Investment Q&A

Q: For long term holds for growth and dividends (grandchildren at least 10 years horizon), which apartment or industrial REIT would you recommend with short explanation of choice.
Thx J

Q: On the RBC Direct Investing web site it shows the short position of BYP.UN as 7.06%. Is that correct?

Being that there is an (almost) guaranteed offer to takeover BPY.UN by BAM is it unusual to have such a large short position in this case at this time? Aren't the shorts going to have to cover eventually and that would put upward pressure on the stock price? Your comments please.

Q: On a chart, 10 year interest rates move up quite a bit. Higher rates put pressure on REITs because of the debt. Why do you think they were unaffected and even went up? Actually, quite a few REITs look good technically. Are they recent positive news?

Q: It is clear from your answers that you do not like HR much (at all?), Can you add some granularity to this view? Thank-you.

Q: The price of smart centres is still trading at a discount from pre-pandemic. Is this a recovery play and is the 7.5% dividend safe in the current climate or only in a recovery?

Q: For real estate exposure, would you recommend buying both CAR.UN and TCN, or is holding only one sufficient? If one is acceptable, which do you prefer? Thank you!!

Q: "WIR's historical tax allocation has been 40% foreign non business income and 60% return of capital (ROC). ROC is included in the distribution and is not a separate payout. There certainly is no Canadian dividend tax credit. We would be fine with this in a cash account".
One more question on this CDN Cie !
I keep WIR.UN in my non registered account, since 1) the dividend is excellent and 2) The Cie is well positioned ,are those 2 arguments are enough to justify keeping WIR,UN in my non registered account and to pay the 15% US withholding tax + CDN tax ? any other argument ? since the dividend is 4.8% -15% US tax - CDN tax on 40% foreign non business income ? Thanks again !

Q: Hi 5i,

I own BPY.un and was planning on taking the BAM.A shares in the recent offer. Would it make sense to do it now?

BAM.A is trading around $CDN49.08. If you take .4 of that amount the value of BPY is around $19.63. Since BPY is trading around $21.75 it seems to suggest selling BPY now and buy BAM.A for the future (Trading costs and taxes not important). If the deal doesn’t go through, I have locked in the increase.

If BAM increases their offer by 75 cents, do you think the .4 of a share would change?

Your thoughts would be appreciated.

Thanks
John

Q: I am considering selling rei.un and splitting the proceeds between dir.un and iip.un. what do you think?? Also, which do you prefer: dir.un, smu.un or grt.un.
thanks
judy

Q: Hello 5i Team
Further to BAM takeover of BPY, I looked back at the BPY takeover of Brookfield Canada Office Properties (BOX-UN) in 2017 for a similar timeframe:
January 23, 2017 takeover at $30.10 announced
April 20, 2017 revised takeover price of $32.50 announced
June 30, 2017 offer closed BOX-UN delisted
Therefore do you see the following timeframe to be reasonable:
Revised takeover price announced either mid march or early April 2021
BPY unit holders would receive the March 31, 2021 distribution
Completion of takeover prior to June 30 distribution payment (i.e. unit holders will not receive June 30 distribution)
Also noted at the time BPY increased their offer by approximately 8 % for BOX-UN – therefore would an increase from US$16.50 to the range of US$17.50 to US$18.00 be considered reasonable?
Thanks for the great service.

Q: When are we likely to hear whether Bam.a is going to increase their offer for BPY or not?

Q: Thanks for your aswer for WIR :" historical tax allocation has been 40% foreign non business income and 60% return of capital (ROC). ROC is included in the distribution and is not a separate payout. There certainly is no Canadian dividend tax credit. We would be fine with this in a cash account. With the ROC component, this shifts a portion of income to capital gains tax treatment, as this portion lowers the ACB of the investment. In an "RRSP from a tax perspective the currency of the account does not matter: there is no withholding tax in the RRSP. But since distributions are paid in US funds, holding in a US dollar account will save on f/x conversion fees. #5 They are the same thing, one trades in Canadian dollars. There is no advantage of one vs the other."
Does this means that: 1) I should ask for the tax credit for the 15% US tax ? and 2) most important thing ,will be the income tax (T5) be automatically calculated ONLY on approximatively 40% of the total year distribution, and not on the entire distribution ? 3)nb: I notice in my account that the 15% US tax is calculated on all the distribution and not just the dividend ! normal ?
In such case it is OK to keep in in my non registerd account as you mentionned !

Q: Hi,

How is TNT.UN doing in terms of its distribution? Is it reasonably safe?

Thanks,

Gord

Q: Given REI.UN drop in share price this year, do you anticipate an increase in dividend yield in the near future? Do you suggest long term hold or sell for another REIT?

Q: I have not seen any time-lines related to the proposed minority take-out "proposal". Do you think that it would be possible to complete the transaction in 2021 or will it likely slide into 2022. Thanks

Q: WPT (WIR.UN.WIR.U) is a Canadian Cie having its business in the USA, but in this case it is mentionned :
« Distributions paid by the REIT to a Canadian unitholder that are made out of the REIT's "current or accumulated earnings and profits" (as determined for U.S. federal income tax purposes) generally will be subject to U.S. withholding tax at a rate of 15% (generally reduced to 0% for RRSPs). »
1) Does it mean that there is no Canadian tax credit on dividends, but only a foreign tax credit for this stock for the US 15% tax?
2) The US withholding tax is taken monthly in my non registered account, it is indeed around 15% of the dividend (5% per year div.). What about the capital distribution: is it paid on top of the 5% dividend, as a deposit in my account or within the REIT itself?
3) Is it worthen to keep this(excellent?) stock in a non registered account?
4) If it were in a RRSP, should it be in the US account (OTC) to avoid US Tax, or it may be kept in the Canadian account and shall not be taxed ?
5) Is there any advantage for WIR.UN vs WIR.U? Thanks a lot

Q: I hold a position in FCR.UN. that was part of a real estate trio in an income portfolio. The other  "partners" are TCN and BPY.UN which was recently sold for tax harvesting purposes.
The question now is should I sell FCR.UN which is just slightly in a loss position?
If the suggestion is to be patient and hold, what other one should I purchase as part of a real estate trio, aka to replace BPY.UN?........Thanks.......Tom

Q: Hi, could you please rank these REITs first in terms of safety of distribution and secondly in terms of potential growth. Thanks.

KWH, ERE, HOM, CHP, DIR, NWH, CRT

Q: What do you think of nhw.un
thanks Phil

Q: Hi, your view please off FCR’s 50% distribution cut? I believe this was unexpected by the market yet FCR was only down marginally on the day, make sense? Would you expect similar action by KMP, CAR, HOM, ERE or CHP and briefly why? Thanks.