“Wal-Lord: How the Retail King’s Landlord Could Pay You Monthly Rental Income”

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The “Wal*Lord” teaser from Brian Hicks is not a new one, but I’ve had readers asking about it over and over during the last week or so — which must mean that it’s being re-run by Angel Publishing in an attempt to hoover up some more subscribers to The Wealth Advisory.

So I took a quick look to make sure that they’re still teasing the same company that they featured a little over 2-1/2 years ago… and whaddya know, it is still the same. Indeed, the ad itself is almost exactly the same — I didn’t notice any real updates or edits (other than to say that they’ve been paying their monthly dividend for 11 years now, not nine). The stock price of the company is pretty close to where it was back in April of 2012 at about C$27 — though performance looks better for the shares in Canadian dollars (flat) than it does in US dollars (down 5-10%). Back when this ad first ran the US$ was slightly less valuable than the C$ so the stock was slightly over US$27 and slightly under C$27, that currency relationship has flipped so now the Canadian shares are still slightly under C$27 but in US terms the fair price is a bit under US$25. The company continues to have a decent yield, continues to rely heavily on Wal-Mart as a tenant, and has not raised or lowered the monthly dividend since the Summer of 2007.

If they can’t come up with a new ad, I’m not going to write a whole new article (so there!) — what follows is our article that ran on April 5, 2012. It has not been edited, updated or revised. The original discussion from back then is still at the bottom of the article, so feel free to jump in if you have thoughts to share.

—–from 4/5/2012——-

“Every Month for the Past 9 Years, This Little-known Landlord Has Sent Out ‘Rent Checks’ It Collects from Wal-Mart to Its Partners…”

“I’ve Found a Way for You to Become a Partner for as Little as $27….”

That’s the intro to Brian Hicks’ “Wal*Lord” teaser ad that’s been circulating very heavily today — and to be honest, I almost didn’t even look at the ad, because from the name I was certain it was just another version of the Walmart landlord teaser that Roger Conrad has been sending out for his Canadian Edge newsletter off and on for a couple years.

But though they’ve lifted the basic idea from Conrad’s teaser ad campaign, this is a different pitch for a different company. The tease is an attempt to get you to subscribe to The Wealth Advisory from Angel Publishing, which apparently is now being edited by Brian Hicks … and the promise, as always, is a lusty one …

“It’s the single most reliable way you can get an extra check every single month.

“One little-known “landlord” has been sending out ‘rent checks’ it collects from the world’s largest retailers to its partners for the last NINE YEARS!

“I’m talking about collecting rent from some of the world’s biggest billion-dollar retailers — like electronics superstore Best Buy.

“This landlord also gets rent from office supply behemoth Staples and from home improvement and crafts leaders Lowe’s and Michaels…

“This landlord even collects rent from the world’s largest retailer, Wal-Mart.

“That’s right. Even the huge retailer Wal-Mart is contractually obligated to pay this landlord each month in order to honor its lease agreements — no matter how shaky the economy is, or how high inflation soars…

“Wal-Mart must pay him before it even pays itself…

“That’s why I’ve dubbed him ‘Wal-Lord.’

“And I’ve found a way for you to become a partner of this landlord starting immediately — with as little as $27.”

So I guess if we’re going to be calling ships “she” then calling real estate owners “he” is only fair, but it still sounds a bit odd.

And not to let the cat out of the bag too early here, but yes, this is clearly just another teaser for a REIT with a Wal-mart connection. Which many of them have.

REITs, if you’re new to this game, are Real Estate Investment Trusts — they’re popular in the US and Canada as a way to democratize real estate income, they buy or develop properties (some specialize in malls, or office buildings, or apartments or other niches, others are diversified), then they get a tax break (as in, “don’t pay any” for their real estate income as long as they pass the lion’s share of that income through to their shareholders (or unitholders, as they’re sometimes called). They’re almost all built to pay regular and growing dividends and appeal to income investors.  And they trade and act just like regular stocks in almost every way, though their dividends are generally treated as regular income (not like stock dividends), since they didn’t pay taxes at the corporate level.

And this particular one, though it’s not the same REIT Conrad has been pitching, is also Canadian. But which one? Here are a few more clues from the ad:

“‘Wal-Lord’ has delivered reliable ‘rent checks’ to partners for 113 consecutive months (that’s NINE years!) without missing a single payment.

“And this past October, Vancouver’s main newspaper The Globe and Mail reported: ‘… A dollar invested [with this landlord] in 2001 is now worth $18.’

