Laurentian Bank Securities analyst Gaurav Mathur thinks the correction the Canadian real estate investment trust sector, which began in the middle of 2023, has “entered ‘a later inning in the ball game’ as the effects of capital constraints, higher interest rates, and higher cost of capital continue to percolate through the sector.”
“In effect, the challenges of a ‘higher for longer’ rate paradigm are potentially expected to persist amid the broader macroeconomic pressures, even though the futures market is pricing multiple rate cuts at the time of writing this note,” he added. “We therefore recommend that Canadian REIT investors remain tactical as we expect multiple opportunities to materialize and create significant value in a volatile year ahead.”
Concurrently, he resumed coverage of seven equities:
* Canadian Apartment REIT (CAR.UN-T) with a “buy” rating and $55 target. The average on the Street is $55.83.
* Dream Industrial REIT (DIR.UN-T) with a “buy” rating and $15.50 target. Average: $16.05.
* Granite REIT (GRT.UN-T) with a “buy” rating and $90 target. Average: $87.61.
* InterRent REIT (IIP.UN-T) with a “buy” rating and $15 target. Average: $14.35.
* Mainstreet Equity Corp. (MEQ-T) with a “buy” rating and $180 target. Average: $172.50.
* Nexus Industrial REIT (NXR.UN-T) with a “buy” rating and $10 target. Average: $9.19.
* Primaris REIT (PMZ.UN-T) with a “buy” rating and $18 target. Average: $16.75.