Joshua Varghese

Real estate has performed poorly the last 10 years. 2016-18 saw Trump adopt a growth-on mentality that allowed tech to take off, but at the expense of real estate stocks. Then, RE rebounded only for Covid to crush it in 2020--will people go to the office or mall again? But then, markets invested in data centres and cell towers for a year or two. Then, high interest rates crushed that rally in 2022. Now, the good news is an easing cycle in rates which will feed the appetite for RE stocks.

Long-term, yes, for residential REITs, like apartment ones. They also benefit from more immigration. This leads to higher rents. InterRent, Minto and CAP are his preferreds in this space. CAP is the biggest, and they hold a super-quality portfolio that they've been upgrading in recent years. All these are focused in Ontario. but they benefit from lower interest rates. A caveat: Ottawa is slowing immigration to Canada, which feeds demand for apartments. Expect choppiness, but these are good holds.

Long-term, yes, for residential REITs, like apartment ones. They also benefit from more immigration. This leads to higher rents. InterRent, Minto and CAP are his preferreds in this space. CAP is the biggest, and they hold a super-quality portfolio that they've been upgrading in recent years. All these are focused in Ontario. but they benefit from lower interest rates. A caveat: Ottawa is slowing immigration to Canada, which feeds demand for apartments. Expect choppiness, but these are good holds. Minto has a great relationship with a private developer who build high-quality homes. They have great capital discipline. But they are exposed to the Toronto market, and their quality homes puts them in competition with the current condo glut in Toronto. This won't hurt Minto's long-term, but the stock will be choppy.

Long-term, yes, for residential REITs, like apartment ones. They also benefit from more immigration. This leads to higher rents. InterRent, Minto and CAP are his preferreds in this space. CAP is the biggest, and they hold a super-quality portfolio that they've been upgrading in recent years. All these are focused in Ontario. but they benefit from lower interest rates. A caveat: Ottawa is slowing immigration to Canada, which feeds demand for apartments. Expect choppiness, but these are good holds.

They rank among the top REITs in Canada and the U.S. They have a history of buying and spending well and adding a lot of value. They were a darling until Covid hammered the office market. Now, AP.UN faces a tough office market. Toronto remains a major city that hasn't returned to the office, so vacancy rates remain high. He doesn't know if this huge wave will return. But AP's dividend is sustainable, though it should be cut to do things like buyback stock and paying down debt.

A high-quality company in seniors living, benefiting from aging demographics. Same-location growth is impressive. The stock's momentum can continue. A caveat: the retirement space is vulnerable to disruption, given that no senior looks forward to entering a retirement home. But seniors are healthier now and they have more options. This trend will continue. So competition could enter this space, not now, but in the future. And yes, CSH is attractive to a private buyer. It's possible.

It's the largest provider of industrial real estate in the world, publicly traded, around 2-3% of global GDP flows through their buildings. E-commerce if fueling industrial RE, such as Amazon. Also, PLD uses analytics to help increase the flow of goods through their buildings. However, many people built such buildings, then higher interest rates drove up those costs. So, more supply and higher rates and slower rent growth weighed on this sector. The silver lining is that higher rates killed some projects, so the current supply will get absorbed and then rents will increase again. PLD is one of the best ways to play this.

It's had a tough time gaining scale, further hampered by high interest rates. They tried a strategic review, but didn't attract buyer interest. In the past month, they sold half their portfolio for 750 million Euros, which crystallized value and increased analyst views of ERE. They are intent on monetizing assets, and the stock price has a good margin of safety.

Customers tend to rent these spaces longer than they expected, and the rates are not crazy. So, it's a good business based on demand. Also, PSA doesn't need to spend much money on these buildings (who cares what their storage space looks like?) compared to an office building. Low capex, so cash flow is strong. PSA is a pioneer in this space and they have grown it well in past decades. A caveat is that low fewer home sales means that fewer people are selling their homes and putting stuff in storage, hence decreasing demand. That said, PSA is a quality long-term hold and lower interest rates will increase demand.

He doesn't like passive investing in REITs, because an ETF REIT can hold laggards like office REITs. He prefers an actively managed one like RIT.

Private markets used to be for institutional investors, but are increasingly reaching retail investors. Blackstone is the largest player, and they launched a fund for retail investors. More players will enter this space as costs will decline. Public RE stocks will have to catch up to private market values (as they grow more popular) or the REITs will go private.

Holds quality Loblaw assets and industrial ones mostly located in cities. Same-store net income growth isn't super, but good. It won't shoot the lights out, but you can buy it comfortably for your grandmother.

Like Choice REIT is to Loblaw, CRT is to Canadian Tire. The 6% dividend is safe, based on a safe payout ratio. If interest rates stay pat, these shares won't move much, but if rates fall, CRT will do well.

Demand endures and it's a low capex business. It trades at only a 5.5% cap rate and 3-4% net operating income growth, down from double-digit but seems to be troughing. Will benefit from lower interest rates as more people move homes and need storage space.

Allocations to alternative assets will only increase; they've increased 12.5x over the last 10 years (vs. 4x for regular assets), from $25 trillion today to $65 trillion by 2032. They invest big capital in areas like infrastructure and private credit. Not cheap, but worth it.