“That means it has returned well over 1,700%.

“You could have turned a small $10,000 investment into a whopping $180,000 profits!

“It has averaged 29.7% returns to its investors every year.”

So that’s almost enough detail to confirm our answer … perhaps a little more?

“This landlord specializes in retail real estate. Its strategy involves leasing shopping centers anchored by “big box” retailers.

“It owns and manages a massive portfolio of shopping centers in major cities in our friendly neighbor to the north, Canada.

“Their ownership interest contains an aggregate of over 25 million square feet….

“It’s already signed over 70 long-term lease agreements with Wal-Mart, and most of these leases have terms of 20 years or more.

“And here’s the beauty part of this opportunity…

“Because of its strong relationship with the world’s biggest retailer, several more retail powerhouses are also cozying up to this landlord.

“This landlord has an enviable list of Fortune 500 clients including Best Buy, Staples, Lowe’s, Michaels, and most recently, Target.”

So … who is it, eh? Well, all those clues get poured into the Thinkolateur, and we learn that this is … Calloway REIT (CWT in Toronto, CWYUF on the pink sheets).

Like many REITs in Canada, Calloway pays a monthly dividend — in their case, it comes to a yield of about 5.8% at the current just-under-$27 share price. And they are a major Wal-mart landlord in Canada, thanks to a partnership with an aggressive big-box developer who basically helped to bankroll Wal-mart’s mass expansion in Canada and who then offloaded many of his “SmartCentre” developments to Calloway. You can see that whole story here in that Globe and Mail article that Hicks quotes from, and the partnership with SmartCentres and its aggressive CEO has indeed been a solid growth driver for Calloway — though most of the aggressive parts of that growth came early in the last decade.

I’ve never looked particularly closely at Calloway, but they do compare pretty favorably with Riocan (that’s the one Conrad teased a couple years ago, and has continued to tease) — Riocan is the Big Daddy of Canadian retail REITs, and arguably has more high-value urban locations in the East and a bit more diversification, and as such it gets a little bit of a premium price compared to Calloway, but they’re pretty close in valuation. Both are very low-cost operators (as befits a big box and strip mall landlord with economies of scale — boxes are much cheaper than operating enclosed malls or office buildings), and both look reasonably appealing.

There’s been a bit of a buzz around Canadian retail lately, with the relatively strong economy and resilient real estate market making some folks more comfortable with Canadian REITs than those on our side of the border, but it’s worth noting that though demand is pretty high for Canadian retail space right now, it’s a dramatically smaller market and it’s apparently a tougher one to expand in even though more retail space is needed — so much so that Riocan is pushing most of its expansion forward on our side of the border in a search for growth. There’s an interesting story here from Reuters today about demand for big retail space in Canada and how the lack of mall development has kept rents high and spaces hard to find — so that ought to be a positive driver, particularly for folks like Calloway that have new malls with strong anchors that might draw more interest from US retailers who are moving north (and yes, they did get Target as a tenant recently, which could become a big deal, though it was largely because Target took over a defunct retailer’s space in a couple of their malls).

So there you have it — a Canadian REIT, a pretty good yield, a strong base of centers with high occupancy, about 40% of of which are indeed anchored by Wal-mart. I don’t know what their growth profile looks like going forward, but they do certainly have the high-profile and hard-charging leadership to push for more development, and they appear to be on track to expand along with their developer partner as more projects are developed and then spun off to the REIT. It’s not as staid a pick as Riocan seems to be, and they’re more tied to strategic partners (Wal-mart Canada and SmartCentres) who might have an impact on their plans, but they’re a bit cheaper, have a higher yield, and own a lot of relatively young big box malls that appear to be doing quite well. If Wal-Mart loses the attention of the Canadian consumer they’d probably be in trouble, since Wal-Mart is both a large part of their revenue (more than 25%) as well as a critical anchor for most of their key properties, but as long as Canadians keep shopping at Wal-mart I imagine they’ll probably do just fine. With a large portfolio already under their belt, and a market cap of well over $3 billion, I’d be a bit surprised to see them churn out near-30% growth again over the next decade as they did in their first decade of growth, but if they continue to leverage their space and their backlog they ought to at least be able to keep up that steady dividend and, one hopes, keep pace with inflation as they gradually raise rents.

