MAY 2016
Alitis Private REIT Launched
The new Alitis Private REIT (Real Estate Investment Trust) was launched on March 24, 2016 marking the culmination
of more than a year’s worth of work by Alitis, along with our team of Securities Lawyers, Tax Accountants, Systems
Providers and long term Real Estate Specialists. The Alitis Investment Team is continuing its due diligence but by the end of
April had an extensive list of approved quality and exclusive real estate investments. Feedback from our clients and new
investors has been universally positive specifically noting that the Alitis REIT provides access to high quality private real
estate that is normally only available to institutional investors.
The difference between the Alitis Private REIT and other public REITs is its structure. Our REIT was specifically
designed to deliver regular cash flow, periodic capital gains and improving portfolio value without the volatility of the public
market. Here are some of the key features of the Alitis REIT:
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RRSP eligible
Quarterly distribution of net rental income and realized capital gains (from properties sold)
Monthly purchases and redemptions (with a minimum 30 days’ notice)
5-year early redemption charge (to discourage short-term trading)
Multi-Manager and Multi-Country structure (primarily in Canada and approximately 25-35% in the US)
Minimum investment of $5,000
Monthly electronic purchases and withdrawals ($100)
Please ask your Portfolio Manager for the REIT’s Fact Sheet to learn more.
The word is out and interest in the REIT is building; the 7 city tour of public presentations (from BC to Manitoba) has been
an unmitigated success. Serious investors embrace private real estate as they understand that the stock market can lead to
significant volatility and a less predictable performance path than good old-fashioned private real estate.
L-R: Terry Gwilliam, Vice President, Alitis Investment Counsel, | George Ganas, Senior Vice President, Timbercreek Asset
Management | Kevin Falcon, Executive Vice President, Anthem Properties | Sean Roy, President & CEO, Ironclad
Developments | Cecil Baldry-White, CEO, Alitis Investment Counsel
QUARTERLY UPDATE
1
MAY 2016
Old Investment Paradigm vs. The New Paradigm
Since the inception of Alitis in September of 2009, our story has been that the landscape of the investment world has
changed – permanently! The ‘old paradigm’ of investing for retail investors is based on limiting investments within two
primary asset classes: stocks and bonds. In contrast, we refer to the established multi-asset approach (which has been
employed by ultra high-net work families, and institutions for more than two decades) as the ‘new paradigm’ of investing.
It begins with an allocation to stocks and bonds and then expands by adding meaningful allocations (40-60%) to another asset
class called Alternative Investments. Broadly speaking, Alternatives Investments include:
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Private Real Estate
Private Equity (companies, infrastructure, farmlands, timberlands etc.)
Private Fixed Income (mortgages, bridge financing, corporate lending)
Absolute Return Investments (hedge funds, options and futures-based strategies)
Cecil Baldry-White, our CEO, will be speaking at two national conventions for a select group of Canada’s leading
Financial Planners and Investment Advisers. His message to his industry colleagues is the same as it has always been to our
Alitis private clients. Cecil states, “When a paradigm shift occurs in any industry or technology (like the
Internet), it is a game changer. Through this change there will be leaders, there will be followers and there
will be some who leave the industry. Just because one may not initially recognize or adopt the new
paradigm, it doesn’t mean it didn’t happen.”
Alitis is proud that we are based on Vancouver Island, that we have clearly differentiated ourselves from others and
that we are ahead of the pack. There is only a handful of investment firms in Canada that have embraced the multi-asset
class, “new” paradigm, approach to the degree that we have done and other the firms typically have minimum investment
requirements of $1 million. At Alitis, we set a minimum at $100,000 for our clients. In doing so, we have made our model
of advanced asset management available to a wider range of investors, families, and young professionals. Please contact us to
discuss how we might accommodate new clients who are committed savers who have not yet reached this $100,000
milestone.
QUARTERLY UPDATE
2
MAY 2016
We see the Millennials as one of the most important demographic segments and our firm is built to attract this
group of young investors through our diversified pools. The new Alitis Private REIT will attract investors who are drawn to
real estate investments. Just as the baby boomers have changed the current investment landscape, Millennials are set to
change the future investment landscape.
