GIM Investment Letter & Model Portfolios — Q2/20
We are pleased to present the GIM Investment Letter and Model Portfolios for the period ending June 30, 2020.
Please follow the links below to view in PDF:
We are pleased to present the GIM Investment Letter and Model Portfolios for the period ending June 30, 2020.
Please follow the links below to view in PDF:
Real Estate Musings
Part 1 – Near-Term “Headline” Risk
Let’s deal with the current issues first. The companies we like cover a wide spectrum of industries, including grocery stores, essential services, industrial properties (including logistics), technology, apartments and offices. People still need to get food, go to Canadian Tire and live in an apartment. Offices still need to have a physical presence. We have positioned our clients with exposure to industrial/logistics properties, which are smoking hot right now – Amazon doesn’t own its real estate, but it needs to lease a property with proper logistics to deliver all that stuff it sells. We also invest in REITs that are really incognito technology companies such as Data Centres. All the data from online usage needs to be stored somewhere; Telus, Rogers, et al do not own all their own web storage facilities, they now have to lease it from you.
Anecdotally, industry analysts are reporting rent payments in the >90% range for the companies we own, which is better than the headline news the media seems to be suggesting. Typically, they get >98% collection rate on rents through an economic cycle. Yesterday the federal government announced a rescue package for small business owners facing rent/lease payments (more details to come). The government has already put programs in place for everyone who needs to pay rent or groceries with the $2,000/month (indefinite) ESG plan. The Province of BC has announced a $300/month subsidy for people renting. Governments at provincial and federal levels are taking firm action to allow families and businesses to pay rent.
Part 2 – Investments vs. the Economy
At risk of making a motherhood statement, there is a difference between a good company and a good stock. Because REITs are highly liquid, they were brought down quickly in the panic selling in late March. All companies, good and bad, were taken down in equal measure. The REITs fell by 50% in price. Even if we were to discount all the bad news in the share price and more, REITs are an incredible bargain right now. Best of all we can own good companies et good stocks at the same time which is nirvana for us.
Incidentally we don’t think Warren Buffett is a value investor. He is really an investor who waits to buy when he can get a good company and a good stock at the same time. This is exactly what we’ve also done for our clients.
Finally, we are happy to report that some REITs have snapped back more quickly than the broad market. For example, Data Centre REITs are higher today than they were before March 2020.
Part 3 – Non-Tangible Considerations
All management teams of REITs lived through the crisis of 2008-09, at least for the companies we are interested in. None of them want to repeat that experience and they’ve spent the past 10 years cleaning up their balance sheets. They’ve refinanced debt at lower rates and termed out maturities. Lines of credit are in the tens if not hundreds of millions of dollars in size and are often multi-year committed lines (as opposed to demand loans), so lenders can’t easily cut and run. These REITs issued equity whenever their share prices popped (dilutive to shareholders but prudent in hindsight). These companies are all in a position of incredible strength to take advantage of weaker private or public players who are forced sellers.
There has been a shift to tele-commuting, but it has been going on for the past 40 years. There is currently a worry in the industry about retail (mall) properties falling in value. REIT managers are aware of these shifts. They have been selling off lower grade retail locations and high grading their remaining properties. They’ve upgraded by increasing density and creating multi-use locations, such as building up areas near transit links, adding retail and community use facilities (seniors services, recreational facilities), and building condominiums on top. They make sure these types of value-adds include grocery, recreational, walking/living spaces and access to public transit.
Conclusion: There is a 50% off sale in some high-quality REITs. Buy.
Please contact GIM today to learn more about our REIT Portfolios.
Sources: Scotiabank and NBCFM Research
Disclaimer: GIM staff, clients, immediate family and relatives own REITs directly and indirectly.
We are pleased to present the GIM Investment Letter for the period ending March 31, 2020.
Please follow the links below to view in PDF:
We are pleased to present the GIM Investment Letter and Model Portfolios for the period ending December 31, 2019.
Please follow the links below to view in PDF:
The 2020 Investment Season is here! RRSP limits for 2019 and 2020 are $26,500 and $27,230 respectively; the deadline for RRSP contributions for the 2019 tax year is March 2, 2020. The TFSA limit for 2020 is $6,000; you can deposit up to $69,500 ($139,000 per couple) if you have never contributed to a TFSA. Other great ways to invest include pre-authorized monthly contributions (PACs), RESPs, RDSPs and of course, open/taxable accounts. Gold Investment Management is available by telephone: 1.888.436.9955, fax: 1.866.541.7947, email: investir@gold-im.com or visit us at gold-im.com.
Let Gold Investment Management help you build a strong future. Invest today!
