Thirty-Seven Cents, and I had to Buy Groceries

• This is being delivered to you on Monday evening so you wouldn’t be distracted on celebrating Canadian Thanksgiving. Next week we return to a Sunday Morning delivery.

It was 1983, and I was 27. I had just been paid my once-a-month salary and went to the bank to take out cash for groceries. Back then, there were no debit cards — just credit cards and cash. When I asked the teller for $100, she paused, looked down, then up, and said quietly:

“I’m sorry, sir, you have thirty-seven cents in your account.”

I couldn’t believe it. I phoned home — no answer. My wife and two little kids were waiting, and I had no money. My paycheck had been eaten up by automatic payments that had already gone out.

That day, I bought groceries on my credit card. I can still remember the sinking feeling — shame, fear, and exhaustion all rolled together. I had worked the whole month and had 37 cents left.

After that day, I decided never to feel that way again. I got to work. I found ways to earn more, sold produce, invested, failed often — but kept going. That moment became my wake-up call.

Forty-two years later, it still drives me. When someone asks for my definition of wealth, I always think of that day. For me, wealth means I can walk into a grocery store and buy what my family needs — without worrying about it. Or I often say, “When I can buy raspberries in January.”

Funny how that sticks with you.

Our failed experiences can destroy us or drive us. I was lucky — my thirty-seven-cent moment became my start.

That moment taught me a principle I’ve carried through every investment: control what you can, protect your reserves, and grow from strength.
When I analyze a REIT, I look for that same balance — enough reserves to survive, and enough efficiency to thrive. To hear the whole story, sign up for the podcast.

Here’s Apartment REIT #4 in my Countdown — one that’s been quietly building its hive year after year.

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

Hank Method Analysis: Morguard North American Residential REIT (MRG.UN)

1. Core Overview & Business Model

Morguard North American Residential REIT (“Morguard Residential REIT”) — MRG.UN on TSX.

- Asset base: ~$4.5 billion (as of June 2025), 42 multi-suite properties, one retail property.
- Portfolio: ~12,315 suites across Canada (Ontario, Alberta) and the U.S.
- Strategy: Generate stable and growing distributions, enhance property value, and grow through acquisitions and management efficiency.
- Strengths: Diversification, stability, residential focus.
- Risks: Debt intensity, FX exposure, fair value volatility, and operational complexity.

2. Recent Performance & Financials

Q2 2025:
- Revenue: $88.5M (+3.2% YoY)
- NOI: $56.9M
- FFO per unit: $0.47 (+14.6% YoY)
- Distribution: $0.19/unit (payout ratio ~40%)
- Occupancy: Canada ~95%, U.S. ~94.8%
- Unit repurchases: 1.2M units ($21M value)
- Fair value gains: $69M (H1 2025)

2024 Recap:
- NOI: ~$181M
- FFO/unit: $1.65 (flat YoY)
- Net income: $99M (down due to fair value swings)
- Debt-to-gross book value: ~39.7%
- Same-property NOI: +7.2% in Canada, -4% in the U.S.

3. Hank Method Scoring (0–10 per Rule)

1. Hive Must Come First – 7
2. Nature Knows Best – 8
3. Recycle – 7
4. Focus, Specialize & Be Efficient – 7
5. Live in the Right Place – 6
6. Little Things Over Time – 7
7. Be Strong, Fight When Needed – 6
8. Probability of Success – 7
9. Constant Feedback – 7
10. Listen to the Buzz – 6

Average Hank Score: 6.8 / 10

4. Key Metrics & Summary

- FFO Payout Ratio: ~40–42% (conservative)
- Unit Buybacks: Active, shows alignment with unitholders
- Debt Refinancing: Managed prudently, maintaining flexibility
- Occupancy: Stable, minor declines in Canada offset by U.S. gains

Strengths:
- Steady NOI and FFO growth
- Conservative payout structure
- Strong management execution

Risks:
- Occupancy softness in Canada
- FX and fair value volatility
- Related-party management structure

5. Hank Verdict

Verdict: HOLD (Accumulate Selectively)

Morguard Residential REIT is a disciplined, steady performer in residential real estate.
It embodies Hank’s principle: protect the hive first, grow patiently, and invest with discipline.

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