TSX:SRU.UN - Post by User
Comment by
Saphoon Feb 23, 2021 10:52am
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Post# 32636469
RE:Outperformance persists
RE:Outperformance persistslogicandinertia wrote: Smartcentres has started to materially outperform the CDN REIT index, and more recently, even the TSX 60.
Likely relates to the comfort investors took from most recent earnings report, and the rationale provided by management surrounding the sustainability of the distribution.
My own investment rationale is fairly straightforward:
(1) Smartcentres owns a lot of undeveloped real estate in some of Canada's fastest growing neighbourhoods.
(2) Immmigration will accelerate once again, with the Canadian government lowering the threshold for permanent residency (once again on Feb 16, 2021), as they ramp back up post COVID. Many of these permanent residents elect to stay in the GTA, due to opportunities and extended family presence. Over half of new immigrants settle in the Toronto area.
(3) Due to density issues, local governments are eager to rezone commercial areas to mixed use, opening up the opportunity to build more housing, which is exactly at the center of SRU's strategy.
(4) Gridlock and too many people in downtown Toronto means more people want to live in the suburbs and work remotely, exacerbated by Covid. Once again, their mixed use zones allow for both new residential and office complexes, at cheaper rent and lesser commute for traffic-weary GTA residents.
(5) What were once viewed as strip malls will be (and are being) repurposed for some of Canada's most dense cities/neighbourhoods. With increased population comes the need for more dentists, doctors, massage, physio, accounting offices, food, etc. In other words, the vacancies left by bankrupt apparel makers unable to compete against online and fast fashion trends will be swallowed up by those offering personal services to an increasingly dense surrounding area.
(6) The illustration of SRU's game plan is evident in 2020, when the shortfall in cash flow from the base business was covered by condo/townhouse sales, allowing the distribution to be sustained in a challenging time.
Good luck to all...
Excellent post. SRU is the only REIT that I am holding. I need to emphasis the importance of condo\townhouse which they have partnered with one of the giants in private homebuilders.
The furtuere looks real good.
GLTA