I was selling produce in the summer to support my family. It was 1987. It was one of my many side hustles and a reaction to having 37 cents in the bank. I’d drive my old beater van down to Detroit, buy fresh produce, negotiate the border, and sell it in Ontario for a small profit.

One Friday, I was fully loaded in the van when suddenly I couldn’t steer. The steering column had snapped. The mechanic said it would cost seven hundred and fifty U.S. dollars to fix it so I could get home. I didn’t have the money or a way to pay. He was insisting on cash only.  I’d already used every dollar to buy the load. I was buying bananas at the time — twenty-nine cents a pound — as a loss leader to attract customers.  A really dumb idea and another business mistake.

 So, I went to the banana guy I’d met that summer, a young entrepreneur full of energy.  He opened his drawer, pulled out seven hundred and fifty U.S. dollars, and handed them to me. I was stunned. I asked him why he’d do that. He said, “I knew right away when I met you, you were ok.” He trusted me. We fixed the van and barely made it home. I paid him back the next week, but that day, the 29-cent banana man taught me an important business lesson — listen to your gut when it tells you to trust. Listen to it when it tells you not to trust.

 As we get older, our instincts can become our best compass.  Listen to the complete story in this week’s podcast. 

More lessons from some very bad attempted side hustles in future letters, but now here is my #1 REIT pick. Next week, I’ll talk about how I decided how much of my $10,000 to invest in each of my 5 Companies. Remember, I don’t just look at the Hank scores; I review all the information and go with my gut. This is my #1.

Company Overview & Context

Boardwalk REIT (TSX: BEI.UN) is a Canadian real estate investment trust focused on owning and operating multi-family residential properties across Alberta, British Columbia, Saskatchewan, Ontario, and Quebec.
It manages more than 34,000 apartment units and has total assets exceeding CAD 8.8 billion. The REIT emphasizes operational efficiency, capital recycling, and geographic diversification.

Hank Rule-by-Rule Evaluation

Rule 1: The Hive Must Come First – Insider Alignment & Growth

Insider ownership exceeds 24%, showing strong alignment. Revenue has grown from CAD 494.8M (2022) to CAD 603.3M (2024). Non-cash revaluation gains impact net income reliability.

Score: 4/5

Rule 2: Nature Knows Best – Simplicity & Business Durability

Straightforward residential rental model; durable business with natural housing demand, though exposed to regulation and rate shocks.

Score: 4/5

Rule 3: Recycle – Debt & Capital Discipline

Debt-to-equity around 66%. Most mortgages CMHC-insured. Moderate leverage with active capital recycling.

Score: 3/5

Rule 4: Focus, Specialize, and Be Efficient – ROIC vs WACC

Focused on multi-family housing; operational efficiency solid, but margins sensitive to maintenance and rates.

Score: 3/5

Rule 5: Live in the Right Place – Competitive Moats & Geography

Diverse portfolio across provinces mitigates risk. Moderate moat due to brand and scale.

Score: 3/5

Rule 6: Little Things Over Time Become Big Things – Compounding

Steady growth potential through reinvestment, though leverage may dampen compounding.

Score: 3/5

Rule 7: Be Strong, Fight Only When Needed – Prudent Divestments

Actively sells non-core properties and recycles proceeds; disciplined capital management.

Score: 4/5

Rule 8: Probability of Success – Industry Balance & Resilience

Residential sector stable but sensitive to rates and regulation.

Score: 3/5

Rule 9: Constant Feedback – Governance & Adaptability

Good governance and reporting transparency. Management actively adjusts to market.

Score: 4/5

Rule 10: Listen to the Buzz – Market & Analyst Sentiment

Market cautious; P/B ~0.71 suggests undervaluation with macro risks priced in.

Score: 3/5

Summary of Scores

Verdict

Overall Hank Score: 6.8 / 10 (Normalized from 34 / 50)

Verdict: Hold / Selective Accumulate

Boardwalk REIT exhibits strong insider alignment, stable residential demand, and prudent capital management. Its valuation appears modest (P/B < 1) suggesting market caution due to interest rate and regulatory risks. Dividend yield (2.4%) is safe but modest.
The REIT remains a high-quality operator within the Canadian residential space but lacks explosive growth catalysts.

Recommended as a HOLD for investors seeking long-term residential exposure with moderate income stability.

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