Time to get a little picky on REITs?

reitThe threat of rising interest rates slammed the real estate investment trust sector in 2013.

For 2014, with that threat still there, it may be time to get selective when it comes to your REIT picks because double-digit returns are going to become more difficult to achieve.

“We believe the Canadian REITs are at the end of a 20-year era of exceptional returns driven by declining interest rates,” said Alex Avery, an analyst with CIBC World Markets, in a note to investors.

The Bloomberg Canadian REIT Index delivered a total return of negative 5.6% in 2013, with values down 10.8% over the year — the saving grave for investors being the distribution.  Read More…

This article has 8 Comments

  1. Landan Gulick

    This is why last week i decided to sell most of my reit portfolio and put it more towards non-interest bearing stocks (more blue chips). I feel rates will rise shortly and bonds/reits will not be safe. I could be very well wrong seeing as how i was chicken little for the last 3 years ont he booming real estate market and i missed a lot of opportunities but hey i am always a bit cautious when dealing with securty instruments. YMMV!

  2. Armand B

    So is anyone here still thinking it is a buy and will still perform well in 2014? I am not sure and i've been at this game for more than 5 years.

  3. Rishi H.

    So why are interest rates tied with how these and bonds react? I don't see the relation.

  4. Wesley G

    The simple answer is to not bail on REIT but simply diversify your holdings in a balanced way. Couch Potato does a good job for us Canadians in showing how much % you should be putting towards that side of things.

    If you get greedy and chase rates based on past performance you are doomed already. Do your research!

  5. Tavaris Schaller

    Can someone explain to me in more detail how reit and real-estate market work. So as i understand they are like mutual funds but they invest in companies who deal in real-estate market? Would this mean one invests in them if they want to get a piece of rental income (underlying property) or something?

  6. Kori Le Doyt

    If you plan on buying and holding for the long-term then this constant worry is not important. The people who worry about th inevitable (people, interest rates will rise!) will sell too quick. Just buy it and move on to greener pasteurs. If you look historically reits have done quite well. I personally hold CDZ which makes a strong effort to find businesses that have made consistent distributions over years.

  7. Darryl

    I still only invest 10% of my holdings into reits. It's way too unpredictable to me despite the claims of it being great for 20+ years.

  8. Zakary Kolb

    Hog wash! I see the trend of REITs still outperforming the indexes for 2014 and at least well into 2015. The economy although still doing relatively well compared to the US is still not out of the red and so i doubt bank of canada will foolishly raise interest rates causing reit's to plummet. Mark my words!

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