Weekly Price Changes Apr-21-28, 2017
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There is a huge culture shift underway in Washington, given the appearance of chaos. This week's economic comments track the general direction of the US dollar beginning with the run up period to the US election to now. This impacts earnings of companies that report results in US dollars from operations located outside of the US. Two of these are in the Brookfield group and are updated in this week's earnings. This week's market commentary provides a couple of reasons why the US dollar has been weakening and why it is expected to continue.
Updates include Atrium Mortgage Investment Corp. (AI, AI.DB, AI.DB.A,B), MCAN Mortgage Corp. (MKP), Brookfield Infrastructure Partners LP(BIP.UN, BIP.PR.A,B,C,D), Brookfield Property Partners LP(BPY.UN), Boston Pizza Royalties Income Fund(BPF) and comments on changes in price for fixed rate preferred shares compared to the variable rate ones.
Atrium and MCAN both hold mortgage portfolios, typically shorter term and secured by first charges on real estate. Atrium had record results for Q1-2017 with net income per share increasing from $0.23 to $0.25. For 2016 earnings were $0.97 per share consistent with our forecast. The earnings per share forecast for 2017 has been increased to $0.98 per share after a better than expected Q1-2017. Atrium's growth has been from increasing the size of the mortgage portfolio partially offset by earning moderately lower interest rates. A risk for both would be increased mortgages in arrears, Atrium is not showing any material increase, the yield at 7.4% excludes the year end top forecast at $0.10 per unit. Given the strong start to 2017 the yield including a $0.10 year end top up will be 8.4%. The 12 month price target is increased from $12 to $12.25.
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