RRSP & TFSA Tables:
Year | RRSP Annual Limit* |
2013 | $23,820 |
2014 | $24,270 |
2015 | $24,930 |
2016 | $25,370 |
2017 | $26,010 |
2018 | $26,230 |
2019 | $26,500 |
2020 | $27,230 |
*18% of “earned income” for the preceding year to annual limit
Year | TFSA Annual Limit |
Cumulative Total |
2009-2012 | $5,000 | $20,000 |
2013 | $5,500 | $25,500 |
2014 | $5,500 | $31,000 |
2015 | $10,000 | $41,000 |
2016 | $5,500 | $46,500 |
2017 | $5,500 | $52,000 |
2018 | $5,500 | $57,500 |
2019 | $6,000 | $63,500 |
2020 | $6,000 | $69,500 |
In today’s episode, we interview Gold Investment Managements Founder and President Jonathon Gold, CFA. Our conversation covers everything you need to know about publically traded REITs, including the macro characteristics of the uncorrelated returns, the benefits of diversification within Real Estate, why publically traded real estate is in many ways superior to private markets and much more.
Grand Theft Life Podcast
If you’ve ever been interested in Real Estate investing, this episode is a can’t miss. You don’t need millions of dollars to own a stake in the millions of square feet of Datacenters, hotels or apartment buildings across the world.
The 2019 Investment Season is here! RRSP limits for 2018 and 2019 are $26,230 and $26,500 respectively; the deadline for RRSP contributions for the 2018 tax year is March 1, 2019. The TFSA limit for 2019 is $6,000; you can deposit up to $63,500 ($127,000 per couple) if you have never contributed to a TFSA. Other great ways to invest include pre-authorized monthly contributions (PACs), RESPs, RDSPs and of course, open/taxable accounts. Gold Investment Management is available by telephone: 1.888.436.9955, fax: 1.866.541.7947, email: investir@gold-im.com or visit us at gold-im.com.
Let Gold Investment Management help you build a strong future. Invest today!
RRSP & TFSA Tables:
Year | RRSP Annual Limit* |
2013 | $23,820 |
2014 | $24,270 |
2015 | $24,930 |
2016 | $25,370 |
2017 | $26,010 |
2018 | $26,230 |
2019 | $26,500 |
*18% of “earned income” for the preceding year to annual limit
Year | TFSA Annual Limit |
Cumulative Total |
2009-2012 | $5,000 | $20,000 |
2013 | $5,500 | $25,500 |
2014 | $5,500 | $31,000 |
2015 | $10,000 | $41,000 |
2016 | $5,500 | $46,500 |
2017 | $5,500 | $52,000 |
2018 | $5,500 | $57,500 |
2019 | $6,000 | $63,500 |
Portfolio managers have a fiduciary duty to act with care, honesty and good faith, always in the best interest of their clients. Investment decisions therefore must be independent and free of bias. This results in a higher level of trust placed on portfolio managers.
En tant que fiduciaires, réglementation des valeurs mobilières exige le plus haut niveau d’éducation et d’expérience dans l’industrie du placement.
Les gestionnaires de portefeuille fournissent la gestion des placements continue des investissements des clients en fonction de leurs objectifs et de la tolérance au risque décrits dans un énoncé de politique de placement (EPP). Les clients donnent généralement autorité pour le gestionnaire de portefeuille pour prendre des décisions d’investissement sans obtenir l’approbation préalable pour chaque transaction (appelée gestion discrétionnaire).
Portfolio managers typically charge a fee based on a percentage of the investments they manage. This fee is transparent and can be less than retail management and distribution costs, which are often embedded as a cost of doing business. It’s important to note that clients’ assets must reside at a custodian financial institution for an extra layer of protection and safety and there is usually a small additional fee for this service. Fees are fully transparent on client statements. Fees are not paid by commission based on volume of buying or selling investments and can be lower than typical mutual fund fees.
An individual written agreement will be established to set out how clients will work with a portfolio manager, including ongoing communication, types of investments, reporting, fees, risks and other issues related to clients’ individual circumstances.
Tant la société et l’individu qui gère les investissements des clients sont enregistrées et contrôlées par des commissions des valeurs mobilières provinciales.
Firms registered as portfolio managers must meet strict financial reporting, capital and insurance requirements to further protect clients’ investments.
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Gold Investment Management Ltd., a registered portfolio manager, offers exchange traded fund (“ETF”) model portfolios, equity, fixed income and alternative asset management services to individuals, corporations, pension funds, charitable foundations and trusts. Our guiding principles are integrity, discipline and results. Established in 2007, Gold Investment Management currently serves clients in Alberta, British Columbia, Saskatchewan, Manitoba, Ontario and Quebec. Gold Investment Management also serves clients in the United States where we are licensed as a registered investment adviser with the U.S. Securities and Exchange Commission.
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