Q: I have had good success with industrial reits, having held DIR.UN for several years, and having 2 other industrial reits bought out over the years with nice profits. And then there's NXR. A more recent purchase and clearly a mistake, as it is currently the highest percentage loss in my portfolio (fortunately a small holding: only about 1% - but was about 1.5% initially). Question - do you see any hope for this one, or better to just move on now that it has shown a little strength? This is in an RSP, so the loss can't be claimed. I would like to take advantage of the current relatively high yields in some better-quality names to hopefully make my RSP a little less prone to this kind of loss.
Thank-you
Thank-you
5i Research Answer:
A tough call, because the unit price could improve simply with lower rates, if they occur as expected in 2024. Mgmt. notes the payout ratio may 'drift' towards the low 90% range, and this could provide some breathing room and calm down investors. Higher rents should help, and cash flow is expected to improve about 5% or so in 2024. With a small position, and a very low valuation of 9X cash flow, we would see it as a HOLD today for at least a few quarters. It trades below book value and net asset value.