Comments on: Fair Value of REITs http://www.canadiancapitalist.com/fair-value-of-reits/ Helping you invest and prosper Sat, 11 Feb 2012 19:27:54 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: marv http://www.canadiancapitalist.com/fair-value-of-reits/#comment-159493 marv Tue, 07 Oct 2008 11:47:22 +0000 http://www.canadiancapitalist.com/2007/11/14/fair-value-of-reits#comment-159493 I bought $ 19000 gold stocks in 1987 they are now worth $ 485ooo. I have not sold. Buy when when they are under valed I think every one should have a little gold. I bought $ 19000 gold stocks in 1987 they are now worth $ 485ooo. I have not sold. Buy when when they are under valed I think every one should have a little gold.

]]> By: James http://www.canadiancapitalist.com/fair-value-of-reits/#comment-154382 James Wed, 10 Sep 2008 00:59:05 +0000 http://www.canadiancapitalist.com/2007/11/14/fair-value-of-reits#comment-154382 Thanks, BTW love your site. I've been one of your regular readers for quite some time. Always great content. James Thanks, BTW love your site. I’ve been one of your regular readers for quite some time. Always great content.

James

]]> By: Canadian Capitalist http://www.canadiancapitalist.com/fair-value-of-reits/#comment-154199 Canadian Capitalist Tue, 09 Sep 2008 02:39:45 +0000 http://www.canadiancapitalist.com/2007/11/14/fair-value-of-reits#comment-154199 James: According to the TD Newcrest report of July 30, 2008, RioCan's NAVPU is estimated at $21.40, roughly what it is trading at right now. James: According to the TD Newcrest report of July 30, 2008, RioCan’s NAVPU is estimated at $21.40, roughly what it is trading at right now.

]]> By: James http://www.canadiancapitalist.com/fair-value-of-reits/#comment-154082 James Mon, 08 Sep 2008 18:03:17 +0000 http://www.canadiancapitalist.com/2007/11/14/fair-value-of-reits#comment-154082 I don't have acces to the TDSI newsletter, do you know what they are quoting the current NAVPU at for rei.un? James I don’t have acces to the TDSI newsletter, do you know what they are quoting the current NAVPU at for rei.un?

James

]]> By: Canadian Capitalist http://www.canadiancapitalist.com/fair-value-of-reits/#comment-153893 Canadian Capitalist Mon, 08 Sep 2008 00:24:56 +0000 http://www.canadiancapitalist.com/2007/11/14/fair-value-of-reits#comment-153893 James: The numbers you are using are the book value of RioCan's properties. The NAVs estimated by analysts are a better reflection of actual market values of the properties. My understanding is that analysts use price per square foot of comparable properties that were sold recently to arrive at a market value of RioCan's properties. James: The numbers you are using are the book value of RioCan’s properties. The NAVs estimated by analysts are a better reflection of actual market values of the properties. My understanding is that analysts use price per square foot of comparable properties that were sold recently to arrive at a market value of RioCan’s properties.

]]> By: James http://www.canadiancapitalist.com/fair-value-of-reits/#comment-153818 James Sun, 07 Sep 2008 14:33:17 +0000 http://www.canadiancapitalist.com/2007/11/14/fair-value-of-reits#comment-153818 I'm having trouble with this NAVPU. I took RIOCAN total Assets - total liabilities = 1798000000 NAV = 1798000000 units outstanding = 220000000 NAV/Units out = $8.1 well below current market??? Is riocan very overpriced or am I calculating wrong? James I’m having trouble with this NAVPU.
I took RIOCAN total Assets – total liabilities = 1798000000
NAV = 1798000000
units outstanding = 220000000
NAV/Units out = $8.1
well below current market???
Is riocan very overpriced or am I calculating wrong?
James

]]> By: Nabloid http://www.canadiancapitalist.com/fair-value-of-reits/#comment-81040 Nabloid Thu, 15 Nov 2007 07:43:46 +0000 http://www.canadiancapitalist.com/2007/11/14/fair-value-of-reits#comment-81040 I think many of these comments show the real reason its hard to invest in REITs... why valuation method is the best to use? The assets may be worth more than the stock trades for, but the company may not be making as much money as it should be... (poorly run?). I do like Income Trusts and REITs will live while the average Income Trust will cease to exist... I've done particularily well with Northern Property a few years ago. It was 100% leased with long term government contracts and its dividend yield was above 10% if I remember correctly. Either way, the dividends continue to flow and the unit price is doubled. I think many of these comments show the real reason its hard to invest in REITs… why valuation method is the best to use? The assets may be worth more than the stock trades for, but the company may not be making as much money as it should be… (poorly run?).

