BMO Equity Research IN Tune

Mike Markidis, MD & BMO REITs Analysts walks us through his 2023 outlook. He suggests that higher interest rates have him more cautious, particularly as the adjustment process continues and the spectre of a recession looms. Accordingly, from his perspective, investors' expectations should be more tempered in 2023. Valuation screens attractive on a P/NAV basis, but our weighted average AFFO yield spread is below the LTA. In addition, capital constraints and the potential impact of a recession on tenant demand are formidable challenges; not to mention regulatory uncertainty. Given this backdrop there are still opportunities. From a fundamental perspective industrial real estate is at the top of our pecking order followed by multi-residential. BMO clients can view our report, “2023 Outlook: Something's Gotta Give”, by visiting: https://researchglobal0.bmocapitalmarkets.com/api/v1/publication/getPublicationPdfLive/?id=27730d9f-243c-45fd-95a8-7233995c96c3&read=true&stamp=1672947432901000&sitename=Equity Episode transcript: https://research-ca.bmocapitalmarkets.com/documents/E174D118-40BE-4460-9143-EB52AC209805.PDF To access our full disclosures, please visit: https://researchglobal0.bmocapitalmarkets.com/public-disclosure/

In this episode of IN Tune, we are joined by Doug Morrow, ESG Analyst; Rachel Walsh, Carbon Innovation Analyst; Saj Shapiro, Head, BMO Radicle; and Chelsea Bryant, Managing Director, Trading, BMO Radicle, discuss the interplay between BMO Radicle, energy transition, and the world of carbon credits. In December 2022, BMO Financial Group completed its acquisition of Radicle, expanding the bank's carbon credit development capabilities and its footprint in the environmental commodity market, and deepening its commitment to help clients understand and assess energy transition risks and opportunities. In 40 minutes we run through the basics of carbon trading and pricing, Radicle’s expertise in developing offsets, trading, and advisory, as well as our panelists' outlook for 2023 carbon markets. Episode transcript: https://research-ca.bmocapitalmarkets.com/documents/DF504F7B-36E2-4E16-9A5B-75E6BDF8C863.PDF To access our full disclosures, please visit: https://researchglobal0.bmocapitalmarkets.com/public-disclosure/

The Best of BMO is our quarterly compilation of our broad macro views, as well as our best stock ideas for the next 12 months. Essentially, it is an equity idea book. In this episode, we are joined by eight of our mining analysts to delve into the details of their Best of BMO stock picks. Joining the podcast are Dave Gagliano, Alex Pearce, Jackie Przybylowski, Brian Quast, Andrew Mikitchook, Rene Cartier, Raj Ray, and Ryan Thompson. BMO clients can view our report, “The Best of BMO Q4/22”, by visiting: https://researchglobal0.bmocapitalmarkets.com/research/e8264d3e-3c7a-40c3-a722-45448d47bd32/ Episode transcript: https://research-ca.bmocapitalmarkets.com/documents/387605AD-21CC-46F9-9D77-877FB4B16CDA.PDF To access our full disclosures, please visit: https://researchglobal0.bmocapitalmarkets.com/public-disclosure/

In this edition of our IN Tune podcast, we sit down with Doug Morrow and Juan Sanabria from BMO’s equity research team to discuss the key findings from their recent note on climate change impacts on US real estate companies. Doug and Juan have analyzed the exposure of 70 US REITs to physical climate risk for their US assets in the "new normal" with ever-increasing billion-dollar climate and weather disasters. They believe that REITs will increasingly have to execute strategies in an environment that is likely to be warmer, and punctuated by more extreme weather events with insurance costs likely to further increase, and in some cases, insurance coverage availability questionable. For investors, given the increased frequency of climate events, associated costs may no longer be treated as one-time, but instead be viewed as part of doing business with significant variance by REITs, but not necessarily across sub-sectors. BMO clients can view our report, “It's Getting Hot in Here... So Let's Analyze Climate Change Risk for US REITs”, by visiting: https://researchglobal0.bmocapitalmarkets.com/research/5f4337fe-5f43-444f-b1ed-b9ab66ba423b/ Episode transcript: https://research-ca.bmocapitalmarkets.com/documents/A37BB256-6348-4CD9-B0A3-665564235E1B.PDF To access our full disclosures, please visit: https://researchglobal0.bmocapitalmarkets.com/public-disclosure/

Recorded on October 31st, Sohrab Movahedi and Etienne Ricard join our IN Tune podcast to discuss their recent report "Spin Mechanics", covering Brookfield Asset Management and the anticipated transaction to spin out a 25% interest in its asset management franchise as a 'pure-play', as well as the drivers of value at BAM and BN, and the value proposition of alternative investment strategies in a higher interest rate environment. BMO clients can view our report, “Spin Mechanics”, by visiting: https://researchglobal0.bmocapitalmarkets.com/research/84eef555-31d0-4c99-b081-6ef194889177/ Episode transcript: https://research-ca.bmocapitalmarkets.com/documents/03991578-A48F-48D6-A740-74D970BDD942.PDF To access our full disclosures, please visit: https://researchglobal0.bmocapitalmarkets.com/public-disclosure/

