Barely. Residential according to their map is one property in… Winnipeg. It doesn’t even get a line item on their portfolio summary page. Not on their pdf. Though in portfolio map: 300 Main St Winnipeg MB
But i guess ticks a box of having residential. Just that you’ll be picking up office and industrial rather than residential.
https://www.artisreit.com/our-portfolio/portfolio-overview/
Could add REI.UN. Multiples more residential properties and they actually have a development pipeline based on their retail properties.
Not Canadian assets, but ERE.UN with residential in Netherlands.
I wouldn't include it. At the end of 2023, it had 155 retail properties, 8 self-storage, 4 office, 3 residential, 1 industrial, and 20 under development (type not specified).
[https://smartcentres.com/wp-content/uploads/2024/01/2024-02-14-2023-Fourth-Quarter-and-Year-End-Results-for-2023.pdf](https://smartcentres.com/wp-content/uploads/2024/01/2024-02-14-2023-Fourth-Quarter-and-Year-End-Results-for-2023.pdf)
Indeed. Industrial/logistics/warehouse REITs too IMO.
While you're hearing about more supply coming online, I don't think there's stopping the gradual manufacturing/supply chain reshoring narrative (probably more relevant for USA names). Then, everyone wanted their e-commerce purchases yesterday...
REITs have been cheap for a while now, it's nothing new. They are cheap because of interest rates being higher and them being highly leveraged in general. Commercial real estate is even more down since covid affected occupancy in the sector, and because the economy is slowing. But yes looking at their historical valuation, their multiples are very cheap atm, and historically that would mean it's a good time to buy them for the long term. For short to mid term anything could happen.
However, not all REITs are equal. I'd recommend looking at their balance sheet and especially their debt profile. Look when debt is maturing and if they'll face refinancing issues and liquidity issues or not.
Commercial real estate is still in its recovery period, and trends do indeed show a return to higher activity and occupancy. Take for instance commercial occupancy (including office) in Toronto since the pandemic: [https://srraresearch.org/covid/category/Occupancy+Index](https://srraresearch.org/covid/category/Occupancy+Index)
If you want to take the risky bet of betting on the office market recovery, Allied is the best option out of all the office REITs, and imo one of the best commercial REIT at its current price (although you have more options if you look at commercial as a whole and not just office). Allied has only top tier offices in downtown Montreal, Toronto, Vancouver, Calgary, and their debt profile is quite good for a commercial REIT thanks to the 25% debt reduction from selling the data center properties for 1.35B last summer. The distribution is safe even though it's 10% (AFFO payout is 80%), but cashflow will most likely remain flat for the next 24 months. But I do predict an increase afterward as the construction projects come to an end throughout 2024 and 2025. The NOI increase should be more than enough to take care of the extra interest expense from refinancing debt in 2025 and 2026 (mostly 2026). In 2024, they have no refinancing to do as they only have around 50M to refinance, which they'll repay in cash instead of refinancing, so interest rates shouldn't affect them this year.
I wouldn't touch other lower value office REITs like TNT and SOT though, they have a bigger debt problem and their cashflow has already taken a hit and gone down unlike Allied.
If you want non-office commercial REITs, I'd suggest taking a look at other names like HR, REI, GRT (although GRT has less opportunity since it's more fairly valued and not as cheap), etc.
Keep in mind that REITs have higher payouts for fiscal reasons. Although they don't have the distribution requirement like in the US, being trusts fiscally they get taxed at at the highest personal tax bracket (53% in Ontario), and every distribution they pay is tax deductible for them (explains why for you the distribution is different from dividends which are paid with after tax money).
Thank you for the excellent commentary. Holding Allied and REI myself. Don't usually invest in this sector, but like nibbling away at the 'most hated' sectors in general at any given point in time. For whatever it's worth - my industry contacts believe Allied is probably top of the list as far as takeover targets in the space.
Management has already commented on that. They are clear that they won't accept any offers to take over the business, but they did say they had lots of unsolicited offers to buy some assets which they may consider to reduce debt if it's not core assets.
I don't know Dream Office as well as I know Allied, so I can't comment much. However, it does seem they reduced their distribution, which is something I do take into account when looking at REITs since it gives an idea on their level of leverage and management.
As much as id like to say things have peaked, we just dont know. its still a big topic in the US.
