# anyone still buying REITS?



## canadian_investor (Jul 4, 2011)

is anyone still buying Reits after the rumpage in the last 2, 3 months?
i am looking at good large cap Reits that are trading at 52 week or even 104 week lows.
Dundee Reit, Artis, and Boardwalk are both near 52 week lows.
would it be nuts to buy reits at this time?


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## gibor365 (Apr 1, 2011)

imho, "nuts" to buy if there were at 52 weeks high 
I added recently some CUF.UN


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## warp (Sep 4, 2010)

canadian_investor said:


> is anyone still buying Reits after the rumpage in the last 2, 3 months?
> i am looking at good large cap Reits that are trading at 52 week or even 104 week lows.
> Dundee Reit, Artis, and Boardwalk are both near 52 week lows.
> would it be nuts to buy reits at this time?


Boardwalk is not near its 52 week low.....its around $59.20...52 week low is $53.19.
which came back in the summer.


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## Eder (Feb 16, 2011)

I have been adding some First Capital Realty....If RioCan can drop below $23 I will add more of it as well...I think we have lots of time to wait for prices on these, the sector is still busy going from first to worst.


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## Taraz (Nov 24, 2013)

Depends on the REIT. NorthWest Health Prop Real Est Inv Trust(TSE:NWH.UN) is paying a 7.9% dividend. I just bought some a few weeks ago.


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## gibor365 (Apr 1, 2011)

Taraz said:


> Depends on the REIT. NorthWest Health Prop Real Est Inv Trust(TSE:NWH.UN) is paying a 7.9% dividend. I just bought some a few weeks ago.


CUF.UN is much more established REIT and pays 7.93%


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## Longwinston (Oct 20, 2013)

I did not have REIT exposure prior to the drop in the spring. I have been building positions in D.UN (complete), CHP.UN (1/2 done) and DIR.UN (just started).


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## Mall Guy (Sep 14, 2011)

gibor said:


> CUF.UN is much more established REIT and pays 7.93%


. . . and you get alignment with a major shareholder . . . I am adding to a few of my REITs . . . but only the larger quality names, don't mined that a few have US exposure (H&R - Riocan) . . .


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## fatcat (Nov 11, 2009)

i have some FCR and might add some more


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## canadian_investor (Jul 4, 2011)

Mall Guy said:


> don't mined that a few have US exposure (H&R - Riocan) . . .


Artis has US exposure. and Morguard too. MRG-UN.
do you have any opinion on those two?

*@warp*. you are right. Boardwalk is not at 52 week low at mid point of 52 week high and low.
do you like Boardwalk at this valuation?

does everyone think there is still more downside risk with US tapering?, or would you say tapering risk is already priced in?


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## underemployedactor (Oct 22, 2011)

fatcat said:


> i have some FCR and might add some more


FCR is a corporation not a REIT, so you don't have to own it in a registered or TFSA account. It's mainly retail, but I think it has good management. I own it and would think of getting more.


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## Spidey (May 11, 2009)

I've been buying in the last few months - BEI.UN, CAR.UN, AX.UN, MRG.UN, D.UN and FCR. I really loaded up on MRG.UN when it was down toward the $9.00 level and insiders were as well. If you are looking at them as a short-term investment REITs may be nuts. But if you're looking for a 10 + year hold, I don't think you will be sorry. People always need a place to shop, a place to work or a place to live.


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## My Own Advisor (Sep 24, 2012)

Already DRIPping REI.UN and HR.UN and CWT.UN. Looking to buy more D.UN and start a position in CUF.UN in TFSA in 2014.


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## Cal (Jun 17, 2009)

I think its nuts not to buy at these prices/yields.


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## lightcycle (Mar 24, 2012)

Are REITs getting hammered because of the threat of higher interest rates?


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## Taraz (Nov 24, 2013)

Yep, that one looks good too.


