
TSE:XRE
This summary was created by AI, based on 2 opinions in the last 12 months.
The iShares S&P/TSX Capped REIT Index ETF (XRE-T) has garnered mixed reviews from experts, with concerns prevailing regarding the state of the Canadian real estate market. Uncertainties surrounding the economy, real estate conditions, and immigration policies have raised red flags for potential investors. Although the fund offers a decent yield of 4.87%, experts caution that capital is at risk, and the potential for growth in this sector may be limited. Some investment advisors recommend looking towards U.S. real estate alternatives, especially in logistics, data centers, storage, and warehouses. For those seeking capital appreciation, a low-cost base and strategic planning for tax implications on selling are critical considerations, potentially steering investors towards other financial vehicles such as banks or bank-covered call ETFs for favorable exposure to real estate.
He is a bit of a contrarian when it comes to REIT valuations. You have to be careful when you are overpaying for yield and the REIT sector kind of lends itself to that category. Has had a very good run. Most of the REITs are great operating businesses. But on a free cash flow basis, they are trading at a 14-16 times AFFO and he prefers 10-12 times. This is a good hedge against your long positions.
REITs. Felt we were due for a little bit of a downturn in them. They are still great buys but you have to be selective with them. He still likes them. XRE-T is a recommendation.