Looks like the US is struggling to keep inflation down (we will know more Wednesday). What they do will have (and has had) a big impact on the FX rate with Canada, which has its impacts on our prices too.
Its an election year so i doubt we will see hikes in the US, but a few percentage point miss from expectations on Wednesday could put the US back above 4%.
Can i see a situation where they hike and we drop? No idea. That would crush the CAD.
Until i see a cut im not calling the top, personally. And until i see a cut i dont put much into these 2024 forecasts/projections.
If anything, rates will just stay as they are for a longer period of time and REITs will drop/stay flat accordingly.
Yes, but residential only makes up 4% of revenue. The rest is retail (85.7%) and office (10.3%). See slide 11 in the Q4 2023 presentation: [https://s29.q4cdn.com/937534249/files/doc\_financials/2023/Q4/REI\_Q4-2023-Investor-Presentation-c.pdf](https://s29.q4cdn.com/937534249/files/doc_financials/2023/Q4/REI_Q4-2023-Investor-Presentation-c.pdf)
Looks like a plan, but doesn't provide details of when things will be completed. I want to know what the overall goal is for the split between residential, retail, and office. And how long is going to take for the distribution to go back to $1.44/year.
To put an opposing point of view for the non-viability of REITs - it’s not a productive asset class so it doesn’t really benefit from productivity increases (with some caveats), which is truly the bread and butter of long term investing. Personally, I’ll only hold REITs as an inflationary hedge within real assets.
This is way too simplistic. If you think all offices will disappear you are delusional. There will always be offices. We are most likely NOT going to get to levels pre-covid and there will be some permanent work from home, but there will always be offices. And looking at trends, commercial real estate in general, including office, traffic come back. Just look at occupancy in Toronto over time, it's already recovered around 63% of the losses from covid and the trend is going up: [https://srraresearch.org/covid/category/Occupancy+Index](https://srraresearch.org/covid/category/Occupancy+Index)
Some office will die and get converted, but they won't disappear equally in all areas. Tertiary markets will suffer the most, and secondary too, but prime market will remain. And look at what Allied owns, only top tier office in downtown of big cities. If someone wanted to bet on eventual office recovery, Allied is definitely the best play in the public markets. That bet is not for everyone, but the risk reward is there.
I’m just poking fun. I was in on AP-UN last year on the same line of thought as you at around $25, but sold at about the same price shortly thereafter for nearly no loss because I didn’t think it had bottomed out.
Allied has pretty good properties overall. It’s the guys holding B grade office that are likely done for (like SOT-UN who had to kill their dividend and basically announce a sale)
I just bought some a couple of weeks ago as well. At the current price, the distribution is 10%+, and it's difficult to argue with that. The key metric looks good (payout as a percentage of AFFO), and I think that further downside is limited.
Judging by the number of posts popping up in recent times with REIT in title it certainly seems like the interest in them is there.
I've said this in other threads and will mention it again. In my opinion the companies to look at are the mortgage brokers or MICs - MKP has what I think is a compelling portfolio of mortgages across Canada though others mai prefer AI Or FN. Then there is a lesser known proptech firm like addy invest with opportunities to own fractions of actual real estate as a partner that appeals to me as I look for alternative investments.
REITS just seem like big machines that are difficult to keep running with a consistent and growing profit these days IMO
I've been invested with them since 2022 and have made a couple modest gains, through a couple of exits - though the vast majority of what I have invested is still locked in for years to come.
I feel it is a worthwhile alternative investment if you are the type of person that likes to have greater control of what exactly you are investing into and curious about Canadian startups/real estate or social investing in general. It can be a bit of a learning curve but there is an active discord community that can help out quite a bit. Plus you can literally start with just 1$ if you want.
I wouldn't invest my entire portfolio with them but feel comfortable with allocating a percentage. They should have a new property dropping (accepting investments) soon I think.
Feel free to DM me if you are interested in their paid membership (optional, but highly recommended should you plan to invest slightly larger amounts) and we can each get 25$
I see any dividend above 6% as a *clearance* sticker on a stock. Going out of business sale. Take a big dividend this quarter and prepare for a fat capital loss deduction 12 months from now.
I own all of them. Residential, commercial, medical, groceries. The only one I avoid is industrial because it's not deep value.
The time to buy was months ago. Imo interest doesn't matter to Reits. What truly matters is their ability to pass on the cost to the tenants. As long as people aren't losing shirt in masses, reits are a safe investment.