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## Mall Guy (Sep 14, 2011)

canadian_investor said:


> Artis has US exposure. and Morguard too. MRG-UN.
> do you have any opinion on those two?



look to the platform they own . . . properties, management team, strategy. . . not a fan of either . . . Artis, growing at any expense, Morguard on ownership (Morguard Corp) . . . just my opinion !


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## Causalien (Apr 4, 2009)

Nah, I will wait for the interest rate rise event after the debt ceiling debate supposedly around Feb 2014. Chasing yield is the wrong strategy IMO. Obama is losing steam because of the Obamacare execution problem. So there's a bigger chance that the GOP will be able to freeze the debt ceiling this time.


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## blin10 (Jun 27, 2011)

holding, will buy more IF there will be another leg down


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## Jon_Snow (May 20, 2009)

Ditto.


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## Ponderling (Mar 1, 2013)

I toook a leap and bought into Granite - which as I understand it mostly underpins the property of different Magna auto parts congolmorate factories around the world. So more a REIT with global exposure. Waited for the sell off to start for first buy, and a second bite when the price sagged more. l


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## Janus (Oct 23, 2013)

Just bought some XRE (I can't buy stocks right now, restricted... only ETFs and funds allowed). Wish I could buy individual REITs at these yields...


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## maxandrelax (Jul 11, 2012)

I'm pretty overweight in Dundee, Morguard, and Chartwell. Bought Dundee at the absolute top  Looking to pickup Rei, have been sitting on the fence all summer.


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## the-royal-mail (Dec 11, 2009)

NorthWest Health Prop Real Est Inv Trust(TSE:NWH.UN) is at 10.11 with 7.91% yield. Seems to be at a 52 week low. Could be a good buy just for the dividends, but will they be cut? I see there were a couple other threads about NWH in the summer. Need more information about this business.


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## PatInTheHat (May 7, 2012)

Recently I added to ARCP and purchased O on the US side of things due to the crazy bargains they are trading for. Probably makes more sense to be holding canadian REITS though


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## liquidfinance (Jan 28, 2011)

I was looking to buy D.UN once it hit 8%. Now it's there i'm very tempted. Just need to find some spare cash.


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## canadian_investor (Jul 4, 2011)

Mall Guy said:


> not a fan of either . . . Artis, growing at any expense, Morguard on ownership (Morguard Corp) . . . just my opinion !


what is it about the Morguard corp. that you don't like?
the stock of the parent corporation, MRC, has done quite well and not been affected with the reit sell off much.
form what i have read, mortguard is supposed to be a good management company for real estate of different types.

i would like to hear your thoughts too.


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## fatcat (Nov 11, 2009)

underemployedactor said:


> FCR is a corporation not a REIT, so you don't have to own it in a registered or TFSA account. It's mainly retail, but I think it has good management. I own it and would think of getting more.


yes, true enough but it trades in correlation to reits pretty much 100%


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## BoringInvestor (Sep 12, 2013)

I own ZRE.T as a part of my couch potato portfolio.
As I rebalance my portfolio quarterly, and I'm down overall on the position, I'll likely be purchasing more units every three months for some time.


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## Eclectic12 (Oct 20, 2010)

underemployedactor said:


> FCR is a corporation not a REIT, so you don't have to own it in a registered or TFSA account ...


Technically, while it is less work to own a REIT in a registered account - there's nothing that forces a REIT investor to steer clear of the taxable account.

Certainly I've been happy to have the mostly capital gains of the REIT for other purposes with almost no income increase (grossed up or otherwise).



Cheers


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## blin10 (Jun 27, 2011)

tempted to buy more but at the back of my mind, what will happen if markets pull back 1000 points on tsx ? if they are at 52 week lows when markets are balling, I can't imagine what will happen if there's a correction


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## gibor365 (Apr 1, 2011)

I remember that lst 2 years on big pullbacks, REIT was performing the best (together with bonds) in my portfolio....
So, who knows....


