Artis Real Estate Investment Pref Shs Series E T.AX.PR.E

CAD 10-YR BOND YIELD AT 3.03%

[garyreins]

So for many REITS that operate only in Canada and the US interest rates dont matter, we have a 10  year at 3% and the BOC expected to cut to that 3% by end of 2025 by major banks...

but we're still getting 10% AFFO cash flows from HR, BTB, PRV reit...

Retail reits like Riocan and SRU probably moved up from 8.5% to 7.5% or so now

REIT rally should still have legs so AFFO yields move towards 6% across the board and maybe even 5% if your a solid reit

As the BOC and fed cuts come in steady every quarter there should theoretically be nowhere to go but up.  If inflation magically surges again....well,

[Torontojay]

It's not just about AFFO yield that matters. It also matters whether or not the company can grow its cash flows over time. That's the speculative part about putting a value on a company.   

[Frankie10]

Thank you for this thought provoking take on business valuation with respect to REITs.

[garyreins]

REITS are fixed income alternatives. Growth is not huge if u can sustain 8% dividend indefinitely 

[Torontojay]

  It should at least sustain the inflation rate, no? If it doesn't, and earnings miss or dividend gets cut then the share price will follow.   

[garyreins]

Bonds and GICS dont have inflation hedge.  "Earnings miss or dividend cut"? I just said if a REIT is able to sustain a 10% AFFO on the assets indefinitely (no improvement, no losses), and interest rates are 3% its a very suitable return for income investors without any growth. Growth is always ideal but if you rely in income and its way higher than a savings rate then you cant go

[Torontojay]

First of all, Reits are not bonds or gic's.  When the share/unit price goes higher the dividend yield or affo yield is lower c.p. Otherwise, you would be just happy to collect the dividend and not complain about the share price.   Long term reit investors want both  yield and some capital appreciation which is a hedge on inflation. The cash flows should grow with inflation.

[garyreins]

The takway in my original post was with the current 10 year at 3% and some CAD reits having 10% AFFO flow, it surely is an unreasonable gap even if FFO declines a bit.   If management forecasts with debt renewals and lease maturities are staggered and things are stable for the forseeable future the spread seems too steep- hence, they should have more upside in the coming months