Millennials generally place a high value on achieving a healthy work/life balance. Studies show that in many cases,
Millennials prefer to rent quality apartments to home ownership. This helps them to sidestep massive debt through rentals
versus ownership of larger homes, unlike their parents and grandparents. For this reason, we see condominium quality
apartment buildings as being an excellent private real estate asset. We have placed a major focus on this type of real estate
in the Alitis REIT, Income & Growth and Growth Pools.
Stocks, Bonds and Global Growth
April 1st, our Investment Committee held our first Quarterly Investment Committee Meeting of 2016. We conducted a
thorough review of the major global macro-economic indicators; we reaffirmed our outlook; and we adjusted the tactical
asset allocations of our pooled investments.
Interest Rates
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Despite a much anticipated increase in the US Federal Funds Overnight Interest Rates in March, Janet
Yellen (Federal Funds Chair) and her committee did not change their interest rates in April. The US
economy has slowed and the inflation inputs they were concerned about seemed to be abating. The last
thing they wanted to do was put a damper on growth with higher rates.
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In Canada, as in Europe and much of the world, economic growth is slowing. The 20-year out-sourcing of
manufacturing to China by the G7 countries finally reached its peak in 2014/2015. The “Commodities
Super- Cycle” which evolved through this game-changing approach to out-sourcing of manufacturing to
emerging countries appears to also have peaked. This leaves Canada, Australia and the commodityproducing countries of South America reeling, as demand for commodities has collapsed.
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Benign global growth implies that interest rates will remain low. Traditional government and investment
grade corporate bond yields are likely to stay in the 1-3% range for some time. Because of this, we are
maintaining our minimum weights in bonds and instead hold overweight positions in our Alternative Fixed
Income solutions such as Private Mortgages, Bridge Lending Funds and other Private Fixed Income
Investments.
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Canada and other resource-based countries have already seen significant declines in their stock markets.
Although individual companies may now represent excellent investment opportunities, we remain cautious
on the broader markets.
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The US stock market, in particular, may well present risks that were somewhat ignored as their economy
has charged forward over the past seven years.
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We remain underweight in the broader stock indexes and are looking for sector-specific opportunities in
the over-sold areas such as the oils, minerals, and recession-resistant industries.
Stocks
QUARTERLY UPDATE
3
APRIL 2016
Note: At this juncture, we see Alternative Investments such as Private Real Estate, Private Mortgages/Loans and Absolute
Return investments as essential to mitigate against potential market risk and to drive investment returns. The bond
component of Balanced Mutual Funds, as well as managed portfolios (often 35%-50% of the fund), are experiencing yields
that may be lower than the fees (MER’s) on those funds. This explains why we firmly believe that our new private REIT and
other Alitis Pools will offer superior returns, with less risk, than retail mutual funds.
Disclaimers and Disclosures
This report is provided, for informational purposes only, to customers of Alitis Investment Counsel Inc. (“Alitis”) and does not constitute an offer or solicitation to buy or
sell any securities discussed herein to anyone in any jurisdiction where such offer or solicitation would be prohibited. Opinions expressed in this report should not be
relied upon as investment advice. This report does not take into account the investment objectives, risk tolerance, financial situation or specific needs of any particular
customer of Alitis. Each individual’s investment objectives, risk tolerance, financial situation and specific needs should be evaluated before making any investment decision.
The information contained in this report has been drawn from sources believed to be reliable, but is not guaranteed to be accurate or complete. This report may contain
economic analysis and opinions, including about future economic and financial markets performance. These are based on certain assumptions and other factors, and are
subject to inherent risks and uncertainties. The actual outcome may be materially different. All opinions expressed herein constitute judgements as of the date of this
report and are subject to change without notice. Alitis assumes no duty to update any information or opinion contained in this report. This report may contain links to
third-party websites. Alitis is not responsible for the content of any third-party website or any linked content contained in a third-party website. Content contained on
such third-party websites is not part of this report and is not incorporated by reference into this report.
Unless otherwise noted, the indicated rates of return are the historical annual compounded returns for the period indicated, including changes in security value and the
reinvestment of all distributions and do not take into account income taxes payable by any security holder that would have reduced returns. The investments are not
guaranteed; their values change frequently and past performance may not be repeated.
Neither Alitis nor any director, officer or employee of Alitis accepts any liability whatsoever for any errors or omissions in the information, analysis or opinions contained
in this report, nor for any direct, indirect or consequential damages or losses arising from any use of this report or its contents.
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