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## Mall Guy (Sep 14, 2011)

canadian_investor said:


> what is it about the Morguard corp. that you don't like?
> the stock of the parent corporation, MRC, has done quite well and not been affected with the reit sell off much.
> form what i have read, mortguard is supposed to be a good management company for real estate of different types.
> 
> i would like to hear your thoughts too.


Rai Sahi . . . is very aligned with his interests, but maybe not so much with that of all shareholder . . . just an opinion !


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## Rob (Apr 25, 2013)

I own Artis and Retrocom, the later is yielding 9.75%. Thinking of adding to that position


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## the-royal-mail (Dec 11, 2009)

ZRE, Retrocom and NWH are all really low right now while Artis seems a lot more "normal". Interesting.


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## HaroldCrump (Jun 10, 2009)

the-royal-mail said:


> ZRE, Retrocom and NWH are all really low right now while Artis seems a lot more "normal". Interesting.


What do you mean, "normal"?

Careful with these comparisons - ZRE is an ETF, while the other three are individual REITs.
Retrocom and NWH are small cap, while Artis is diversified a mid-cap, with significant presence in the US.
NWH is a specialized health sector player, and Retrocom has less than 50 properties total.


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## HaroldCrump (Jun 10, 2009)

Oh, one other thing.
If ya'll are looking at the closing prices from today, keep in mind that you are looking at X-date closing prices for most of these REITs.

For instance, Dundee REIT is going to pay out 19c. this month.
Closing price yesterday was $28. This afternoon's close is $27.80.

Given the high yields for REITs these days, X-date price movements appear more magnified than usual.


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## Mall Guy (Sep 14, 2011)

HaroldCrump said:


> and Retrocom has less than 50 properties total.


not great properties, BUT a significant shareholder (ie Mr Smart Centres) . . . if it tanks, he buys it out . . . not great, but NOT League !!!


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## warp (Sep 4, 2010)

gibor said:


> imho, "nuts" to buy if there were at 52 weeks high
> I added recently some CUF.UN



I did a quick rough calculation on CUF.UN. I came up with a net asset value per share of around $4.70.

As the Reit is selling around $18.00....i am wondering if I am missing something or if I made an error in my quick calculations.

Does anyone on here know what the NAV of Cominar is?

Has anyone on the board done any calsulations on other reits that are selling near their NAV?..or even below?

If so, please post your results.
thanks in advance.


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## CanadianCapitalist (Mar 31, 2009)

TD Securities (Nov. 8, 2013) estimates CUF.UN NAV at $22. They also publish NAV estimates for other REITs.


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## avrex (Nov 14, 2010)

Hi CC, I can't find what you mentioned.

Is it on the TD client's WebBroker website?
or is it somewhere on http://www.tdsecurities.com/


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## gibor365 (Apr 1, 2011)

warp said:


> I did a quick rough calculation on CUF.UN. I came up with a net asset value per share of around $4.70.
> 
> As the Reit is selling around $18.00....i am wondering if I am missing something or if I made an error in my quick calculations.
> 
> ...


When I was researching REITs some time ago , CUF.UN was of the best for combination of yield, P/AFFO, AFFO Payout ratio....

below is link to mid-nov articles about REIT. CUF had P/AFFO 16.6 and AFFO Payout ratio 96%.... After serious pullback those numbers even better now...
http://www.theglobeandmail.com/glob...eits-with-strong-safe-payouts/article4543392/


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## CanadianCapitalist (Mar 31, 2009)

avrex said:


> Hi CC, I can't find what you mentioned.


Go to Webbroker. Markets & Research. Get quote for CUF.UN. Click on Reports tab. TDSI Morning Action Notes has a report on CUF.


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## avrex (Nov 14, 2010)

Thank you very much.


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## liquidfinance (Jan 28, 2011)

warp said:


> I did a quick rough calculation on CUF.UN. I came up with a net asset value per share of around $4.70.
> 
> As the Reit is selling around $18.00....i am wondering if I am missing something or if I made an error in my quick calculations.
> 
> ...


