Scotiabank analyst Mario Saric sees REIT prices tied to the domestic economy,
“Higher rates and recession fears still dominate REIT unit prices, which have lagged the TSX by 9% year-to-date (-19% vs -10%), including 3% in June … We believe a 2022 recession = another 10% downside … That could =20%-30% lower REIT NAVPUs [net asset value per unit] , transforming our current 20% trading discount (i.e., heavy ‘buy’ territory’) closer to ‘sell territory’ (i.e., 10%+ premium to NAV); We think no recession through 2023 (i.e., Scotia Economics revised 2022E/2023E Real GDP of 3.8%/2.6% plays out; … Our current NAVPU estimates are reasonable = 20%+ total return upside. We think a 2023 recession = something in-between (i.e. 10% total return)… "
Mr. Saric did not list his top picks in the sector in this report but did in a June 13 report, “Our Top Growth Picks = BAM, GRT, IIP, SMU, SVI, and TCN. Our Top Value Picks = AP, BAM, CAR, CSH, DIR, ERE, IIP, REI, and TCN. Our Top Income Picks = APR, CRR, CRT and NWH.”