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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: I would like to reduce the number of REITs in my portfolio but strike a nice balance in industrial, residential, commercial and perhaps care homes. My present holdings include CUF.UN, AP.UN, CAR.UN, GRT.UN, AAR.UN and SRU.UN. Which of these would you eliminate and what might you add?
Read Answer Asked by Lloyd on March 27, 2017
Q: My investment advisor has suggested that I sell Crombie due to uncertainty regarding Sobeys, Crombie's principal tenant. Do you share this concern?

He suggested True North as a replacement. What is your opinion?

I would replace Crombie with office and/or residential REITs.

With respect to office, I have enough Artis AX.UN, but could add to H&R HR.UN or buy another which you would recommend. Suggestions?

With respect to residential, I have plenty of Canadian Apartments CAR.UN but would buy another recommendation. Suggestions?
Read Answer Asked by Carl on March 21, 2017
Q: How would you suggest incorporating non-equity investments into diversifying a portfolio? For example, if an investor owned an office building:

a) Would this satisfy the "REIT" sector component of the portfolio?
b) Should the investor diversify within the REIT sector, and aim to also own a residential REIT, such as CAR.un?
c) Should the income-producing real estate asset be considered a "bond-proxy", thus not affecting the equity sector allocation?
d) Other?

Thanks in advance!
Read Answer Asked by Jonathan on January 03, 2017
Q: We all know that interest rates will be going up, and these guests on BNN poo poo reits as an investment, and than try to explain how there picks down 60 & 70 % may eventually come back for there investors if they wait long enough. The way i see it, if a reit has good management they will do well going forward. In Canada, Car.un, they are full, in the USA the ones are around 95% full. More and more people in the future will be forced to live in an apartment, with poor wage growth, more expenses, they will never qualify for a mortgage. What do you think, am i not seeing the real picture here, high quality Reits should be held even a rising rate time?
Read Answer Asked by eugene on December 22, 2016
Q: Hi, I've sold my REITs in my cash account but am thinking of adding two or three in my RRSP accounts for long term holds. Is this a reasonable move? I've noticed that your recommendations generally include CSH, CAR, and REI. I can't help but be attracted to the yield on AX. Am I "reaching" for yield and likely to be disappointed if I buy AX? What would be your top 2 or 3 REITs for an RRSP that consists of a balanced group of etf's? I'm looking to be a bit more conservative here than in my cash account which mirrors the balanced equity model fairly closely.
Thanks, Rod
Read Answer Asked by Rod on December 05, 2016
Q: In answer to a recent question about real estate exposure, you noted that you prefer apartment-focused REITs to office REITs and office REITs to retail REITs. Is this preference only if you are purchasing a REIT for income first and foremost as opposed to hoping for some growth as well? It would seem to me that the residential REIT does have almost a guaranteed income stream but very limited growth potential due to rent controls (aside from takeovers). The office/retail companies eg. REI, however, are able to participate in a growing economy as rents are often based partly on sales and there is the ability to raise rents in an uncontrolled market albeit while benefiting from long-term contracts. If a company has a greater mix of assets, is that not better than being reliant on one sector? So, is this just a case of risk/reward as to what REIT to purchase or is there a lot more risk in REI than I realize?

Appreciate your insight.

Paul F.

Read Answer Asked by Paul on December 02, 2016
Q: I am retired, modest risk appetite, have a diversified portfolio, and am considering buying a quality REIT for my RRIF for income and some growth potential. I have till now considered our home as our real estate investment. Your thoughts are appreciated. Do you prefer office vs retail or some combination? Please recommend a couple of names? Thank you for your comments. Edward
Read Answer Asked by Edward on November 29, 2016
Q: Hello 5i team,
I would like to purchase a few REITS through my RRSP account since I currently have non. I was thinking of purchasing one of the listed REITs that you suggested in a previous question and maybe an ETF (if they exist).

Of the REITs (CSH, HR, CAR) which one has the best dividend/growth? I figured a REIT that goes across the country would be the best.

