Sienna Senior Living Inc LWSCF

CIBC

[retiredcf]

CIBC REIT analyst Dean Wilkinson sees his sector as cheap, but there are complications,

“The first major M&A announcement of the year may have provided a shot in the arm to an arguably ailing sector, but beyond the clear implication of the stark value proposition the sector offers, investor attention (much to the chagrin of many) is still squarely focused, we believe, on the rate trade. With a great degree of volatility, the REIT complex is now trading, on average, at a 15-per-cent discount to NAV, a level that has historically been quite attractive and coincided with increased investor demand … However (there’s always a but…) … a 50 basis points steeping of the curve at the long end would imply the REIT sector is, in fact, trading at NAV parity and perhaps a much less compelling investment opportunity than the deep discount we believe the market is currently pricing. We continue to believe/expect the normalization of the yield curve comes from downward pressure on the front end of the curve (being a positive for the REIT complex), acknowledging the path is perhaps taking a good deal longer than was originally expected … By asset class, we continue to favour seniors housing (Chartwell and Sienna) and multi-family (Killam [Canada] and BSR and Flagship [U.S.]) followed by ‘defensive’ retail (Crombie and Choice), and then the industrial REITs. We continue to view BN as a longterm core holding”