# REIT



## MrMatt (Dec 21, 2011)

So a lot of people are down on REITS right now.
But I just got some BAM, because they absorbed BPY, but I'm wondering about others.

Slate looks interesting, or should I just get an ETF?

I don't think REITs are actually over, I think they're just on a depressing down cycle now.


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## newfoundlander61 (Feb 6, 2011)

The only REIT I hold is in a TFSA and that is chp.un for income purposes.


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## Spudd (Oct 11, 2011)

TD likes Granite Industrial (GRT-UN) and First Capital (FCR-UN) at the moment for their small-cap quantitative portfolio. I've been messing around with following this portfolio and have been getting generally good results.


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## Ponderling (Mar 1, 2013)

I looked at a reit etf a few years ago. At the time you could get a good chunk of the etf top holdings in a handful of trust.

So presently in a rrsp: car, csh, hr, ir, ap, kmp and grt Bailed on smart center mid pandemic to put funds into more beat up reit holding. Also put cash into reits about july 2020. Just getting above water on funds held from before covid


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## AltaRed (Jun 8, 2009)

ZRE has a more equal weighting so it is considerably more palatable than XRE for example. ZRE has had a decent recovery since the March 2020 deep dive.


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## Jimmy (May 19, 2017)

Some were really punished in 2020 - Retail, commercial office space , lodging etc and may take longer to come back. Data centers, warehousing and industrial will rebound quicker. I bought IVQ - Invesque- a healthcare REIT w property mainly in the US at the bottom (they cut their dividend for safety) and it is up nicely 35% this year. Was way undervalued.


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## londoncalling (Sep 17, 2011)

I don't think it makes sense use an ETF for REITs. It's been awhile since I looked at them but I agree with @Ponderling in that you can pick the top 2,3,4 etc holdings of any REIT etf and save the MER for about $5 a purchase. I am currently looking for another REIT. Most likely in residential but have been looking at agricultural but nothing has caught my attention. I appreciate the chart and would be interested to see where they are at more recently. Perhaps Mar 20 to Mar 21 or to Mar 20 to present.


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## 307169 (May 24, 2015)

Completely agree, the performance in reflation environment for REITs fully depends on the debt level and the ability for the REIT to raise its rent. So individual analysis is required.


londoncalling said:


> I don't think it makes sense use an ETF for REITs. It's been awhile since I looked at them but I agree with @Ponderling in that you can pick the top 2,3,4 etc holdings of any REIT etf and save the MER for about $5 a purchase. I am currently looking for another REIT. Most likely in residential but have been looking at agricultural but nothing has caught my attention. I appreciate the chart and would be interested to see where they are at more recently. Perhaps Mar 20 to Mar 21 or to Mar 20 to present.


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## scorpion_ca (Nov 3, 2014)

I started to buy ZRE in 2014 when RioCan was a superstar performer amongst REIT companies. Check out the performance of RioCan now. Those who are suggesting to buy a couple of underlying companies instead of an ETF, how do you know which companies would be doing better in 5 to 10 years down the road?


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## AltaRed (Jun 8, 2009)

Which is why ZRE is not a bad choice...equal weighting so that no single REIT weighs it down, at least for those into passive investing. My ex has had a holding of ZRE for income purposes for several years..


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## londoncalling (Sep 17, 2011)

scorpion_ca said:


> I started to buy ZRE in 2014 when RioCan was a superstar performer amongst REIT companies. Check out the performance of RioCan now. Those who are suggesting to buy a couple of underlying companies instead of an ETF, how do you know which companies would be doing better in 5 to 10 years down the road?


I believe ETFs are the advisable route for any passive investor who plans to buy and hold. If the majority of the the ETF holdings can be made in 4-5 purchases you are looking at a management fee of $20-25. I guess it depends on how you intend to rebalance, redeploy new capital etc. In the case of an equal weight fund like ZRE that would not be the case. You do get a lot of active management and rebalancing with this product for a reasonable management fee. I guess it depends on how much money one is allocating to this fund. It's not too expensive if you are allocating $5k but if you are looking at $100k to REITs which is 10% of a Million dollar portfolio that can be quite an annual fee. I haven't looked at the historical holdings of the fund either but how often is a REIT swapped out would be good to know as well for deciding whether to go ETF vs. stock pick. If it's not often than the active management is less significant. If it's often than one needs to consider whether or not the portfolio churn is an effort to chase performance. My uninformed hypothesis would be that the holdings don't change that often by name but there is a lot of rebalancing for weighting. Based on what I have heard ZRE is a good product and likely to provide decent performance with little effort. If I were to go the ETF route I would prefer equal weight on other options as you can easily get too much of a good thing through a holding that sees meteoric performance. As final thought I would ask "How does anybody know what companies will be the superstar 5-10 years down the road? " 

Cheers


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## Ponderling (Mar 1, 2013)

well I started by with KMP and CAR since they held modest level properties that were mostly recession resistant. I sold RIO when they sold their us malls


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## 307169 (May 24, 2015)

scorpion_ca said:


> I started to buy ZRE in 2014 when RioCan was a superstar performer amongst REIT companies. Check out the performance of RioCan now. Those who are suggesting to buy a couple of underlying companies instead of an ETF, how do you know which companies would be doing better in 5 to 10 years down the road?


