We’re adding Dundee Industrial REIT (TSX: DIR-U, no US symbol) to How They Rate coverage this month.

The company was spun out of parent Dundee REIT (TSX: D-U, OTC: DRETF) in early October in an initial public offering. Dundee REIT continues to own 78.9 percent of the REIT, which owns industrial properties.

Advice Changes

Boston Pizza Royalties Income Fund (TSX: BPF-U, OTC: BPZZF)–To Hold from Buy @ 18. The unit price for this restaurant royalties company has moved beyond my target. That’s at a time when insiders have reduced holdings by 10.7 percent over the last 12 months, and competition appears to be heating up.

PRT Growing Services Ltd (TSX: PRT, OTC: PFSRF)–To SELL from Hold. PRT has attracted a takeover offer of CAD4.45 per share from private equity firm Mill Road Capital. The offer is all cash and represents a 26.5 percent premium to PRT’s 20-day volume-weighted average price.

PRT’s current price is within 2 percent of the takeover price, limiting upside, particularly in view of the lack of a dividend. Regulatory approval is likely, and the deal should close in December.

But given the limited upside investors should book the gain. That especially goes for US investors, who by selling avoid potential complications affecting merger proceeds.

Ratings Changes

Atlantic Power Corp (TSX: ATP, NYSE: AT)–To 4 from 5. A reduction in projected cash flow from two Florida power plants where contracts will expire next year doesn’t directly threaten the dividend.

It does, however, reduce visibility of future earnings and shaves a point off Atlantic Power’s rating.

Safety Ratings

The core of my selection process is the six-point CE Safety Rating System, which awards one point for each of the following. A rating of “6” is the safest:

• Payout Ratio–A ratio below our proprietary industry baseline.
• Earnings Visibility–Earnings are predictable enough to forecast a payout ratio below our proprietary industry baseline.
• Debt-to-Assets Ratio–A ratio below our proprietary industry baseline.
• Short-Term Debt Ratio–Debt due in next two years is less than 10 percent of market capitalization.
• Business Stability–Companies that can sustain revenues during recessions are favored over more cyclical ones.
• Dividend History–No dividend cuts over the preceding five years.