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Discussion Starter #1
I have H & R Reit, Dream, Riocan
TD direct investing says to hold/buy

My question is If Google, Shopify and the like are having their employee work from home.
Will these Reits just keep declining.
If I sell now will be at a big loss and they are inside my RRIF so no capital loss.

Thank you
 

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There is no reason to sell any of these that are beaten down at the moment. Give them a year and see just how much recovery will be achieved. More people will be working and shopping from home going forward but I suspect there will not be nearly the transition that most people are speculating on. Revenues and unit prices will bounce back to a more normalized level. One must remember many REITs had quite a solid run leading up to the Feb/Mar collapse so it would be better to compare today's values with unit prices of a year ago or two.

I own REI.UN and have no reason to sell any time in the next few years. They continue to re-invent themselves by re-developing retail properties into mixed use and believe they will get back to $25 or so in a few years. With RioCan in particular, the key question is whether they can maintain the current distribution. If they can, it is a defnite hold to wait it out. I have not looked at the financials to make that judgement.
 

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Retail stores and shopping malls were already losing a lot of business to online shopping then the Covid crisis put them out of business. I wouldn't want to invest in a REIT that owned a lot of stores.
 

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Discussion Starter #4
Retail stores and shopping malls were already losing a lot of business to online shopping then the Covid crisis put them out of business. I wouldn't want to invest in a REIT that owned a lot of stores.
How do you find out who owns a lot of stores or buildings that Google, Shopify employees will no longer be working in.
I am not savvy with all this investing. I am a widowed, senior lady and trying to steer through this without making too many mistakes.
Thank you for your reply
 

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Discussion Starter #5
There is no reason to sell any of these that are beaten down at the moment. Give them a year and see just how much recovery will be achieved. More people will be working and shopping from home going forward but I suspect there will not be nearly the transition that most people are speculating on. Revenues and unit prices will bounce back to a more normalized level. One must remember many REITs had quite a solid run leading up to the Feb/Mar collapse so it would be better to compare today's values with unit prices of a year ago or two.

I own REI.UN and have no reason to sell any time in the next few years. They continue to re-invent themselves by re-developing retail properties into mixed use and believe they will get back to $25 or so in a few years. With RioCan in particular, the key question is whether they can maintain the current distribution. If they can, it is a defnite hold to wait it out. I have not looked at the financials to make that judgement.
Thank you for your reply.
I have been watching these 3 Reits and they are dropping daily while others stocks seem to be improving. This is why I was getting nervous to sell or hold.
 

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Retail stores and shopping malls were already losing a lot of business to online shopping then the Covid crisis put them out of business. I wouldn't want to invest in a REIT that owned a lot of stores.
Selling at a low in a TFSA or RRSP does not make sense though when there will be some substantial recovery in unit prices in a year or so. I'd give it a year.
 

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Thank you for your reply.
I have been watching these 3 Reits and they are dropping daily while others stocks seem to be improving. This is why I was getting nervous to sell or hold.
I can only speak to RioCan. Unit price is currently circa $16 versus about $12.50 circa March 23rd at its low. You can sell now at the current price, or in my case, I would wait to see if it recovers to circa $20 within the next year....especially if it maintains its current distribution.

The key decision though is, given where RioCan unit pricing is, do you have an alternative investment opportunity which is reasonably likely to out perform in Total Return over the next 12 months? That is really the decision to be made - meaning you have to forget what you paid for RioCan. That is gone. It only matters what will happen going forward from today. If I am right, from this point forward, if RioCan holds its distribution AND unit price climbs to $20 twelve months from now, that would be ~34% gain in TR (25% in capital appreciation plus 9% in yield from current pricing). Obviously, if RioCan runs into cash flow problems and more tenant defaults, then that 34% return will not be realized. Personally, I don't know what else out there might give me that sort of 12 month gain, so I am holding for now.
 

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Discussion Starter #9
I can only speak to RioCan. Unit price is currently circa $16 versus about $12.50 circa March 23rd at its low. You can sell now at the current price, or in my case, I would wait to see if it recovers to circa $20 within the next year....especially if it maintains its current distribution.