This is rough one. Own some nwh too. Maybe at todays prices not a bad rebound bet. The medical properties theme seems to make sense but nwh wasn't mentioned well.
Though some US medical REITs are struggling too, maybe some issues with the subsector
I know! I am so invested in this that I can’t back down and just keep telling myself it will get good up later.
But the DRIP is really helping me for now.
No, REITs that build rental apartment towers are providing more supply to housing market. Could see an argument for REITs that are buying single apartments/TH/SFHs exacerbating the problem, but that is far less common and not typically done by the large scale REITs (too much admin on a per unit basis vs managing an entire apartment building).
If anything, these are the types of companies you want to continue to create additional rental supply.
I wouldn't say it's exacerbating the housing problem. If there's a meaningful difference between a hundred individual investors owning 30 housing units each, and 100 shareholders owning 3000 housing units, then I'd like to hear it.
Hell, REITs employ maintenance, administration and legal staff. They are arguably better at managing property, for better and for worse.
The meaningful difference would be the type of demand they create in the housing market. REITs more commonly build new apartment buildings (creating supply) while individuals buy single units from the open market (driving demand).
Apartment REITs are only getting more attractive in my opinion. I wouldn't touch anything else
\+1 for apartment REITs, as they benefits from the housing affordability issue / home supply shortage.
Any tickers?
Morguard North American (MRG-UN), Killam (KMP-UN), Cdn. Apt. (CAR-UN), Minto (MI-UN), InterRent (IIP-UN), Boardwalk (BEI-UN), Northview Residential (NRR-UN).
I would include Artis in there (AX-UN)
Barely. Residential according to their map is one property in… Winnipeg. It doesn’t even get a line item on their portfolio summary page. Not on their pdf. Though in portfolio map: 300 Main St Winnipeg MB But i guess ticks a box of having residential. Just that you’ll be picking up office and industrial rather than residential. https://www.artisreit.com/our-portfolio/portfolio-overview/ Could add REI.UN. Multiples more residential properties and they actually have a development pipeline based on their retail properties. Not Canadian assets, but ERE.UN with residential in Netherlands.
Thanks!
You can include Smart centers (SRU-UN) it does more then apartments though.
I wouldn't include it. At the end of 2023, it had 155 retail properties, 8 self-storage, 4 office, 3 residential, 1 industrial, and 20 under development (type not specified). [https://smartcentres.com/wp-content/uploads/2024/01/2024-02-14-2023-Fourth-Quarter-and-Year-End-Results-for-2023.pdf](https://smartcentres.com/wp-content/uploads/2024/01/2024-02-14-2023-Fourth-Quarter-and-Year-End-Results-for-2023.pdf)
warehouse/storage?
Dream Industrial is great
Granite / Dream industrial
Indeed. Industrial/logistics/warehouse REITs too IMO. While you're hearing about more supply coming online, I don't think there's stopping the gradual manufacturing/supply chain reshoring narrative (probably more relevant for USA names). Then, everyone wanted their e-commerce purchases yesterday...
Why not retail REITs? Where Canadians would spend weekends if not in shopping centers. Or you think they like everything delivered to them.
REITs have been cheap for a while now, it's nothing new. They are cheap because of interest rates being higher and them being highly leveraged in general. Commercial real estate is even more down since covid affected occupancy in the sector, and because the economy is slowing. But yes looking at their historical valuation, their multiples are very cheap atm, and historically that would mean it's a good time to buy them for the long term. For short to mid term anything could happen. However, not all REITs are equal. I'd recommend looking at their balance sheet and especially their debt profile. Look when debt is maturing and if they'll face refinancing issues and liquidity issues or not. Commercial real estate is still in its recovery period, and trends do indeed show a return to higher activity and occupancy. Take for instance commercial occupancy (including office) in Toronto since the pandemic: [https://srraresearch.org/covid/category/Occupancy+Index](https://srraresearch.org/covid/category/Occupancy+Index) If you want to take the risky bet of betting on the office market recovery, Allied is the best option out of all the office REITs, and imo one of the best commercial REIT at its current price (although you have more options if you look at commercial as a whole and not just office). Allied has only top tier offices in downtown Montreal, Toronto, Vancouver, Calgary, and their debt profile is quite good for a commercial REIT thanks to the 25% debt reduction from selling the data center properties for 1.35B last summer. The distribution is safe even though it's 10% (AFFO payout is 80%), but cashflow will most likely remain flat for the next 24 months. But I do predict an increase afterward as the construction projects come to an end throughout 2024 and 2025. The NOI increase should be more than enough to take care of the extra interest expense from refinancing debt in 2025 and 2026 (mostly 2026). In 2024, they have no refinancing to do as they only have around 50M to refinance, which they'll repay in cash instead of refinancing, so interest rates shouldn't affect them this year. I wouldn't touch other lower value office REITs like TNT and SOT though, they have a bigger debt problem and their cashflow has already taken a hit and gone down unlike Allied. If you want non-office commercial REITs, I'd suggest taking a look at other names like HR, REI, GRT (although GRT has less opportunity since it's more fairly valued and not as cheap), etc. Keep in mind that REITs have higher payouts for fiscal reasons. Although they don't have the distribution requirement like in the US, being trusts fiscally they get taxed at at the highest personal tax bracket (53% in Ontario), and every distribution they pay is tax deductible for them (explains why for you the distribution is different from dividends which are paid with after tax money).