Let's start with deductive reasoning, we should eliminate those REIT with lots of debt and rely on short term loans. Than move on to those that are non arms length from its tenants (like the Canadian tire one, or Choice Properties and Crombie). Than move onto eliminating those that have do NOT have significant amount of renewal of lease in the near future, as lease will increase in reflation environment. Afterwards, we move on to eliminate REITs that are external managed, where the manager has no significant economic interest in the REIT.


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## pwm (Jan 19, 2012)

I discovered an interesting side effect of holding ZRE instead of XRE. I have XRE and my son has ZRE. I do the income tax returns for all our family members and I noticed he had quite a large cap gain from ZRE for 2020 on his T3. No cap gain from XRE. I presume this is a result of re-balancing in ZRE. XRE is cap weighted, so not so much buying/selling maybe?


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## AltaRed (Jun 8, 2009)

Perhaps a re-balancing but a large (outsized) cap gain would be unusual because of that sort of thing. More likely an underlying holding was bought out for cash or by an ex-Canada buyer. I remember when XIU or XIC had a large cap gain one year and it was due to the buyout of Tim Hortons.


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## pwm (Jan 19, 2012)

I found it strange because they both basically hold the same REITs only in different quantities.


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## AltaRed (Jun 8, 2009)

In that case, it would be REITs that had outsized growth relative to others that fueled cap gains. Exactly what re-balancing would do.


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## scorpion_ca (Nov 3, 2014)

I read somewhere a long time ago that you buy REIT on registered account. I have ZRE on my TFSA and use DRIP too.


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## AltaRed (Jun 8, 2009)

scorpion_ca said:


> I read somewhere a long time ago that you buy REIT on registered account. I have ZRE on my TFSA and use DRIP too.


It depends. That may be a good move for the likes of ZRE where 'surprise' cap gains may get you from time to time and if there is a very high component of Other Income, but I find it better to have some individual REITs in non-registered IF they tend to have a good proportion of their distribution in ROC (DD&A/CCA). Get the income now and defer taxation (cap gains at that) to the day you sell the REIT. I don't think one can make a blanket statement on where is best.


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## james4beach (Nov 15, 2012)

pwm said:


> I discovered an interesting side effect of holding ZRE instead of XRE. I have XRE and my son has ZRE. I do the income tax returns for all our family members and I noticed he had quite a large cap gain from ZRE for 2020 on his T3. No cap gain from XRE. I presume this is a result of re-balancing in ZRE. XRE is cap weighted, so not so much buying/selling maybe?


I think these things can be very mysterious with ETFs. As I understand it, even fund inflows/outflows can trigger capital gains for the fund so I don't think you can read too much into the holdings, or that cap gain.

Long term, looking at their total returns, they seem to have about the same performance. ZRE underperformed at times, outperformed at other times. Not really any consistent winner between these two, as far as I can tell.


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## My Own Advisor (Sep 24, 2012)

Like Pondering and London, among others, I've unbundled my REIT ETF. The MERs for REIT ETFs seem too high, north of 0.50% MER. 

I think you can own the best and ignore the rest. 

Own CAR.UN, REI.UN (cheap now), KMP, Summit, Granite, Smart and Choice.


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## MrMike (Sep 30, 2020)

My Own Advisor said:


> Own CAR.UN, REI.UN (cheap now), KMP, Summit, Granite, Smart and Choice.


Why didn't you list HR.UN?


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## My Own Advisor (Sep 24, 2012)

MrMike said:


> Why didn't you list HR.UN?


Ha. Actually, I dumped it rightly or wrongly Mike. I sold it off in favour of more RioCan (REI.UN) last summer.








August 2020 Dividend Income Update


August 2020 Dividend Income Update Welcome to my latest dividend income update for 2020. You can find my previous update here. Regular readers of this site will know we continue to take a two-prong…




www.myownadvisor.ca





Do you still own it?


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## MrMike (Sep 30, 2020)

My Own Advisor said:


> Ha. Actually, I dumped it rightly or wrongly Mike. I sold it off in favour of more RioCan (REI.UN) last summer.
> 
> Do you still own it?


