Opinions
Barry Schwartz
Granite REIT
GRT.UN-T
HOLD
Jul 18, 2024
Stock price when the opinion was issued
You might be interested:
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.
Have seen a recovery in shares in last few weeks, as bond proxies usually go up when interest rates go down. Expectation is for multiple rate cuts in Canada. That will improve balance sheet, but doesn't improve the business on a dime. Still getting good uplifts on new rental agreements signed at higher prices.
In NA, we're struggling with an over-supply of industrial real estate. Have to work through it. One of the best-managed REITs in Canada. Likes the industrial sector, not going anywhere anytime soon. But you have to have confidence that interest rates are going to come down materially from here.