As of the last set of results I make it a nav of roughly $20.68


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## My Own Advisor (Sep 24, 2012)

Good time to add CUF.UN, timing might be good for the 2014 TFSA contribution


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## rick (Nov 26, 2013)

Causalien said:


> Nah, I will wait for the interest rate rise event after the debt ceiling debate supposedly around Feb 2014. Chasing yield is the wrong strategy IMO. Obama is losing steam because of the Obamacare execution problem. So there's a bigger chance that the GOP will be able to freeze the debt ceiling this time.


+1

and the word "tapering" is all that's needed to bring reits down some more, could be some really good buying opportunities in 2014.


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## underemployedactor (Oct 22, 2011)

Eclectic12 said:


> Technically, while it is less work to own a REIT in a registered account - there's nothing that forces a REIT investor to steer clear of the taxable account.
> 
> Certainly I've been happy to have the mostly capital gains of the REIT for other purposes with almost no income increase (grossed up or otherwise).
> 
> ...


Yes, you're right of course, there is nothing stopping you from owning a REIT in a non registered account, but you would want to look at the particular REIT pretty carefully to see the components of distribution. If they have a lot of foreign non business income for instance, then you are paying tax at your full marginal rate on that part of the distribution. In that case, I would much rather have a dividend payer (enter FCR) for the preferential tax treatment.


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## Eclectic12 (Oct 20, 2010)

underemployedactor said:


> Yes, you're right of course, there is nothing stopping you from owning a REIT in a non registered account, but you would want to look at the particular REIT pretty carefully to see the components of distribution. If they have a lot of foreign non business income for instance, then you are paying tax at your full marginal rate on that part of the distribution.
> 
> In that case, I would much rather have a dividend payer (enter FCR) for the preferential tax treatment.


True ... though in these particular cases, RoC is ranging from 83% to 100% so that worst case, the full marginal rate is on 17% of what's paid (usually less as there's usually some eligible dividends mixed in as part of the 17%.

YMMV plus keeping tabs for any sustained changes in the business is important.



Cheers


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## warp (Sep 4, 2010)

CanadianCapitalist said:


> TD Securities (Nov. 8, 2013) estimates CUF.UN NAV at $22. They also publish NAV estimates for other REITs.


Thanks for the reply CC.

You are right...my calculations were wrong, as I suspected ..( they were very quick, very basic calculations which I know I should not do).

The NAV is around $ 22. Payout of availiable distributable cash is around 90-95%.

Thanks again


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## warp (Sep 4, 2010)

By the way CC....

you say TD publishes NAV values for other reits......Is this info just for TD clients, or can anyone access it?

Thanks in advance for a reply


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## avrex (Nov 14, 2010)

Hi warp,
You must be a client and login to the TD WebBroker or TD EasyWeb portals.


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## liquidfinance (Jan 28, 2011)

The sale continues. 

Cominar seems to be getting hit very hard. Currently trading at August 2009 prices!


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## blin10 (Jun 27, 2011)

you don't want to buy the one the goes down the most, that's a wrong strategy... look how top dogs rei and hr holding up, most down 1%+ but rei/hr did not loose anything, that's where you want to be


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## CanadianCapitalist (Mar 31, 2009)

warp said:


> By the way CC....
> 
> you say TD publishes NAV values for other reits......Is this info just for TD clients, or can anyone access it?
> 
> Thanks in advance for a reply


Sorry I missed your post warp but I see avrex has already answered it. I'm a TDDI client, so I get this info through Webbroker.


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## liquidfinance (Jan 28, 2011)

blin10 said:


> you don't want to buy the one the goes down the most, that's a wrong strategy... look how top dogs rei and hr holding up, most down 1%+ but rei/hr did not loose anything, that's where you want to be


REI is still 18% off the April peak. I wouldn't say it's holding up.