The key decision though is, given where RioCan unit pricing is, do you have an alternative investment opportunity which is reasonably likely to out perform in Total Return over the next 12 months? That is really the decision to be made - meaning you have to forget what you paid for RioCan. That is gone. It only matters what will happen going forward from today. If I am right, from this point forward, if RioCan holds its distribution AND unit price climbs to $20 twelve months from now, that would be ~34% gain in TR (25% in capital appreciation plus 9% in yield from current pricing). Obviously, if RioCan runs into cash flow problems and more tenant defaults, then that 34% return will not be realized. Personally, I don't know what else out there might give me that sort of 12 month gain, so I am holding for now.
Thank You again for sharing your thoughts on this. I greatly appreciate your reasoning and the breakdown explanation.
 

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I would add that it may be a good time to review your portfolio and make sure you are well diversified.
 

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Discussion Starter #11
Thank You I agree. I need to find an advisor soon.
TD Wealth want 1K a month to manage.
Assante I believe are fee paid advisors
Edward Jones are a little more than 1K a month to manage
I need my Portfolio balanced.
 

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Thank You I agree. I need to find an advisor soon.
TD Wealth want 1K a month to manage.
Assante I believe are fee paid advisors
Edward Jones are a little more than 1K a month to manage
I need my Portfolio balanced.
A fee-only advisor would be the best setting. Basically pay a one time fee for the review and consultation and then no more fees until needed in the future.

Also consider index funds (such as e-series mutual funds at TD or asset allocation ETFs). Then you don't have to make decisions about each security (which could lead to moments of doubt and occasional mistakes), but rather just take market returns as they come.
 

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Discussion Starter #13
Thank You for your advice. I just need to find a good fee only advisor now.
I am in the Ottawa area.
 

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Thank You I agree. I need to find an advisor soon.
TD Wealth want 1K a month to manage.
Assante I believe are fee paid advisors
Edward Jones are a little more than 1K a month to manage
I need my Portfolio balanced.
If you are a DIY investor already, then all you really need to do, is get a portfolio review done by a 'fee only' advisor who might charge $1-2k for a full review of where you are at and where you want your portfolio to be in retirement. They won't recommend specific products, but they can advise on asset allocation, diversification, and what kind of holdings might go in your various accounts.

If you are simply seeking a Balanced 60/40 or similar portfolio, why don't you just buy one of the Asset Allocation ETFs such as VBAL in each of your accounts and call it a day? One simple holding.....period!
 

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I checked REI.UN's recent quarterly update written by an analyst - see below. Their expected price is around 22 in 12-18 months time.
While we acknowledge that the retail real estate sector is indeed under significant near-term stress, the REIT’s current price appears to reflect the assumption that the uncollected rent to date will not be collected at all, and that the REIT’s cash flows are permanently impaired; lease obligations are legal contracts, and cannot simply be ignored if they are indeed serviceable. As the REIT has taken the necessary steps to address its near-term debt obligations (i.e., 2020 debentures and majority of mortgages effectively re- financed), and given the REIT’s substantial liquidity (we certainly do not think the survivability of the REIT is in question), we believe that the REIT’s current discount to NAV of 37% is decidedly short-sighted, and does not reconcile with the fundamental value of the underlying real estate (especially in a post- COVID world).​
I purchased some additional shares on the drop. I don't expect it to do much. The top 10 tenants of their retail spaces are all very good companies - loblaws, sobeys, walmart, dollarama, BMO. etc. The only that will likely struggle with payments would be cineplex.
 

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WOW! Thank You dubmac for your very informative reply.
These kinds of quarterly updates tend to be very optimistic - don't expect great things to happen. this one will likely muddle along with range-bound trading 15-18 for the next while
 

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scorpion has a good point. I have ZRE for this purpose. (The only downside is in ZRE, or any other REIT ETF is that you get some dogs with your stars - and at this time Retail REIT's like REI are dogs)
 

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With any ETF, one gets both the winners and the losers. It usually all works out in the end because few ppl can always pick winners except by pure luck. It always amuses me when folks confidently believe they can always pick the stars. Only on the anonymous internet does that happen.

Most REIT sectors have their heyday and doldrums. Some retail REITs do fine anchored by the likes of Sobeys, etc. Can't broadbrush these things..
 
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