Buy a REIT with just 4 Buildings?

The province of Manitoba in Canada has some very interesting rent control rules. Newer buildings less than 20 years old are not subject to the government's rent control guidelines.

Marwest Apartment REIT is my second stock to add to the Hank High Risk ETF. Just over 45% of its apartments are not currently subject to rent control.

It owns and operates some 516 apartments within 4 buildings in Winnipeg, Manitoba. It is a very small REIT.

To do a comprehensive analysis, I downloaded the past 3 years of financial statements into Ask Hank, and the analysis is below. I’m going to add a small holding to the ETF portfolio. I also reviewed their buildings based on information on their IR site, the economy and climate in Winnipeg, and their management structure. While helpful, I don’t base an investment decision solely on the Ask Hank analysis. It helps, but I also look at the entire picture. I don’t like all their related-party transactions, which aren’t a deal stopper but do require more monitoring and analysis. I see this quite a bit in small REITS, and it’s something to watch.

It may seem like a lot of work to find and download the annual statements. But investing is work. If you aren’t willing to do some work, you should likely not be investing in individual stocks. Ask Hank requires the download when it can’t cleanly grab the audited statements. While the snapshot function of Ask Hank is helpful, make sure you use only information from the audited statements to do a full Hank Analysis to truly understand a company. My analysis is below. Would you buy this one?

This information is for Educational Purposes only. Do not make portfolio changes without speaking with your financial advisor. I am not a financial advisor.

Marwest Apartment REIT – Full Hank Analysis (Audited 2022–2024 Filings)

1. Snapshot

Revenue: 2022 $7.17M, 2023 $9.96M, 2024 $10.35M (CAGR ~20%)

NOI: 2022 $4.30M, 2023 $6.36M, 2024 $6.88M (CAGR ~26%)

Net Income: 2022 $3.40M, 2023 $8.70M, 2024 $12.16M (fair-value driven)

Investment Properties: $126.8M → $142.0M

Mortgages: $104.5M → $103.3M (LTV improves 82% → 73%)

Equity: $19.0M → $39.9M

Trust Units: 8.67M → 9.06M

Exchangeable Units: 10.84M → 10.44M

Distributions: ~$130k–$137k

Market Price: ~$0.75 (late 2025)

2. Hive Growth Factors

Revenue Growth ~20% strong. Net Income ~89% low quality (FV noise). NOI ~26% strong. Distributions flat. BV/unit CAGR ~42%.

3. Key Hank Metrics

P/B: ~0.17× (trust only) or ~0.37× (economic). Operating CF ~$2.95M → ~$0.15/unit → ~20% CF yield. Buybacks ~2% units. Distribution payout <10% CF.

4. Hank 10 Rules (Score ≈ 60/100)

Rule 1 – Alignment 7/10: Strong insider alignment; external mgmt reduces score.

Rule 2 – Durability 8/10: Simple apartments; leverage risk.

Rule 3 – Debt Discipline 5/10: LTV improves but still high; refi risk.

Rule 4 – Efficiency 7/10: Good NOI margins; positive spread.

Rule 5 – Moat/Location 6/10: Stable Western Canada but concentrated.

Rule 6 – Compounding 7/10: Strong BV/NOI compounding; short history.

Rule 7 – Strength 5/10: Some buybacks; limited flexibility.

Rule 8 – Success Probability 6/10: Strong asset class; equity volatile.

Rule 9 – Governance 5/10: Clean audits; related parties high.

Rule 10 – Market Sentiment 4/10: Deep discount; illiquid.

5. Graham Margin of Safety

CF yield ~20%; P/B very low. Margin of safety exists but fragile due to leverage + cap-rate risk.

6. Munger Inverse

Reasons not to buy: micro-cap, illiquid, high leverage, external mgmt, only 4 properties, FV sensitivity, tiny distribution.

7. Portfolio Fit

Best as a small satellite position for long-term holders. Monitor LTV, NOI, refinancing, AFFO clarity, governance.

8. Summary

Strengths: Strong NOI/BV growth, deep value, simple business, safe distribution, some buybacks.

Weaknesses: Leverage, size, related-party structure, illiquidity, FV sensitivity.

Hank Score ≈ 60/100.

This information is for Educational Purposes only. Do not make portfolio changes without speaking with your financial advisor. I am not a financial advisor.