H&R REIT owns office, industrial and retail properties in the U.S. and Canada.
Hi Lou,
Would HR.UN be worthwhile keeping for the long haul?
I value your opinion.
Thank you,
B
Hey B,
Thanks for the assignment and your kind words.
H&R Real Estate Investment Trust owns 54 million square feet of commercial real estate comprised of retail malls, office buildings, single tenant industrial buildings and two development properties. The REIT pays out 75.6 per cent of its funds to unit holders and the current yield on distributions is 6.46 per cent. The threat of rising interest rates is what has thrown water on the REIT sector. The constant chatter concerning the U.S. Federal Reserve potentially tapering off its policy of monetary easing would lower demand for bonds, reduce their prices, and jack up yields. In the leveraged world of real estate, rising rates has bearish implications.
An examination of the charts will inform my opinion of HR.UN.
The three-year chart indicates that the units have been in the throes of a downtrend since August of 2012. There was a spate of buying that came in during the spring of 2013 but that quickly dissipated. As outlined on the chart the RSI and the MACD both generated sell signals in early May of this year as the shares met resistance at $24.00 and began a retreat to near $20.00 by late August as the anticipation of Fed tapering gained momentum.
At the conclusion of the September meeting of the Federal Open Market Committee it was announced that monetary easing would continue, sending the units higher where they met resistance at $22.00 along the 200-day moving average. Currently the units have pulled back and are testing support at $20.75.
The six-month chart depicts the sell signal generated by the RSI and the MACD in October as the units failed to move above the 200-day moving average. The close-up of the bounce off support at $20.75 seems to indicate that buyers are showing interest at these prices. Having said that there are a number of patterns that would suggest caution. The first is the established downtrend line, the resistance along the 200-day moving average, the death cross that surfaced in July, and the double top that formed in October.
Until there is a significant reversal of the downtrend it would suggest that sellers are still in control of the market.
Make it a profitable day and happy capitalism!
Have your own question for Lou? Send it in to lschizas@globeandmail.com.
Lou Schizas