Post by
Defiance2050 on Dec 10, 2022 4:43pm
REITs and etf/ mutual fund companies
Excluding REITs buying back their own shares the recent market trends have been showing reporting entities such as ETF / mutual fund including the banks have been significant net sellers of REITs.
This is not exclusive to one company and the last several years have been a mess of historic type of concepts.
Up until recently the thought of telecoms and utilities (which were not decreasing their valuations) were holding up and increasing despite historically declining SP with higher rates. Banks and insurers typically increase SP in rising rate environments, the opposite is happening now with P&C insurers (Intact and Definity) being the exception. Reits have historically done well in inflation and this is the opposite effect.
You can argue about Office rents or the semantics of interest rates (Dream Office is approximately 80% fixed to apartments and industrial which tend to be 90%+). Apartment and industrial rents are on the trend of increasing but the SP are on the decline. Valuations of the publically traded companies is out of proportion; normally there is a slight premium (factoring out asset manager discount) to NAV but sector wide there is now a discount.
In regards to M&A of entire companies I would not price it in to how you would value the company (there is a possibility of properties being sold and share bought back).
I don't think there can be a buyout for a small premium (unless DRM is making the offer) and if anyone else would be purchasing it, they would have to either buyout the contract with DRM or continue to use them.
I suspect at a certain point the selloff will disappear and valuations will return to normalized ranges. However the sentiment is currently awful and it is seeming to price in to certain sectors long-term high rates but on others it is as if it is just another day in the office.
Results although a backward indicator showing performance up to a certain point in time have yet to show the shifts that are being "priced in"
Comment by
SNAKEYBOY on Dec 10, 2022 7:31pm
Also REIT sentinment never fully recovered from covid19 for many reits, while TSX/DOW/S & P blew past the all time highs by a big margin. REITS like RIOCAN and HR Reit for example could never get back to their 2019 prices.