Also do REIT ETFs exist? If so are there some that possible cover commercial properties only?

Thank you,
Andrew
Read Answer Asked by Andrew on November 02, 2016
Q: I've been considering CAR.UN. While the drop in recent days might be seen as "good" for me, in lowering my cost, given that my three most recent purchases (DH, KBL and IWO) have all been immediate losers, I thought I'd better ask you first: do you see anything to explain the recent drop with CAR.UN; and do you think this is a good time to start a position? (As CAR's recent performance is not materially different from XRE, perhaps it's more of a concern with REITs generally at this time?
Read Answer Asked by James on October 27, 2016
Q: Peter, I've been thinking of CAR.UN for a long-term hold; it yields about 4.4% But I just saw Ross Healy (who I think has a pretty good track record for conservative investors) recommend Cominar, with its 10% yield. I have no need for active income; everything will be reinvested. For a long-term hold, would you expect someone to do better overall (including distributions of course) with CAR.UN or CUF.UN? The units will be held in an RRSP. Thank you.
Read Answer Asked by James on October 13, 2016
Q: Hello,

The following 5 companies are on my buy list to complete my portfolio:

PBH
TOY
NFI
BCE
CAR.UN

I have room for two in my TFSA, two in my non-registered and one in my RRSP. How should I divide the above 5 stocks into these accounts?

My plan is to buy on pullbacks. But I'm thinking about buying CAR.UN now because it has already pulled back on the mortgage news. Does this make sense?
Read Answer Asked by Carla on October 11, 2016
Q: i asked 5i a few days ago about preferred shares vs reits. 5i response was that reits are favoured due to the fact they can grow their business/distributions over time but both sectors will be impacted by interest rate hikes. i know in the past you have recommended etf for diversification but i've looked at the reit etf's XRE, ZRE, VRE and I have concerns, rightly or wrongly, with either the weightings (Riocan, HR as % of holdings) or certain reits (DREAM) in each etf. what do you think of just holding REF and CAR as my reit holdings instead of an elf, especially given the pullback in those names over the last month or so? would these 2 provide enough diversification in the reit space? these would part of a portfolio with a fair bit of exposure to utilities, pipelines, banks. thank you
Read Answer Asked by Richard on October 06, 2016
Q: Good morning Peter and Team,

Sorry for another question about the changes to the mortgage business! The new rules will undoubtedly disqualify a number of people from obtaining mortgages, thus relegating them to renting instead of buying real estate. I'm wondering if this is a buying opportunity for "apartment" type REITs like CAR.UN and IIP.UN. If so, what REITs do you find most compelling, and is there any preference as to where should they be held? (RRSP, RRIF, TFSA, Non-registered investment account.)

Thanks as always for your valued advice.
Read Answer Asked by Jerry on October 05, 2016
Q: Regarding my question earlier about 2 REIT's to diversify existing position in AX.un, I probably should have pointed out preference for market cap and mimimum current yield. I like (and anticipated) your recommendation of Chartwell however IIP.un sacrifices too much current yield and market cap security to make up for potential growth for me. Would CAR.un fit nicely given my desire for a larger market cap? Is H&R too much like AX.un? thx!
Read Answer Asked by Tom on August 17, 2016
Q: Hi, what is your view of the REIT space right now? They are declining a lot today relative to normal stability, but have been strong lately. I have the ones listed as well as SIA with isn't technically a REIT but in the same area. I believe the new Real Estate category is coming soon, and the US election. In general is it good timing for the REIT sector over the next 6 months. And would you consider any other REITS better than the ones I currently own at the present time? I'm well diversified so I'm not over my % for the category, although could consolidate to fewer than 4 holdings.
Read Answer Asked by Kel on August 12, 2016
Q: Your comments please on CAP REIT's operating results and your thoughts going forward. Am cautious on the impacts new foreign home ownership taxes will have on apartment valuations in BC and possibly Ontario. Apartment REIT's are coming off a bit. Do you see this continuing in light of the tax situation and a possible US rate hike this year.
Read Answer Asked by Alan on August 11, 2016