Post by
retiredcf on Oct 16, 2022 12:37pm
Assessment
Would you agree that interest rate hikes, real and expected, have lead to multiples compressing on REITs, including apartment and industrial, which are my two favorite areas in this sector? What do you think of Minto Apartment REIT going forward?
We would agree. Investors who buy properties (including REITs) value them based on certain rate of return targets. Since debt is heavily used in real estate, uncertainty around where rates will keep investors on the sidelines and deals on hold. However, we think this will create an opportunity in the real estate sector as expectations for interest rates adjust as rents are still quite healthy and growing. We would agree that industrials and apartment REITs are strong. We would be fine with Minto. It trades at about 6.5x cash flow and yields about 3.72%. However, it is relatively small and we would prefer a larger name like CAR.UN or GRT.UN. (5iResearch)