Opinions
Andrew Moffs
Granite REIT
GRT.UN-T
BUY
Sep 27, 2023
Stock price when the opinion was issued
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Catchup trade in the real estate sector started July-August. Continued uptrend since July 18. As rates come down, real estate will benefit. Has created a great, diversified portfolio in different sectors. Still sees over 20% upside, target of ~$87. Analysts rank it an Outperform.
Benefiting from lower interest rates, rising 10% in the last 1.5 months. Industrial REITs were strong during the pandemic and are slightly softening now. Doesn't follow this name much anymore, but the rising tide of lower rates will lift REITs. Magna remains a key tenant, but GRT is slowly untethering from Magna.
Diversified industrial globally. High quality properties. 10-12% discount to NAV. Focused on larger part of the market (over 300k square feet), where there's more vacancy. It needs to work through that. Likes the sector, stock's interesting at this level, keep owning it if you do.
Sounds counterintuitive, but WFG and trees are going to be beneficiaries. US still needs them, just going to pay higher prices.
GRT.UN is a good name. PKI works well here. Materials sector, with a name like NTR.
There's even a part of the TSX that does well with a falling CAD, as earnings get amplified.
Canada's largest industrial REIT with properties in Canada, Europe and Asia. Increasing rents has helped the business, however, rents have appeared to plateaued lately. Concerns that large revenue stream from Magna will be at risk from tariffs. Would buy more shares upon stock price weakness. Strong business overall.
26% of net operating income is from MG, so being impacted by tariffs. He calls this a second-derivative target of tariffs. Shares are trading as though MG is going to move its operations to the US, but he doesn't think it's equipped to do so.
Both are quality. Likes both sectors. Likes both, but if he had to choose, he'd pick GRT.UN.
In Quebec and BC, but CAR.UN is mainly a play on Toronto, a fantastic multi-family market, but there is rent control. Great supply/demand fundamentals, but hard to get the cashflow. Outperformed peers, so pullback is understandable.
Industrial warehouse sector continues to do quite well. GRT.UN focuses on Canada, US, and Europe, trading at a nice discount to NAV. Underperformed, not warranted. Concern about oversupply in US, but he thinks they're in a good position.