In this episode of our IN Tune podcast we sit down with Doug Morrow, BMO’s Director of ESG Strategy, to go over the key findings from the department’s recent launch of ESG coverage for the base metals and diversified mining industries in a report entitled, “Beneath the Surface: Exploring ESG Trends and Progress in the Base Metal and Diversified Mining Industries”. We talk everything from minerals traceability to diversity, equity & inclusion, and review how investors can apply the findings in their investment process. We also preview the latest report, “It’s Getting Hot in Here… So Let’s Analyze Climate Change Risk on US REITs”, a collaborative effort covering how climate change effects US REITs. Where BMO’s Research team worked together with the BMO Climate Institute and other parties to run a first of its kind analysis on how US real estate companies are exposed to wind, wildfire, and flooding risks that are being exacerbated by climate change. BMO clients can view our report, “Beneath the Surface: Exploring ESG Trends and Progress in the Base Metal and Diversified Mining Industries, by visiting: https://researchglobal0.bmocapitalmarkets.com/research/81336ca0-481e-4920-804d-b3b177cb3c7e/ And our report "It’s Getting Hot in Here…So Let’s Analyze Climate Change Risk on US REITs" by visiting: https://researchglobal0.bmocapitalmarkets.com/research/5f4337fe-5f43-444f-b1ed-b9ab66ba423b/ Episode transcript: https://research-ca.bmocapitalmarkets.com/documents/0CBB1ED1-7A73-4F84-A834-CA8602602B16.PDF To access our full disclosures, please visit: https://researchglobal0.bmocapitalmarkets.com/public-disclosure/

There has been a lot of buzz around the voluntary carbon market over the past few years given increased interest in corporate carbon offsetting to help facilitate the explosion in net-zero and emissions reduction targets. We believe this market is currently in its “carpe diem” moment and that it has arrived at an important crossroad, with a need to meet increasing demand for offsets while still maintaining market integrity through products that reflect actual impact. While we believe this market is slated for impressive growth, its potential is predicated on an ability to deliver high-integrity products. In this short podcast, we touch on certain nuanced aspects of the market, including differences with compliance and voluntary markets, credit-quality criteria, and the implication of Article 6 of the Paris Agreement. BMO clients can view our report, “The Voluntary Carbon Market: International Market of Mystery”, by visiting: https://researchglobal0.bmocapitalmarkets.com/research/938af63e-12dc-4b6c-8d1f-26fd4b2fa340/ Episode transcript: https://research-ca.bmocapitalmarkets.com/documents/1306A54B-83F2-403B-9DA9-E2E00B7AEAA3.PDF To access our full disclosures, please visit: https://researchglobal0.bmocapitalmarkets.com/public-disclosure/

In this short (16 min) podcast, we discuss the key recent changes we have made to our EV sales forecasts and battery assumptions, and the resulting impacts on various upstream battery metals including lithium, nickel, cobalt, graphite, and others. BMO clients can view our reports, "Raise EV Targets Higher and Update Key Assumptions to Varying Upstream Effect", by visiting: https://researchglobal0.bmocapitalmarkets.com/research/abe03309-3d6b-432e-8507-3ebf507894eb/ and "Changing Some EV and Lithium Assumptions, Though Conclusions Remain Same" by visiting: https://researchglobal0.bmocapitalmarkets.com/research/65f1a666-1549-4b11-9c93-009328f5f574/ Episode transcript: https://research-ca.bmocapitalmarkets.com/documents/0E975775-C5A2-487E-9B85-98EBA70158BA.PDF To access our full disclosures, please visit: https://researchglobal0.bmocapitalmarkets.com/public-disclosure/

BMO clients can view our report, “Best of BMO Q322” by visiting: https://researchglobal0.bmocapitalmarkets.com/research/e165cee3-dced-46c4-942a-df8e116962ae/ Episode transcript: https://research-ca.bmocapitalmarkets.com/documents/DD9845C9-AE86-457A-93FE-7D24B4201212.PDF To access our full disclosures, please visit: https://researchglobal0.bmocapitalmarkets.com/public-disclosure/

With agricultural related GHG emissions accounting for about quarter of global emissions, conversations around the role of farming in carbon and emissions management are intensifying. This includes the capacity of soil to sequester carbon by growers transitioning to farming practices such as no-till and cover cropping. Governments are starting to incentivize such transitions, and numerous food and crop input producer pilot programs to track on-farm sustainability practices have emerged. In this podcast, Joel Jackson, Chemicals and Fertilizer Analyst at BMO Capital Markets, discusses the key findings from his recent research report, which concludes that while many hope no-till farming and cover cropping could prove a benefit to growers to monetize sustainability practices and lower emissions, they may prove to be a burden unless government and food industry incentives materially increase and broaden. Even with government incentives and promises of CPG industry incentives, BMO estimates a 5- to 10- year payback for a farmer transitioning to no-till and cover cropping. Upfront equipment switching costs are sizable, there are yield penalties in initial years, and material annual cover crop seed costs. Plus, future outcomes are blurry - carbon monitoring is imprecise, carbon sequestration seems lower than projected and variable year to year, there’s carbon re-emissions potential from natural occurrences or if practices are abandoned, carbon marketplaces are immature, and government policies are unclear. Episode transcript: xxx To access our full disclosures, please visit: https://researchglobal0.bmocapitalmarkets.com/public-disclosure/