So whaddya think? Would you prefer Riocan or Calloway for your Canadian mall money, or do you have other real estate plays north of the border that you prefer? Or do you think US retail REITs are a better bet? I own a retail REIT in the western US (ROIC), and have suggested a few REITs to the Irregulars over the years, but do not own any of the companies mentioned above. Let us know what you think with a comment below.


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69 Responses to “Wal-Lord: How the Retail King’s Landlord Could Pay You Monthly Rental Income”


  1. At the market bottom around January 09 I was shopping around for some canadian trusts to replace the Canada trusts that were now going to be taxed (REITs were exempt). There was an article in the Globe and Mail (which btw does a great job covering canadian markets) and they quoted Harry Levant who has an expensive fee-based website covering canada trusts (http://www.incomeresearch.ca/). In the article he recommended Calloway, then selling at $9 as a “no-brainer” buy because most of their portfolio was Walmart and government properties. I held my breath and loaded up on Calloway, Whiterock (recently taken over by Dundee, which is another great REIT) and a few others at that time. Probably one of the best investments I have ever made and I have had my share of turkeys.

    Like(1)

  2. They sound like pretty good investments, but I have had some of these type Canadian investments, and they are tedious at tax time, my recollection is that they are still taxable on American Income taxes!
    Am I wrong?
    Morry

    Like(1)

    • Canada requires a withholding tax (foreign tax) which you can get credit for on your US return. You do have to pay a tax on the dividends but they are treated as qualified, 15%, and of course any capital gains. Canada has a strong economy, solid banking system, unemployment rate is 7%.

      Like(1)

      • I have one (Northwest Healthcare Properties REIT). Its dividend is ordinary, not qualified
        Its dividend is about 6.8%/year which seems higher than Calloways’s, and its price is more stable.

        Like(0)

        • You can’t just look at yield. Northwest has a 5-year total return of 10.5% compared with Calloway’s 18%. In regard to taxes most brokerage houses are misakenly not reporting Canadian Trust dividends as qualified, but most of them are. See article:
          http://www.businessweek.com/magazine/content/05_13/b3926130_mz070.htm
          and scroll down to heading EARNINGS ABROAD. I had to give the dividend information to my accountant as he too was not aware of it.

          Like(0)

    • to correct mr. hicks and company, the GLOBE and Mail is a major TORONTO newspaper not Vancouver, although you can get the paper in Vancouver, The SUN and The Province are the Vancouver 2 major papers, that’s like saying the New York Yankees play @ Fenway. anyways about the stock, it’s good

      Like(0)

      • That’s because we were smart enough to elect a reasonably conservative majority (controlling) government last time ’round, instead of a raving socialist loon like other countries I could name, most recently France.

        Don’t take it personally.

        Like(0)

        • I don’t take it personally I wasn’t one of the slobbering fools that took Obama to the White house. LOL I think he;’s a Socialist and a bad President. That being said why buy over the border for a dividend that is a horror at tax time.. Why not just buy things like Altria [MO} or Cop and take the dividends. Keep a dividend portfolio simple in my book 4-8% with the 8% a bit on the riskier side with tight stops and a careful eye. If something had a 14% dividend I;d buy it and watch it with tight tight stops. JMHO Deb PS I love the thrifty Canbadians they are sure laughing at us now with good reason.

          Like(1)

  3. Another relatively small Canadian REIT which I am profiting with, and have in the past is Artis.
    Symbol is AX.UN on Toronto exchange. Present yield is 6.7% and a 19.1% price increase over the last twelve months. OTC symbol is ARESF.

    Like(0)

  4. Sorry for this basic question, but I am new to this. When you speak of “it comes to a yield of about 5.8%”–that is per year, correct?

    Like(0)

    • Not as a general rule — REITs are not partnerships like MLPs are so they shouldn’t usually have a K-1 form for you. It’s just that the dividends are usually ordinary income, not eligible for lower dividend tax rates, though I suppose there may be return of capital as well if they distribute more than they earn (lowering your cost basis). And since this particular one is Canadian, if you happen to be a US investor you might see a withholding tax on the dividend that you could then take credit for as a foreign tax paid. I’m not an accountant or tax expert, but that’s the basic lowdown.

      Like(0)

  5. Thanks a lot! Now I don’t have to spend 49 dollars to hear Brian Hicks answer to what company it is. How would I purchase the stock, and how do I get the monthly dividends? Sorry, I am very new to this.