I put $5K in RioCan August 2020 too, then $10K in October. In total, that $15K (principal - it's grown to $22K now) is 10% of my portfolio so I'm good on RioCan.

*SIDE NOTE:* That 10% pie is on my principal. When people normally say their pie percent, is it on their principal investment or the current market value? 

$15K is 10% of principal
$22K is 11.4% of portfolio market value
oh, it's so close anyways. Still, just wondering.

I've been reinvesting dividends into H&R for several months now because of this reason: Short-term plan and logic to protect against this...

Please comment on that thread what you think of my reasons for buying H&R.


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## Tostig (Nov 18, 2020)

MrMatt said:


> ...
> Slate looks interesting, or should I just get an ETF?
> 
> ...


Is that Slate Office or Slate Groceries? Did you buy it or let it go? Offices seem iffy but groceries should be recession-resistant because they are a staple business.


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## investor65 (Aug 3, 2021)

I used to be a big fan of ZRE, but now just buy the apartment REITS.
Over the long term, they outperform ZRE by a wide margin. Lately, not so much.

CAR.UN IIP.UN KMP.UN and BEI.UN.
I try to keep them in equal weights, except for CAR.UN, where i have a double weighting.


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## KaeJS (Sep 28, 2010)

investor55 said:


> I used to be a big fan of ZRE, but now just buy the apartment REITS.
> Over the long term, they outperform ZRE by a wide margin. Lately, not so much.
> 
> CAR.UN IIP.UN KMP.UN and BEI.UN.
> I try to keep them in equal weights, except for CAR.UN, where i have a double weighting.


I love KMP.

Beautiful, well managed properties that people actually want to live in.

Before NVU was bought out by Starlight, I owned a lot of them, too (but sold before the acquisition). I felt KMP and NVU were a nice combo. KMP had all the new and nice buildings with good management, and NVU had all the old, crappy buildings with lower class tenants and poor management. Played both sides.

I wish Starlight didn't buy NVU. Not a fan of Starlight.


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## zinfit (Mar 21, 2021)

Tostig said:


> Is that Slate Office or Slate Groceries? Did you buy it or let it go? Offices seem iffy but groceries should be recession-resistant because they are a staple business.


I find Slate Groceries interesting. It has targeted properties in small cities and large towns in the USA. They are the main go to center in those communities. The yield is great and it appears to be sustainable.


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## londoncalling (Sep 17, 2011)

zinfit said:


> I find Slate Groceries interesting. It has targeted properties in small cities and large towns in the USA. They are the main go to center in those communities. The yield is great and it appears to be sustainable.


It is unlikely that you will get any capital appreciation with Slate Groceries. I haven't checked into the sustainability of the yield but if it is sustainable it's a 8ish% return a year. One must consider the ability of these grocers to compete with MNCs moving into the grocery game. Will smaller centres be a place that they can disrupt?


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## Beaver101 (Nov 14, 2011)

^ FWIW, I have both SGR.UN and SOT.UN. 

The former I discovered and nabbed just early this year around mid-$11 and now I see it's around mid-$13 so it did appreciate abit and interests are rolling in every month. 

As for the latter, bought around same time at $5.30 or so and now see it's below $5 (oh well, can't win them all) but interests are rolling in every month, thus far. 

Anyhow both are in my RRSP so it'll be awhile before I them cash out.


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## MK7GTI (Mar 4, 2019)

GRT has done well for me over the past 12 months. Got lucky to get in before the run up. Monthly dividends is great.


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## zinfit (Mar 21, 2021)

londoncalling said:


> It is unlikely that you will get any capital appreciation with Slate Groceries. I haven't checked into the sustainability of the yield but if it is sustainable it's a 8ish% return a year. One must consider the ability of these grocers to compete with MNCs moving into the grocery game. Will smaller centres be a place that they can disrupt?


Its payout ratio is 90%. Its ROE is 17%. IT has predominately 5 major groceries as tenants who have all be experiencing rapid growth in curbside sales in these markets. The one negative is outside external management. I am up 20% over the past year plus the dividend. I am sticking with it.


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## MarcoE (May 3, 2018)

I've had XRE for years, and it's done well for me. Through when I bought it, the yield was something like 5%, and now it's under 3. The big dip recently was a good opportunity to reinvest those monthly dividends.


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## Gator13 (Jan 5, 2020)

We have used our TFSA's exclusively for REIT's. Our annual deposits and purchases (including distributions from the previous year) are typically made in the first 4 weeks of the year. We've had very limited changes within the accounts. Switching from XRE to ZRE somewhere along the way might be the only change we ever made. We hold ZRE, CRT, DIR and INO. Accounts are sitting at about $153k. Each account throws off about $7,700 per year in distributions.

Some ups and downs, but pretty reasonable results to date. Up a little over 23% for 2021 so that will help.


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