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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) presents a yield of 4.87%, which may seem appealing to some investors. However, experts caution about the inherent risks related to the Canadian real estate market, attributing uncertainties to economic fluctuations and immigration policies. While some investors express satisfaction with the yield, they also highlight challenges in capital appreciation, making it a difficult environment for REIT investors. Certain strategies, such as considering alternatives like Canadian banks or bank-covered call ETFs (such as ZEB), have been suggested to potentially navigate the market more effectively. Overall, without significant growth potential, investors need to assess their positions carefully and consider longer-term exit strategies if necessary.
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.