    Like(0)

    • Did you ever get an answer to the question ” How do I invest in this stock?” I’d like to know myself…

      Like(0)

  6. Something nobody else has noted, given the problems with the American dollar and the increasing strength of the Canadian dollar, with dividends payable in Canadian dollars this investment could serve as an inflation hedge if the u.s. dollar continues to decline against other currencies. As one other comment noted, apparently Brian Hicks dosen’t know Canada very well, (not unusual for American analysts) as indeed the Globe and Mail is Canada,s top rated business paper and is published out of Toronto, not Vancouver, nice as the city is.

    Like(0)

    • The Groan and Maul has gone seriously soft leftie over the last decades.

      Smile when you condescendingly comment on Vancouver, pardner. Not that it’s much better than most places politically, but e.g. the Ontario government has been outright certifiable for years, pouring billions down windmill ratholes, closing coal, nuclear, and gas generators, and causing skyrocketing energy bills. Sound like anyone you know?

      Like(0)

  7. Can anyone get into this investment even international investors? Also can someone tell me how to invest in it with out going through Brian’s report to get in? Thank you in advance.

    Juan

    Like(0)

    • REITs are traded on the stock exchange just like any other stock — in this case the home exchange is Toronto but it’s fairly easy to have a US broker buy it if you so choose, the relevant tickers are in the article above — there are many REITs in both the US and Canada, this one has been successful and has a close relationship with Wal-mart Canada, but is not magically different than many others. It depends what exchanges your brokerage has access to, I’m not aware of any exclusionary rules for individual international investors in Canada, though I’m not an expert on that. Tax treatment of the dividends is likely to depend on your country’s tax treaty with Canada.

      Like(0)

  8. Interesting ground floor access if compliance with EU taxation and in particular UK
    HMRC would permit. UK Government wants to resurrect these quaint shopping arcades and High Street presence for traders which will probably end up as shops-within-shops.
    What politicians have yet to admit is often bound up with excluding easy vehicle access so shoppers have to trek and can become vulnerable to thieves.

    Like(0)

  9. Thanks bro, now I don’t have to give 49 dollars to Mr. Hicks for the answer.
    Can anyone get into this investment even international investors? For instance, like me from Malaysia.
    How would I purchase & subscribe the stock?
    How do I get the monthly dividends? International wire transfer, Foreign checks?
    Can someone enlighten me…

    Like(0)

    • As stated, these are essentially ordinary stocks on the TSX (Toronto Stock Exchange). If you and your broker have access to it, you can buy the shares like any other. Tax treatments vary by jurisdiction.

      Like(0)

    • Don’t know about the dividends. Your brokerage account might be able to handle everything. Again, jurisdictions & regulations vary.

      Like(0)

  10. Help me..I am lost. I have got some investments yielding 12%-15% guaranteed income. There is no growth..only the guaranteed interest income yielding between 12%-15%. Acually it is a bit higher but I don’t know how to calculate it. That being said I am not sure if I want into any stocks or anything else. I know I could get lucky on a stock share price but…with a steady 12%-15% every year guaranteed (no potential drop in stock value, etc) I wonder if I should keep doing what I am doing or get into some stocks. Any suggestions?
    JT

    Like(0)

    • Very decent rate of return; can you opt to “plow the interest” back in (buying more, allowing the investment to compound?

      If you cannot, perhaps consider using part of the income to take on some of the tips here. If they match your existing income, keep doing it with proceeds re-invested. Compounding should eventually bring the returns up to the level you are now getting in addition. But it depends on how much of the income you can spare to do this.

      There’s a quick “rule of 72″ you can use for any rate of return. The interest rate for a period x the number of periods required to double your income if it is all immediately re-invested (compounded) = 72 (very close, not exact).
      So 1% return takes 72 periods to double. 7.2% takes 10 periods. And so on.

      Like(0)

    • JT,
      Noted your comments ( in a blog re Wal~Lord promotion, by Brian Hicks ) regarding an investment that you are currently in , yielding 12-15% that is GUARANTEED ??

      Can you please tell me MORE ? Where can I find out more about this investment ?
      ( Website etc. )

      Very much look forward to your reply JT.

      Thx
      Will

      Like(0)

      • Looks like JT is invested in high risk and probably leveraged debt instruments so no risk is
        probably not accurate. There is always risk in an investment. The higher the risk the greater the return and 12/15 % is a high return. Maybe JT will tell us more.

        Like(0)

        • Saw the interest rates from your Mongolian bank however who want to deposit their money for 15.1% for a year when you can make 4 time 90 days deposit in a year and get around 50% with the compounded interest?
          Or am i wrong??

