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High Yield Income Investing
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Be picky in strong 2011 for Canadian REITsBe picky in strong 2011 for Canadian REITs Garry Marr January 6, 2011 – 1:02 pm Canaccord Genuity analyst Mark Rothschild says Canadian real estate investment trusts are poised for another year of double digit returns. “As we gaze into our crystal ball, we believe that Canadian REITs are well-positioned to deliver total returns in the 15-20% range (including distributions) in 2011. In our view, the confluence of a cyclical upturn in property markets and a low interest rate environment is supportive of another strong year of sector outperformance relative to the broader equity market,” said Mr. Rothschild, in a note to clients. In 2010, the Bloomberg Canadian REIT index had a total return of 24.3%. Mr. Rothschild is not expecting a huge jump in distribution but said REITs with lower payout rations might be encouraged to increase the cash paid to unitholders. “Our forecast for higher unit prices is based on the expectation that 1) adjusted funds from operations per unit will rise from same-property net operating income growth and accretive acquisitions, and 2) further compression in property capitalization rates will result in upward revaluation,” said the analyst. He says real estate fundamentals are at their cyclical bottom and poised for growth. “Fundamentals across all major asset classes bottomed during 2010, and growth in tenant demand is, for the most part, outpacing new supply, which should drive vacancy lower and rental rates higher during 2011,” said Mr. Rothschild. However, he maintain, investors should be picky about their investments as some REITs and corporations performing better than other. His tops pick are Brookfield Office Properties REIT, Dundee REIT, First Capital Realty Corp. and H&R REIT. His top small cap is Amica Mature Lifestyles Inc |
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Msg # | Subject | Author | Recs | Date Posted |
15578 | Re: Be picky in strong 2011 for Canadian REITs | Skibum54 | 2 | 1/6/2011 9:01:52 PM |