ALBERTA SLOWDOWN MAKES BOARDWALK REIT NORTH AMERICA’S MOST-SHORTED STOCK.

Canada’s largest residential landlord is the most-shorted company in North America as investors bet it will bear the brunt of a slow economic recovery in the oil- dependent region.

Short interest in Boardwalk Real Estate Investment Trust is at 37 per cent of its free float, or outstanding shares not held by insiders, the most shorted stock on Canada’s S& P/ TSX Composite index, Markit data compiled by Bloomberg Wednesday show. That’s higher than Marriott International Inc., t he most-shorted company on the S&P 500 with 35 per cent of its stock shorted.

Investors are speculating that the Calgary- based apartment owner will face sliding rents and rising vacancies as energy companies cut jobs and employees leave the province of Alberta, which according to Toronto-Dominion Bank i s going through one of its worst economic downturns on record. Boardwalk is just the latest Canadian real estate company in the cross- hairs of short-sellers, who in the past three years have been wagering on a cool- down in the country’s fractured housing market.

Roberto Geremia, Boardwalk’s president, said the short- sellers are likely U. S. hedge funds with a call based on their macroeconomic view rather than anything specific to the company’s operations. Boardwalk has been talking to investors for at least a year about the rise in short positions, and telling them the same thing.

“The view in the world is that Canadian housing prices are in a bubble, the Canadian dollar is under pressure, and oil is too — we’re maybe one of three companies that fit all the above,” Geremia said by phone on July 21. “Even in the current environment, renting is the most affordable housing option, and people will keep renting.” Geremia said his understanding is that the hedge f unds are preparing f or Boardwalk shares to fall to about $ 45, or 19 per cent lower than the July 26 closing price of $55.31.

Alberta is Boardwalk’s largest region, home to 60 per cent of the company’s apartment units generating 70 per cent of its net operating income. Boardwalk’s rental revenue in the province fell 3.3 per cent in the first quarter from a year earlier, the company said in a report. Monthly rents slid 3.7 per cent to $ 1,257 in the period and the company gave out more incentives than planned to keep tenants, such as free renovations.

The freebies helped keep Boardwalk’s towers more full than others, with only 1.8 per cent vacancy in Calgary and 2.8 per cent in Edmonton, compared to 5.3 per cent and 4.2 per cent for the rest of the market respectively, according to the latest annual CMHC figures.

Boardwalk has rallied 17 per cent this year and closed up five cents Wednesday at $ 55.17 in Toronto. It’s still trading about 23 per cent below it’s high of $ 71.40 in 2014, before the price of oil dropped.