Dream Industrial Real Estate Investment Trust T.DIR.UN

REITs

[retiredcf]

I am considering adding some real estate to my portfolio. I expect interest rates to remain relatively steady or drop slightly over the next two years. Do you think now is a good time to purchase a REIT or is there more potential downside as the interest rates on their debt resets higher as the debt matures? I am specifically looking at residential real estate companies but wondering if is there a real estate sector you would prefer over residential? Any recommended companies?

We have seen relatively larger-than-average asset revaluations happen over the past year for REITs and would expect smaller to still happen. REITs have been relatively popular given their attractive yields. When interest rates peak, other discretionary sectors would likely see more expansion in valuation compared to REITs if we were to compare it by sectors. There is also the concern of debt refinanced at higher rates but most of the near-term debt has been discussed by the management and mostly priced in. We like both residential and industrial REITs. We like TCN for its US exposure and a more growth-oriented nature, and CAR.UN for relatively lower drawdowns and upswing (compared to TCN) as well as its overall business fundamentals. For industrial REITs, we like DIR.UN for its prospects moving forward. (5iResearch)

[IanB85]

As things return to normal, the industrial space (from what I have seen) has to be a growing area as focus on managing supply chain issues and eCommerce demands should bring us where we need to be in the coming year to see REITS as a solid part of any portfolio.