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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) is attracting scrutiny from investors due to the prevailing uncertainties in the Canadian real estate market, including economic factors and immigration policies. While the ETF offers a decent yield of 4.87%, concerns have been raised regarding capital risk and the overall growth potential of the investment. One expert suggests shifting focus to U.S. REITs that specialize in logistics, data centers, storage, and warehouses for potentially better returns. Another review indicates satisfaction with the yield exceeding 5%, yet points out the challenges of achieving capital appreciation and dealing with tax implications for selling. For investors looking for real estate exposure, alternative options like banks or covered call ETFs are mentioned to provide superior growth opportunities.
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.