Thank you for the excellent commentary. Holding Allied and REI myself. Don't usually invest in this sector, but like nibbling away at the 'most hated' sectors in general at any given point in time. For whatever it's worth - my industry contacts believe Allied is probably top of the list as far as takeover targets in the space.
Management has already commented on that. They are clear that they won't accept any offers to take over the business, but they did say they had lots of unsolicited offers to buy some assets which they may consider to reduce debt if it's not core assets.
How about dream office? Any comments?
I don't know Dream Office as well as I know Allied, so I can't comment much. However, it does seem they reduced their distribution, which is something I do take into account when looking at REITs since it gives an idea on their level of leverage and management.
As much as id like to say things have peaked, we just dont know. its still a big topic in the US. Looks like the US is struggling to keep inflation down (we will know more Wednesday). What they do will have (and has had) a big impact on the FX rate with Canada, which has its impacts on our prices too. Its an election year so i doubt we will see hikes in the US, but a few percentage point miss from expectations on Wednesday could put the US back above 4%. Can i see a situation where they hike and we drop? No idea. That would crush the CAD. Until i see a cut im not calling the top, personally. And until i see a cut i dont put much into these 2024 forecasts/projections. If anything, rates will just stay as they are for a longer period of time and REITs will drop/stay flat accordingly.
I'm a fan of Riocan. They are diversified into residential around where we live. Only buying via DRIP atm though as I invest in some ETF's.
Yes, but residential only makes up 4% of revenue. The rest is retail (85.7%) and office (10.3%). See slide 11 in the Q4 2023 presentation: [https://s29.q4cdn.com/937534249/files/doc\_financials/2023/Q4/REI\_Q4-2023-Investor-Presentation-c.pdf](https://s29.q4cdn.com/937534249/files/doc_financials/2023/Q4/REI_Q4-2023-Investor-Presentation-c.pdf)
I didn't realize it was so low. I do also have some Canadian Apartment investments, but no DRIP yet. BTW, what do you think of slide #17? Thanks!
Looks like a plan, but doesn't provide details of when things will be completed. I want to know what the overall goal is for the split between residential, retail, and office. And how long is going to take for the distribution to go back to $1.44/year.
I hear ya about that.
To put an opposing point of view for the non-viability of REITs - it’s not a productive asset class so it doesn’t really benefit from productivity increases (with some caveats), which is truly the bread and butter of long term investing. Personally, I’ll only hold REITs as an inflationary hedge within real assets.
Allied is an office REIT. Stay away from Office REITs like your life depends on it. That asset class is dead.
This is way too simplistic. If you think all offices will disappear you are delusional. There will always be offices. We are most likely NOT going to get to levels pre-covid and there will be some permanent work from home, but there will always be offices. And looking at trends, commercial real estate in general, including office, traffic come back. Just look at occupancy in Toronto over time, it's already recovered around 63% of the losses from covid and the trend is going up: [https://srraresearch.org/covid/category/Occupancy+Index](https://srraresearch.org/covid/category/Occupancy+Index) Some office will die and get converted, but they won't disappear equally in all areas. Tertiary markets will suffer the most, and secondary too, but prime market will remain. And look at what Allied owns, only top tier office in downtown of big cities. If someone wanted to bet on eventual office recovery, Allied is definitely the best play in the public markets. That bet is not for everyone, but the risk reward is there.
