Oil slump makes Canadian REITs a bargain #LesTwarog
Jordan Maxwell
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Property investors seeking a bargain may want to turn to Canada, where real estate investment trusts are the cheapest relative to their U.S. peers since the financial crisis. According to BNN.ca, stockholders are paying 13 times a Canadian REIT’s funds from operations to own shares in 51 companies, data compiled by Bloomberg show. Shareholders in 210 U.S. REITs forked over 20 times the cash-flow measure at the end of last year. The difference between the two ratios is the widest since 2009. “It’s a good time to invest in Canadian REITs,” said Anil Tahiliani, who manages about $1.1 billion, at McLean & Partners Wealth Management Ltd. and owns the stocks. “They’re partly reflecting concerns about the Canadian economy, housing and the effect of low oil. But we’re going to be in a low-interest-rate environment, and Canada is still better off. Rates aren’t as likely to go up in Canada as in the U.S.” Real estate values north of the 49th parallel have fallen as oil prices drop by half and the Canadian dollar slides. That’s lowered the price of Canadian REITs, and pushed their yields more than two percentage points above U.S. REITs.
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