We still think 2024 can be a good year for REITs’, Scotiabank says in providing top picks
Scotiabank analyst Mario Saric summarized the findings from the firm’s recent REIT conference,
“This year investor (and REIT) focus was very much on the ability to convert SSNOI [same store net operating income] growth into FFOPU [funds from operations per unit] growth … we sense investors are doing work on REITs given significant perceived trading discounts to NAV … We still think 2024 can be a good year for CAD REITs, but some patience is required… lack of investor confidence in NAVPU [net asset value per unit] as a primary metric … has increased client focus on FFOPU/AFFOPU [adjusted funds from operations per unit] growth … we think select REITs that have lagged YTD but where we see a significant acceleration in FFOPU growth could do especially well. REITs with SO ratings that align with that strategy include IIP and SVI (in particular), followed by TCN, CRR, and AP… The value divide has expanded; history suggests Value should be bought, but we think Growth should still lead the recovery… Our Top Growth Picks = BAM, GRT, HOM, IIP, SVI, TCN. Top Value Picks = AP, BN, CAR, CSH, DIR, MHC, REI. Top Income Picks = CHP, CRR, CRT.”