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## blin10 (Jun 27, 2011)

liquidfinance said:


> REI is still 18% off the April peak. I wouldn't say it's holding up.


i'm talking about only today


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## liquidfinance (Jan 28, 2011)

My thought is to just sit on the sidelines and watch for the time being. If talk of tapering is doing this imagine what is in store for us when it actually happens.


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## Canadian (Sep 19, 2013)

I don't think they're done sliding yet. The downward momentum on the REITs I own have settled but I think that's only because there hasn't been a whole lot of taper talk lately (compared to a few months ago). Considering the declines when there was _talk_ of tapering, I'll be curious to see the reaction when the tapering actually takes effect. I'm DRIPing monthly so I'm getting to participate a bit in the lower prices, but I think I'll wait a while before I add to these positions.


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## Not Working (May 4, 2012)

Canadian said:


> I don't think they're done sliding yet. The downward momentum on the REITs I own have settled but I think that's only because there hasn't been a whole lot of taper talk lately (compared to a few months ago). Considering the declines when there was _talk_ of tapering, I'll be curious to see the reaction when the tapering actually takes effect. I'm DRIPing monthly so I'm getting to participate a bit in the lower prices, but I think I'll wait a while before I add to these positions.


Normally fear and rumours are taken already weight in a stock price before the news hit (from my experience).

I bought 300 shares today of CUF.UN, the stock is under Asset Value, imo it's a steal and i get to be paid 8% until it recovers.


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## james4beach (Nov 15, 2012)

Cominar buyers... so you folks are _that_ bullish on Quebec real estate, eh? Its income breakdown is approx

79% Quebec
7% Ontario
7% western Canada
7% Atlantic Canada

Also, Cominar has been consistently under-performing XRE and I generally don't think it's a good idea to buy chronic underperformers, at least not until there's a sign that trend has changed. Here's a chart of Cominar divided by XRE
http://stockcharts.com/h-sc/ui?s=CUF/UN.TO:XRE.TO&p=W&yr=3&mn=0&dy=0&id=p34740119189


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## warp (Sep 4, 2010)

CanadianCapitalist said:


> Sorry I missed your post warp but I see avrex has already answered it. I'm a TDDI client, so I get this info through Webbroker.


Thanks for the replies CC and Avrex.

If either of you, or any other TD clients here , feel in a helpful mood, please post NAV per share info on any other reits you are looking at. 
Thanks in advance


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## warp (Sep 4, 2010)

Not Working said:


> Normally fear and rumours are taken already weight in a stock price before the news hit (from my experience).
> 
> I bought 300 shares today of CUF.UN, the stock is under Asset Value, imo it's a steal and i get to be paid 8% until it recovers.


That has been my experience as well..( though not all the time). Seems the market has priced in a interest rate increase already. The question is whether the REITS will fall further if, and when a rate increase, or slowing of tapering is actually announced. 

Still some of the best returns are made when buying at the lows. Getting paid 8% to wait certainly does not hurt either.


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## HaroldCrump (Jun 10, 2009)

It seems to me that this situation with the REITs cannot continue indefinitely.

One of three things must happen:

- Long term rates do not rise as much as expected, and the market has overreacted. Gradually, REITs recover some of their lost share price since this past summer.
Yields go back to the 5% to 6% range for the smaller cap REITs and 3% to 4% for the larger ones.

- Long term rates do rise, and maybe even more than expected. REITs start facing financing crunch, and their mortgages start renewing at higher rates.
One by one, the REITs are forced to cut distribution, and the yields finally drop to reflect true valuation.

- At these low valuations, there's got to be some M&A or privatization activity, sooner or later.
Larger REITs might cannibalize the smaller ones, large pension funds like OTPP and CPP buy out some of the smaller REITs at these low valuations, and/or majority shareholders decide to take their REITs private and buy-out the retail shareholders.

