Canada-Headquartered Small Caps with U.S. Operations Receiving an Exchange-Rate Boost

With the Burger King-Tim Hortons merger still fresh in investors’ minds, the topic of corporate tax inversion seems meaningful. The following companies are headquartered within Canada, while operating almost purely in the United States. In addition to the realized tax benefit, the strong U.S. dollar has also contributed to the financial performance of these small caps.

Dream Global REIT (TSX: DRG.UN) – $10.06

Commercial REITs

Dream Global REIT, formerly Dundee International Real Estate Investment Trust, is a Canada-based, open-ended Real Estate Investment Trust (REIT) that was formed to provide investors with the opportunity to invest in real estate exclusively outside of Canada. Its objectives are to managing its investments to provide cash flows through investments in commercial real estate located outside of Canada, building a diversified, growth-oriented portfolio of commercial properties based on an initial portfolio in Germany, capitalizing on internal growth and seeking accretive acquisition opportunities in its target markets, growing the value of its assets and maximizing the long-term value of its Units through the management of its assets, and providing predictable and growing cash distributions per Unit, on a tax-efficient basis.

  • Market Cap: $1,124,292,753
  • Revenues: $256,077,000
  • Effective Tax Rate: 27.8%

Milestone Apartments Real Estate Investment Trust (TSX: MST.UN) – $14.47\

Residential REITs

Milestone Apartments Real Estate Investment Trust (the REIT) is an open-ended Real Estate Investment Trust. The REIT’s portfolio consists of 54 multifamily, garden-style residential properties, comprising 17,648 units that are located in 11 metropolitan markets throughout the southeast and southwest United States. The REIT operates its portfolio through its internal property management company, Milestone Management, providing management services to approximately 35,000 units across the United States.

  • Market Cap: $775,831,880
  • Revenues: $208,233,190
  • Effective Tax Rate: 3.8%

RDM Corp. (TSX: RC) – $3.31

Business Support Services

RDM Corp. is a Canada-based provider of Remote Deposit Capture (RDC) and complex desktop remittance processing solutions. The company processes approximately $600 billion annually and helps corporations and financial institutions increase revenue, expand market share and improve customer service. It provides both software and hardware solutions, including Web-based and mobile RDC for large corporate clients and small businesses, transactional data management, and also manufactures a wide range of digital imaging scanners.

  • Market Cap: $73,054,588
  • Revenues: $25,384,382
  • Effective Tax Rate: 14.4%