Derek Warren is portfolio manager at Morguard Financial Corp. His focus is REITs.
Core: Brookfield Asset Management
One of our long-term core holdings, Brookfield owns a portfolio of global, high-quality, income-producing property and infrastructure assets, both directly and through its subsidiaries. We expect capital growth and rising income. This is a long-term hold, and we recently added more at $41.
Value: InterRent REIT
More of a value play, InterRent is good at taking rundown apartment buildings in bad areas and improving them. It is big around Ottawa. Its emphasis on growth means it pays out less in yield but is also less sensitive to interest rates. We last topped up at the end of November at $5.30.
Income: Pure Industrial REIT
We see the U.S. economic recovery combined with the weaker Canadian dollar being very good for the industrial real estate market in 2014. Pure Industrial is the best way to benefit from these trends. The yield is 7 per cent and the payout is safe. Last bought earlier this month for $4.55 with the recent equity issue.
Past Picks: June 17, 2013
Allied Properties REIT
Then: $32.15; Now: $32.35; Total return: +3.15 per cent
Then: $15.57; Now: $15.00; Total return: +0.62 per cent
American Hotel Income Properties REIT
Then: $11.22; Now: $10.86; Total return: +1.65 per cent
Total return average: +1.80 per cent
Real estate stocks are poised for growth. Interest rate fears caused a pullback, but that is all shown in the prices now. The underlying properties continued to perform very well, with strong demand seen from the pension funds. The economy is continuing to improve, and REITs are positioned for organic growth. We are focusing our real estate funds on the best managed REITs with organic growth opportunities.