{"id":1076,"date":"2020-04-18T11:41:50","date_gmt":"2020-04-18T17:41:50","guid":{"rendered":"https:\/\/gold-im.com\/?p=1076"},"modified":"2021-01-27T21:02:51","modified_gmt":"2021-01-28T04:02:51","slug":"real-estate-musings","status":"publish","type":"post","link":"https:\/\/gold-im.com\/fr\/real-estate-musings\/","title":{"rendered":"Real Estate Musings"},"content":{"rendered":"<div  class=\"tatsu-gdyfjwx8ff3pv3ek tatsu-section    tatsu-clearfix\" data-title=\"\"  data-headerscheme=\"background--dark\"><div class='tatsu-section-pad clearfix' data-padding='{\"d\":\"15px 0px 15px 0px\"}' data-padding-top='15px'><div class=\"tatsu-row-wrap  tatsu-wrap tatsu-row-one-col tatsu-row-has-one-cols tatsu-medium-gutter tatsu-reg-cols  tatsu-clearfix tatsu-gdyfjwx8o7fypiry\" ><div  class=\"tatsu-row\" ><div  class=\"tatsu-column  tatsu-column-no-bg tatsu-one-col tatsu-column-image-none tatsu-column-effect-none  tatsu-gdyfjwx8w552llnd\"  data-parallax-speed=\"0\" style=\"\"><div class=\"tatsu-column-inner\" ><div class=\"tatsu-column-pad-wrap\"><div class=\"tatsu-column-pad\" ><div  class=\"tatsu-module tatsu-text-block-wrap tatsu-gdyfjwx9478ngwu8\"><div class=\"tatsu-text-inner tatsu-align-center  clearfix\" ><style>.tatsu-gdyfjwx9478ngwu8.tatsu-text-block-wrap .tatsu-text-inner{width: 100%;text-align: left;}<\/style>\n<p style=\"text-align: left;\"><strong>Real Estate Musings<\/strong><\/p>\n<p style=\"text-align: left;\"><u>Part 1 \u2013 Near-Term \u201cHeadline\u201d Risk<\/u><\/p>\n<p style=\"text-align: left;\">Let\u2019s deal with the current issues first.&nbsp; The companies we like cover a wide spectrum of industries, including grocery stores, essential services, industrial properties (including logistics), technology, apartments and offices.&nbsp; People still need to get food, go to Canadian Tire and live in an apartment. &nbsp;Offices still need to have a physical presence.&nbsp; We have positioned our clients with exposure to industrial\/logistics properties, which are smoking hot right now \u2013 Amazon doesn\u2019t own its real estate, but it needs to lease a property with proper logistics to deliver all that stuff it sells.&nbsp; We also invest in REITs that are really <em>incognito<\/em> technology companies such as Data Centres.&nbsp; All the data from online usage needs to be stored somewhere; Telus, Rogers, <em>et al<\/em> do not own all their own web storage facilities, they now have to lease it from you.<\/p>\n<p style=\"text-align: left;\">Anecdotally, industry analysts are reporting rent payments in the &gt;90% range for the companies we own, which is better than the headline news the media seems to be suggesting.&nbsp; Typically, they get &gt;98% collection rate on rents through an economic cycle.&nbsp; Yesterday the federal government announced a rescue package for small business owners facing&nbsp;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.&nbsp; The Province of BC has announced a $300\/month subsidy for people renting.&nbsp; Governments at provincial and federal levels are taking firm action to allow families and businesses to pay rent.&nbsp;<\/p>\n<p style=\"text-align: left;\"><u>Part 2 \u2013 Investments vs. the Economy<\/u><\/p>\n<p style=\"text-align: left;\">At risk of making a motherhood statement, there is a difference between a <em><strong>good company<\/strong><\/em> and a <em><strong>good stock<\/strong><\/em>.&nbsp; Because REITs are highly liquid, they were brought down quickly in the panic selling in late March.&nbsp; All companies, good and bad, were taken down in equal measure.&nbsp; The REITs fell by 50% in price.&nbsp; Even if we were to discount all the bad news in the share price and more, REITs are an incredible bargain right now.&nbsp; Best of all we can own good companies <em>et <\/em>good stocks at the same time which is nirvana for us.<\/p>\n<p style=\"text-align: left;\">Incidentally we don\u2019t think Warren Buffett is a value investor.&nbsp; <em>He is really an investor who waits to buy when he can get a good company and a good stock at the same time.<\/em>&nbsp; This is exactly what we\u2019ve also done for our clients.&nbsp;<\/p>\n<p style=\"text-align: left;\">Finally, we are happy to report that some REITs have snapped back more quickly than the broad market.&nbsp; For example, Data Centre REITs are higher today than they were before March 2020.