          Like(0)

          • Don’t know how the Mongolian banks work or are advertising their services, but generally interest rates are quoted as annual rates — even if it’s a shorter term deposit. So if the annual rate is 16% for a 90 day term deposit or CD the actual income from that 90 days would be 4%.

            Like(0)

  11. Don’t know for sure. If you want to “plough” them back in, it is referred to as a ‘drip program’. Some Canadian REITS do this for US customers and some don’t. If you want to check directly, the # is 1-905-326-6400, and ask for their CFO Brad Munn.

    Like(0)

  12. Louren, You don’t “Join” per se. You get yourself an account of say Scottrade and
    fund your account. Then right there online in your account you Buy the stock you
    want. You can check on your account on line everyday should you choose. At the
    end of the year Scottrade will send you all the paperwork you need for your taxes.

    Like(0)

  13. Speaking of REITS, anyone looked at American Campus Communities (ACC)? Is it better than the Canadian REITs discussed above? any thoughts?

    Like(0)

  14. This is alot to consider for a person just breaking in…just want to pick up a few canadian stocks to get started…any thoughts?

    Like(0)

    • I’m not that learned an investor as many here but putting a little dough into a bank like National would be a safe start until you get more comfortable with the markets.
      For a bit of fun, you might dump a grand or 2 on a small gold stock like scorpio or prodigy……..or maybe a little semafo, which is a beat up gold stock starting to come back a bit…………..Good Luck!!!

      Like(0)

      • This particular REIT is a publicly traded stock in Canada, and is also traded using a pink sheets symbol by US brokers. The tickers are in the article above if you want to research them more thoroughly. If you wish to actually trade in this stock (or any other, of course), your broker can explain to you how to place an order for shares. Every broker is different, some let you trade directly on Canadian exchanges and some allow you to trade only indirectly through pink sheets or OTC shares.

        Like(0)

        • Are these people even reading the entire article of Travis? They keep asking the same question over and over again. If you are not savvy enough to figure out a OTC/Pink from Travis’s guide, you should be better off staying away from this game.

          Like(2)

  15. Brian, can you tell me if I can roll over funds from an existing Canadian RRSP mutual fund without penalty to fund a new Canadian REIT?

    Like(0)

  16. I SUBSCRIBED TO YOUR WL LORD PITCH. HAVE HAD NO CONFIRMTION OR NY WORD. IS THIS FOR REAL OR A SCAM TO GET MY CREDIT CARD AND PERSONAL INFORMTION? JJG

    Like(0)

    • Belle, How so? There are a number of RIET’s paying higher than 5.8%. Also, this has already run up and “stabilized”.

      Like(0)

  17. Hi,
    I am a new subscriber, and just read this article and comment thread.
    You may find this series of articles and blogs, that I published earlier this year on Seeking Alpha, helpful for your Canadian REIT research. It breaks out the Canadian REITs by sector, and includes some helpful (such as OTC ticker , description, market cap, dividend, and other, but now a little dated) information, in a comparable format. Here is the title and link of one of a dozen or so articles:
    Analyzing Canadian REITs, Part X: Highest Yields And Lowest Risks
    http://seekingalpha.com/article/365151-analyzing-canadian-reits-part-x-highest-yields-and-lowest-risks
    Cheers, Monty

    Like(0)

    • Thanks, Monty. It is great to have an objective analysis rather than the overblown hype of newsletter promotions. I love Seeking Alpha and Stock Gumshoe, too.

      Like(1)

  18. Have been trying to apply for the WAL*LORD advertisement, but never can find the application of this promised gift, or are you folk advertising it only to trap people into buying your publications? Be real and let me know how to apply if it is true and above board. Cheers Francis.

    Like(0)

  19. I stay in South Africa, I am very much interested in an investment that would give me a monthly income each and every month with a growth of 29.7% yearly. Could you please send me more info.
    Thank you,
    Hannes Viljoen.

    Like(0)

  20. The initial payment for Wal*Lord is $27. Why not you show the way to make payment. Why do you ask $49 for your publications. This creates doubts in the minds of most of us. Whether $27 is one time payment or a regular monthly payments ?. Or it is only a registration fee ?. It is not clear. You are forcing us to purchase your publications to know details. You are keeping us under illusion.

    Like(0)

    • I would suggest you read the article more carefully, then – no one is forcing you to pay $49 for anything. All of the information that is necessary to purchase this REIT is in the post.

      Like(2)

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