To me, this last bit is a risk since so many REIT unit holders that were buying between 2009 and Spring 2013 must now be underwater.
If there is a buy-out or privatization, their shares will be taken out at these low valuations, possibly forcing a capital loss for them.

This situation won't continue for too long...something's gotta give sooner or later.


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## humble_pie (Jun 7, 2009)

HC's message with its condensed but descriptive 3-way forecast scenarios is valuable for all REIT players imho.

especially the 3rd model. Many investors don't realize the implications of a buyout at low levels until one actually happens to them & it forces them to sell.

one can't help but notice that 2 out of Harold's 3 scenarios lead to negative results, though


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## CanadianCapitalist (Mar 31, 2009)

REITs FFO yield is 8.2 percent, a spread of 5.6 percent over 10-year Govt. of Canada bonds. That's healthy but IIRC, the spread was more than 10 percent during the financial crisis. So, yes, there could be more pain in store for REITs.

FWIW, I started adding to REITs because it is most under target in my asset allocation.

REI.UN NAVPU $24.10 
HR.UN NAVPU $24.40 
D.UN NAVPU $34.80


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## blin10 (Jun 27, 2011)

man, d.un is sinking hard... tempting but I dunno there's always a reason why some do worse then the other


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## Synergy (Mar 18, 2013)

CanadianCapitalist said:


> REI.UN NAVPU $24.10
> HR.UN NAVPU $24.40
> D.UN NAVPU $34.80


What's the significance of NAVPU? Related to the book value per share?


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## Not Working (May 4, 2012)

Synergy said:


> What's the significance of NAVPU? Related to the book value per share?


Net Asset Value Per Unit


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## gibor365 (Apr 1, 2011)

HaroldCrump said:


> - Long term rates do rise, and maybe even more than expected. REITs start facing financing crunch, and their mortgages start renewing at higher rates.
> One by one, the REITs are forced to cut distribution, and the yields finally drop to reflect true valuation.


Everything is possible, but as far as i know, big REITs like REI, GUF or AX never cut their dividends in the past


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## liquidfinance (Jan 28, 2011)

blin10 said:


> man, d.un is sinking hard... tempting but I dunno there's always a reason why some do worse then the other


The market isn't always rational though. Some good opportunity to pick up 8% + yields for the TFSA. Little consolation if the price is falling off a cliff though. :cower:


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## AltaRed (Jun 8, 2009)

CanadianCapitalist said:


> REITs FFO yield is 8.2 percent, a spread of 5.6 percent over 10-year Govt. of Canada bonds. That's healthy but IIRC, the spread was more than 10 percent during the financial crisis. So, yes, there could be more pain in store for REITs.
> 
> FWIW, I started adding to REITs because it is most under target in my asset allocation.


I'd like to as well for similar reasons but none of the good ones are at 52 week lows yet. Teasingly close in some cases, but not there. Perhaps time to bite on a few now and save some powder for another potential dip.


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## Synergy (Mar 18, 2013)

Nice little pop in price to some of the REITs today. I would have thought that positive job numbers = potential for taper, which would put stress on the REITs. On the other hand, positive job numbers = a stronger economy, which would be supportive for REITs. ???


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## Mike Ashley (Dec 6, 2013)

*Caution in Investing in Reits Now*

Hi Forum Members, 

*Background*
The massive US programe of buying US$85 billion of assets a month has allowed easy money to flow into the global system, allowing interest rates to be low. 

*Likely Scenario*
The low interest rate environment is predicted to change in Dec 13 or 2014, such that interest rate will increase as the US economy improves. 

"203,000 increase in payrolls followed a revised 200,000 advance in october" - By Bloomberg 2 hours ago. As the US economy improves, interest rate will rise in tandem as the need to keep interest rate low to spur growth reduce.

*Why Mention Interest Rate? Why Caution in Investing in Reits Now?*
Reits are popular among investors because they offer regular payouts in this era of low interest rates. But, an increase in interest rate in line with a better economy will hit REITs. 