&nbsp;<\/p>\n<p style=\"text-align: left;\"><u>Part 3 \u2013 Non-Tangible Considerations<\/u><\/p>\n<p style=\"text-align: left;\">All management teams of REITs lived through the crisis of 2008-09, at least for the companies we are interested in.&nbsp; None of them want to repeat that experience and they\u2019ve spent the past 10 years cleaning up their balance sheets.&nbsp; They\u2019ve 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\u2019t easily cut and run.&nbsp; These REITs issued equity whenever their share prices popped (dilutive to shareholders but prudent in hindsight).&nbsp; These companies are all in a position of incredible strength to take advantage of weaker private or public players who are forced sellers.&nbsp;<\/p>\n<p style=\"text-align: left;\">There has been a shift to tele-commuting, but it has been going on for the past 40 years.&nbsp; There is currently a worry in the industry about retail (mall) properties falling in value.&nbsp; REIT managers are aware of these shifts.&nbsp; They have been selling off lower grade retail locations and high grading their remaining properties.&nbsp; They\u2019ve 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.&nbsp; They make sure these types of value-adds include grocery, recreational, walking\/living spaces and access to public transit.<\/p>\n<p style=\"text-align: left;\"><strong><u>Conclusion: There is a 50% off sale in some high-quality REITs.&nbsp; Buy.<\/u><\/strong><\/p>\n<p style=\"text-align: left;\">Please <a href=\"https:\/\/gold-im.com\/contact\/\" target=\"_blank\" rel=\"noopener noreferrer\">contact<\/a> GIM today to learn more about our REIT Portfolios.<\/p>\n<p style=\"text-align: left;\"><em>Sources: Scotiabank and NBCFM Research<\/em><\/p>\n<p style=\"text-align: left;\"><em>Disclaimer: GIM staff, clients, immediate family and relatives own REITs directly and indirectly.<\/em><\/p>\n<\/div><\/div><\/div><\/div><div class = \"tatsu-column-bg-image-wrap\"><div class = \"tatsu-column-bg-image\" ><\/div><\/div><\/div><style>.tatsu-row > .tatsu-gdyfjwx8w552llnd.tatsu-column{width: 100%;}.tatsu-gdyfjwx8w552llnd.tatsu-column > .tatsu-column-inner > .tatsu-column-overlay{mix-blend-mode: none;}.tatsu-gdyfjwx8w552llnd > .tatsu-column-inner > .tatsu-top-divider{z-index: 9999;}.tatsu-gdyfjwx8w552llnd > .tatsu-column-inner > .tatsu-bottom-divider{z-index: 9999;}.tatsu-gdyfjwx8w552llnd > .tatsu-column-inner > .tatsu-left-divider{z-index: 9999;}.tatsu-gdyfjwx8w552llnd > .tatsu-column-inner > .tatsu-right-divider{z-index: 9999;}<\/style><\/div><\/div><\/div><\/div><div class=\"tatsu-section-background-wrap\"><div class = \"tatsu-section-background\" ><\/div><\/div><style>.tatsu-gdyfjwx8ff3pv3ek .tatsu-section-pad{padding: 15px 0px 15px 0px;}.tatsu-gdyfjwx8ff3pv3ek > .tatsu-bottom-divider{z-index: 9999;}.tatsu-gdyfjwx8ff3pv3ek > .tatsu-top-divider{z-index: 9999;}<\/style><\/div>","protected":false},"excerpt":{"rendered":"<p><a href=\"https:\/\/gold-im.com\/fr\/real-estate-musings\/\" class=\"more-link style1-button\">Read More<\/a><\/p>","protected":false},"author":1,"featured_media":1328,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[18,7,19,8,14,10,17],"class_list":["post-1076","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","tag-dividends","tag-gim","tag-gold-investment-management","tag-investment-education","tag-investment-management","tag-investment-news","tag-reits"],"_links":{"self":[{"href":"https:\/\/gold-im.com\/fr\/wp-json\/wp\/v2\/posts\/1076","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/gold-im.com\/fr\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/gold-im.com\/fr\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/gold-im.com\/fr\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/gold-im.com\/fr\/wp-json\/wp\/v2\/comments?post=1076"}],"version-history":[{"count":1,"href":"https:\/\/gold-im.com\/fr\/wp-json\/wp\/v2\/posts\/1076\/revisions"}],"predecessor-version":[{"id":1762,"href":"https:\/\/gold-im.com\/fr\/wp-json\/wp\/v2\/posts\/1076\/revisions\/1762"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/gold-im.com\/fr\/wp-json\/wp\/v2\/media\/1328"}],"wp:attachment":[{"href":"https:\/\/gold-im.com\/fr\/wp-json\/wp\/v2\/media?parent=1076"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/gold-im.com\/fr\/wp-json\/wp\/v2\/categories?post=1076"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/gold-im.com\/fr\/wp-json\/wp\/v2\/tags?post=1076"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}