RE:GLOBE ARTICLE ON PAYOUT CUTSThey are a day late and a dollar short. People who followed RBC buy calls on REITs have lost most of their money. It's obvious rates and REITs won't be friends. But now you are at a cyclical top in rates and the REITs are near all-time lows. Thanks for the warning BRO!
As for ERE, 5-year Netherlands is already back to 2.9% and ECB is close to cutting as the Eurozone in recesssion. They're growing NOI y-o-y by 4-6% in one of the hottest real estate residential markets in the world, also under strategic review which may result in privatization of the REIT at a significant premiuum to trading price.
As for D.UN, it's trading at $270 per square foot overall, majority of square footage in Toronto's financial district - formerly an area with the lowest vacancy in the world for offices and where $600 psf used to be considered cehap. Who cares if they cut the distribution, Dream Office is worth at least $20 or more dollars here.
As for AP.UN, listen to their call and how much options they have to shore up liquidity just with zoning/residential density options alone. Low debt-asset ratio. CEO just guaranteed the distribution wont be cut and reaffirmed they are committed to it at any cost neccessary.
As for AX.UN, well most of us know this one. Tons of unecumbered assets and a motivated manager. Most of the debt is already now near the high end of the rate transition so any drop will be more of a tailwind here than elsewhere. But I suspect Artis will become a low debt ratio REIT soon if they are not privatized as I believe they'll complete a major asset sale.
MARKOPOLIS wrote: 2. RBC Capital Markets real estate analyst Pammi Bir acknowledged the volatility in the REIT sector in a recent report previewing the upcoming earnings season. Mr. Bir listed a number of REITs where he saw their ability to defend current payout levels as “below average.” He emphasized that distribution cuts were not imminent in any of the companies mentioned. However, because of some combination of elevated payout ratios, weak fundamentals, debt composition, high leverage and/or strategic considerations, the analyst believes the following REITs will have more trouble sustaining payouts than others in the sector: Allied Properties REIT, Artis REIT, Chartwell Retirement Residences, Dream Office REIT, European Residential REIT, Extendicare Inc., American Hotel Income Properties REIT, Melcor REIT, Northwest Healthcare Properties REIT, Nexus REIT, Slate Grocery REIT and SmartCentres