RioCan Real Estate Investment (REI.UN.TO)

He is not crazy about retail REITs because of Amazon and other online retailers taking market share away. Some argue that we are over retailed in Canada. There is not much growth in REI.UN-T. He owns CRR.UN-T. He thinks it has a much more attractive entry point than REI.UN-T.

A real estate investment trust concentrated in retail shopping centres. It is a bond proxy, so is going to be disadvantaged in an era of secular rising rates. Yields about 5.3%. If you own it, it is probably safe. You will probably continue to get the yield, but the multiple might be under pressure because it is a bond proxy. Also, because it is retail oriented and the Canadian consumer being indebted to historic levels, this would not be his preferred exposure.

A really good business with a great management team. Thinks REITs will do okay, because interest rates will go up slowly/moderately. He doesn’t own this because he doesn’t like retail or office too much, and would rather be in multifamily or industrial where there are better opportunities.

He is avoiding the space. It was a trade for the last cycle. He would avoid this and others in the space. Rates have been so low for so long and these equities have been so high for so long. E-commerce is displacing traditional retailers.

This is going to trade in line with the market. They sold their US portfolio, really lowering their debt and putting that money into development. He is looking for 2016-2017 to be a bit slow in earnings. At this level, it looks quite attractive. He likes REITs that have low debt levels.

A solid Canadian company with large holdings in commercial real estate and retail real estate. He doesn’t own real estate, but even if he were inclined, he wouldn’t own at this point in the cycle. Low interest rates have persisted for an extremely long time. What is sparking his interest in the last couple of days following the election, is the move in 10 and 30 year US bonds. There have been significant upturns, and if this is really the catalyst that ends the 35-year bull market in bonds, it is going to be harder for all interest rate sensitive investments, including real estate.

REITs did pretty well up until the summer when they sold off, and he doesn’t know why. From a timing standpoint, REITs seem like a very attractive buy. He doesn’t see anything on the horizon that is going to interrupt their earnings. 5.5% distribution yield. (See Top Picks.)

A bellwether in Canada, and he wouldn’t usually pick such a large cap REIT. However, this trades at between $25 and $30, and is coming back down to the low end of its recent trading range. REITs have sold off. This company sold off its US properties earlier this year, so they are the lowest debt to BV that he has ever seen this company trade at in 15 years. Getting close to being included in the TSX 60. If that happens there will be lots of institutional buying. Dividend yield of 5.45%.

One of the larger Canadian REITs and owns a valuable collection of assets. The only caution is that he doesn’t really like the REIT sector right now. The potential of rising interest rates could put downward pressure on the valuation. Feels the 5.3% dividend yield is safe. Over time you will probably do just fine with this.

Generally, he likes REITs. His 2 favourites are Chartwell and H&R, but also likes this one. Leading up to a potential quarter-point hike in interest rates, you may see a bit of weakness in the REITs.

Have almost no growth, versus 5% for retail peers. Also, trades at a premium to its NAV. They have a 5.3% dividend yield that is accompanied by a 94% payout ratio, which is steadily improving. Has a really good balance sheet. Given where interest rates are, he thinks this is a Buy.

(Market Call Minute.) Wouldn’t want to own this here. Retail is going to be tough for years to come. Amazon is crushing everybody.

REI.UN-T vs. MST.UN-T. MST.UN-T is apartments in the US southwest. The stock has run. Don’t switch from REI.UN-T to MST.UN-T.

You have to look at this in the bigger context of what other REITs do you own in your portfolio. The REIT space is heavily correlated to one another if there is any move in interest rates. He doesn’t expect Canadian rates to rise anytime soon, but REITs have had a heck of a run, so they will be ultrasensitive to any whispers of rates moving up. A high-quality portfolio with quite a bit of diversification.

(Market Call Minute.) REITs have come down a little and this is a quality name. Has an excellent balance sheet relative to others.