RBC Top Picks RBC real estate analyst Pammi Bir reiterated his top picks as earnings reporting season continues.
“Our Outperform-ratings are intact and include Allied Properties, Boardwalk, BSR, CAPREIT, Dream Industrial, European Residential, First Capital, Granite, InterRent, Killam Apartment, Minto Apartment, Morguard Residential, RioCan, SmartCentres, Chartwell Retirement Residences, and StorageVault Canada Inc. On balance, Q2 results were largely as expected, as fundamentals continue to recover across most subsectors. Nonetheless, the sector continues to encounter stiff headwinds from higher rates and concerns of an economy shifting to lower gear. With this in mind, our recommendations remain skewed to names with resilient earnings and NAV growth profiles… several REITs acknowledged that write-downs are possible in 2H/22, particularly should private market transaction data suggest markdowns are warranted … several factors continue to weigh on the space, particularly the sharp rise in bond yields, uncertainty surrounding tax/regulatory policies, and slowing economic traction … we see better entry points on our preferred names, but acknowledge that wider-than-typical margins for error could persist until macro visibility improves.”