Killam Apartment REIT T.KMP.UN

RBC

[retiredcf]

RBC Capital Markets head of global real estate research Pammi Bir surveyed the domestic REIT sector as the fourth quarter begins,

“After stiff rejection in 1H/24, the TSX REIT Index found some love in Q3, posting a 23% total return and marking its strongest quarter since Q2/09. The 9M/24 return improved to +15%, narrowing the gap to the TSX Composite (+17%) and S&P 500 (22%). REIT returns improved around the world, with CDN REITs outperforming the global index (+13% YTD) …Next step-up from here likely requires more macro aid. Monetary policy easing by the BoC and material compression at the long end of the yield curve likely played starring roles in the sector’s rebound. Frankly, a breather hardly seems unreasonable, with the sector giving back some of its gains in recent days. A material improvement in multiples likely requires a sustained leg down in bond yields, in contrast with RBC Economics forecasts … We forecast 2024-26 annual FFOPU [funds from operations per unit] growth at a healthy 3-5%, and 7% upside in our 1-year forward NAVs. We expect several of our preferred subsectors to lead, including seniors housing (13% 2023A-25E FFOPU CAGR), Canadian-weighted multi-family (8%), industrial (5%) … we see attractive risk-adjusted returns in our top picks (BEI, CAR, CIGI, CSH, DIR, FCR, GRT, HOM, IIP, KMP, MHC, MI, MRG, REI, SRU, SVI)”