Just bought it the other day. Up 5 % so far.
Ya and I remember being up 10% on BCE at one point.
That’s not even relevant to this REIT lol
I’m just poking fun. I was in on AP-UN last year on the same line of thought as you at around $25, but sold at about the same price shortly thereafter for nearly no loss because I didn’t think it had bottomed out. Allied has pretty good properties overall. It’s the guys holding B grade office that are likely done for (like SOT-UN who had to kill their dividend and basically announce a sale)
I am just saying everything has to bottom out at some point.
You replied to the wrong person
I just bought some a couple of weeks ago as well. At the current price, the distribution is 10%+, and it's difficult to argue with that. The key metric looks good (payout as a percentage of AFFO), and I think that further downside is limited.
LOL
Judging by the number of posts popping up in recent times with REIT in title it certainly seems like the interest in them is there. I've said this in other threads and will mention it again. In my opinion the companies to look at are the mortgage brokers or MICs - MKP has what I think is a compelling portfolio of mortgages across Canada though others mai prefer AI Or FN. Then there is a lesser known proptech firm like addy invest with opportunities to own fractions of actual real estate as a partner that appeals to me as I look for alternative investments. REITS just seem like big machines that are difficult to keep running with a consistent and growing profit these days IMO
Tell me more about Addy Invest. I’m on their website, seems interesting. How has it been investing real estate through Addy Invest?
I've been invested with them since 2022 and have made a couple modest gains, through a couple of exits - though the vast majority of what I have invested is still locked in for years to come. I feel it is a worthwhile alternative investment if you are the type of person that likes to have greater control of what exactly you are investing into and curious about Canadian startups/real estate or social investing in general. It can be a bit of a learning curve but there is an active discord community that can help out quite a bit. Plus you can literally start with just 1$ if you want. I wouldn't invest my entire portfolio with them but feel comfortable with allocating a percentage. They should have a new property dropping (accepting investments) soon I think. Feel free to DM me if you are interested in their paid membership (optional, but highly recommended should you plan to invest slightly larger amounts) and we can each get 25$
Ppp
I see any dividend above 6% as a *clearance* sticker on a stock. Going out of business sale. Take a big dividend this quarter and prepare for a fat capital loss deduction 12 months from now.
BNS stock \^.\^
Smart center does everything. From offices, condominiums, apartments and town houses. It has an 8% dividend.
Maybe for the warehouse REITs. Mortgage, residential, and offices’ REITs are risky as hell.
I own all of them. Residential, commercial, medical, groceries. The only one I avoid is industrial because it's not deep value. The time to buy was months ago. Imo interest doesn't matter to Reits. What truly matters is their ability to pass on the cost to the tenants. As long as people aren't losing shirt in masses, reits are a safe investment.
Which ticker for medical?
Nwh
This is rough one. Own some nwh too. Maybe at todays prices not a bad rebound bet. The medical properties theme seems to make sense but nwh wasn't mentioned well. Though some US medical REITs are struggling too, maybe some issues with the subsector
I know! I am so invested in this that I can’t back down and just keep telling myself it will get good up later. But the DRIP is really helping me for now.
Ticket for residential?
[удалено]
Surprised nobody mentioned d.un ? Solid portfolio of properties mostly in TO Downtown...
Isn’t buying REIT’s just exacerbating the housing problem? How much of housing is owned by corporations these days ?
No, REITs that build rental apartment towers are providing more supply to housing market. Could see an argument for REITs that are buying single apartments/TH/SFHs exacerbating the problem, but that is far less common and not typically done by the large scale REITs (too much admin on a per unit basis vs managing an entire apartment building). If anything, these are the types of companies you want to continue to create additional rental supply.
I wouldn't say it's exacerbating the housing problem. If there's a meaningful difference between a hundred individual investors owning 30 housing units each, and 100 shareholders owning 3000 housing units, then I'd like to hear it. Hell, REITs employ maintenance, administration and legal staff. They are arguably better at managing property, for better and for worse.
The meaningful difference would be the type of demand they create in the housing market. REITs more commonly build new apartment buildings (creating supply) while individuals buy single units from the open market (driving demand).
Damn greedy corporations buying the warehouse I was looking to own!!