Higher Interest Rate will lead to more interest expense, and will lower dividends payout to investors. Bank debt financing will become a burden with ability to raise new cash capped. The financial burden for REITs to find cash flow to refinance their bank debt and pay bank interest will increase. REITs will lose their appeal continuing to put downwards pressure on their performance.

The above my thoughts for investing in REITs now. 

Cheers, Mike Ashley.


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## SpendLessEarnMore (Aug 7, 2013)

I think with interest rates going up growth will be stalled. 

As a homeowner if my interest rates were to go up, I'd put most of my revenues into paying down the loan instead of buying up new properties. So that come renewal time my mortgage payments will be less.


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## Synergy (Mar 18, 2013)

Mike Ashley said:


> The above my thoughts for investing in REITs now.


A few threads that have already discussed some of your concerns...

http://canadianmoneyforum.com/showthread.php/15612-Why-a-sudden-drop-in-REITs-today

http://canadianmoneyforum.com/showthread.php/16551-Why-the-big-drop-in-CAD-REITs-ETFs-today


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## Canadian (Sep 19, 2013)

SpendLessEarnMore said:


> I think with interest rates going up growth will be stalled.


It could stall organic growth. There are a lot of REITs out there, though. If interest rate increases render new property acquisitions unattractive, the bigger fish may start eating the small fish (REIT mergers/acquisitions/consolidations).


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## My Own Advisor (Sep 24, 2012)

That's what I'm thinking Canadian. In the years to come, most small fish are all gone.


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## scomac (Aug 22, 2009)

gibor said:


> Everything is possible, but as far as i know, big REITs like REI, GUF or AX never cut their dividends in the past


A little history lesson is in order. REITS evolve, earn and seek new avenues for growth.



> Canadian real estate investment trusts, which are celebrating their 20th anniversary, were born out of the carnage that devastated the commercial real estate industry in the late 1980s and early 1990s.
> 
> Property values tumbled as the recession hammered away at the economy. Real estate giants such as Cadillac Fairview Corp. were forced to restructure, and some, such as Olympia & York, declared bankruptcy. Industry veterans still grimace at the memories.


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## Canadian (Sep 19, 2013)

My Own Advisor said:


> That's what I'm thinking Canadian. In the years to come, most small fish are all gone.


It could be very beneficial if done with prudence. Given a rising interest rate environment, a REIT with the managerial capacity and capabilities can create more efficient growth and geographical diversity by acquiring smaller REITs with quality properties than they likely could organically. The key, though, is quality. The number of small REITs with high quality properties is likely limited, so there runs the risk of the bigger REITs having to pay a premium on acquisition.


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## Synergy (Mar 18, 2013)

scomac said:


> A little history lesson is in order. REITS evolve, earn and seek new avenues for growth.


The last paragraph will help people put interest rate fears into perspective somewhat. If interest rates creep up slowly, and the economy continues to improve, REIT's should be able to plug along just fine. Time will tell...



> “The well-run REITs are going to be able to cope with rising or falling interest rates,” he says. And he adds that “right now we’re still getting the benefit of lower interest rates, even though people are fussed about higher rates. We’re still rolling off higher rates, because the debt we put on is generally term debt, and the term debt could be as long as 10 years. So we have debt rolling off that we put on 10 years ago. This debt has a much higher interest rate than the debt we’re going to refinance it with today.”


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## Mall Guy (Sep 14, 2011)

Canadian said:


> It could be very beneficial if done with prudence. Given a rising interest rate environment, a REIT with the managerial capacity and capabilities can create more efficient growth and geographical diversity by acquiring smaller REITs with quality properties then they likely could organically. The key, though, is quality. The number of small REITs with high quality properties is likely limited, so there runs the risk of the bigger REITs having to pay a premium on acquisition.


Agree . . . few small REITs have a cost of capital that allows for quality properties . . .


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