The fundamentals for REITs remain solid

If overall growth is slowing, it makes REITs look relatively better when compared to other sectors, argues Signature Global’s Lee Goldman

Michael Ryval 28 February, 2019 | 6:00PM
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Although the Canadian economy is expected to slow moderately in 2019, real estate specialist Lee Goldman believes that thanks to the positive underlying fundamentals, real estate investment trusts (REITs) will continue to perform well. He maintains that even with growth slowing elsewhere the sector could outshine others.

“The fundamentals are still relatively strong, although it does depend on the asset class and the geography,” says Goldman, senior vice-president at Toronto-based Signature Global Asset Management, a unit of CI Investments Inc. Goldman is senior portfolio manager of the 5-star $405.6 million First Asset Canadian REIT ETF (RIT). Launched in 2004 as an equal-weighted closed-end fund, it was converted 2007 to an actively-managed closed-end fund and converted again in 2015 to an actively-managed ETF. But Goldman concedes that the broader economy is slowing, partly due to the downward pricing of oil that is expected to hit Western Canada especially hard.

Nevertheless, despite a slowing global economy and concerns about U.S.-China tensions, Goldman argues that our economy can expect about 1.8% growth this year. “That is still decent. Our base case is not a recession scenario, although some people talk about it. We think the economy will be strong enough that most sub-sectors of the REIT sector will be just fine.”

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Allied Properties Real Estate Investment Trust42.45 CAD-0.14
Canadian Apartment Properties Real Estate Investment Trust61.12 CAD-1.34
CI Canadian REIT ETF20.59 CAD-0.29
First Capital REIT18.19 CAD-0.38

About Author

Michael Ryval

Michael Ryval  Michael Ryval, a regular contributor to Morningstar, is a Toronto-based freelance writer who specializes in business and investing.

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