initiative 3: Development
  • Special Committee & Activist Involvement
  • Investment Considerations

Background: Artis is a diversified Canadian REIT with Office (49%) Industrial (33%) and Retail (18%) assets in Canada (52%) and the United States (48%). Additional information is available at the company website, investor presentation, financial reports, conference call transcripts and prior Koneko articles.

4Q19 Operating Results

Artis 4Q19 results (press release, MD&A, conference call transcript) beat expectations. Key data:

AX 4Q19 Income

Artis has substantially reduced its exposure to the weak Calgary office market (only 6% of 4Q19 NOI and expected to be just 2% after 1Q20 sales). Results benefited from increased rents at US industrial properties which reported same property NOI +6% yoy. Total NOI from US Industrial properties rose from $9.8mm in 4Q18 to $13.7mm in 4Q19 (+40% yoy) due to a 23% increase in GLA.

This article was written by

John Sheehy profile picture
No longer active on this site

Analyst’s Disclosure: I am/we are long ARESF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Disclosures The author is a unitholder of Artis REIT. The author does not make any recommendation regarding any investment in any company mentioned in this article. Investors are encouraged to check all of the key facts cited here from SEDAR filings and other sources prior to making any investment decisions.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (4)

John Sheehy profile picture
I posted some comments here:
mREITs profile picture
The problem with Artis, is the trading volume is so terribly low, that it is delisted by some brokers. And even if you find one that has it listed, there is NO way to trade options... again, the volume is so low.
John Sheehy profile picture
Are you using the right symbol? How much money are you trying to put to work? Average daily volume for Artis in Toronto over the past 10 days has been 685,953 shares.

ARESF volume data is not meaningful. If you place an order for ARESF then the broker will usually add a small spread and transmit it to the TSX for execution. The broker will not be limited to crossing off-exchange orders for ARESF.
mREITs profile picture
I'm an idiot John, turns out I got confused with another stock. Artis does indeed have derivatives, and volume is decent also after checking. My bad...
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