I do like Income Trusts and REITs will live while the average Income Trust will cease to exist… I’ve done particularily well with Northern Property a few years ago. It was 100% leased with long term government contracts and its dividend yield was above 10% if I remember correctly. Either way, the dividends continue to flow and the unit price is doubled.

]]> By: Canadian Capitalist http://www.canadiancapitalist.com/fair-value-of-reits/#comment-80931 Canadian Capitalist Thu, 15 Nov 2007 02:43:40 +0000 http://www.canadiancapitalist.com/2007/11/14/fair-value-of-reits#comment-80931 TMV: The NAV quoted in the analyst report uses current FMV of properties, not the book value but otherwise my understanding of NAV and cap rates is the same as yours. Phil: I understand your point and that could very well be the reason why REITs sometimes trade at significant discounts to NAV (investors are expecting future NAVs to fall). I'm hoping that a 2% spread over the risk-free rate AND a discount to current NAV gives me a reasonable margin of safety. TMV: The NAV quoted in the analyst report uses current FMV of properties, not the book value but otherwise my understanding of NAV and cap rates is the same as yours.

Phil: I understand your point and that could very well be the reason why REITs sometimes trade at significant discounts to NAV (investors are expecting future NAVs to fall). I’m hoping that a 2% spread over the risk-free rate AND a discount to current NAV gives me a reasonable margin of safety.

]]> By: thickenmywallet http://www.canadiancapitalist.com/fair-value-of-reits/#comment-80897 thickenmywallet Thu, 15 Nov 2007 01:20:20 +0000 http://www.canadiancapitalist.com/2007/11/14/fair-value-of-reits#comment-80897 I am not an accountant but bad tenants/uncollected rent would probably go towards reducing the capitalization rate of that particular property and the REIT's ability to continue its distribution. NAV is measured traditionally by the book value of assets minus liabilities which is not affected directly by the capitalization rate (which would affect the market value of the asset) and is more of a measure of the share price in the REIT context. Both are equally important but probably for different reasons. I am not an accountant but bad tenants/uncollected rent would probably go towards reducing the capitalization rate of that particular property and the REIT’s ability to continue its distribution. NAV is measured traditionally by the book value of assets minus liabilities which is not affected directly by the capitalization rate (which would affect the market value of the asset) and is more of a measure of the share price in the REIT context.

Both are equally important but probably for different reasons.

]]> By: Phil S http://www.canadiancapitalist.com/fair-value-of-reits/#comment-80826 Phil S Wed, 14 Nov 2007 22:21:53 +0000 http://www.canadiancapitalist.com/2007/11/14/fair-value-of-reits#comment-80826 Keep in mind that shares of a real estate company is not the same as owning real estate, like your house. A REIT is still a business like every other business and it is concerned about cash flow. If they have empty properties, it's not generating revenues which means that the mortgage owing is not getting paid down (not keeping up with the amortization) and hence the debt side goes up and the net asset value goes down. Would you rather invest in a REIT that has 10 million square feet of space that is rented out, or 10 million square feet of vacant space? If the REIT holds, for example, 100,000 sq ft of industrial space in suburban Winnipeg, would it really be that easy to kick out the renter and find another business to occupy that space? Keep in mind that shares of a real estate company is not the same as owning real estate, like your house. A REIT is still a business like every other business and it is concerned about cash flow. If they have empty properties, it’s not generating revenues which means that the mortgage owing is not getting paid down (not keeping up with the amortization) and hence the debt side goes up and the net asset value goes down. Would you rather invest in a REIT that has 10 million square feet of space that is rented out, or 10 million square feet of vacant space? If the REIT holds, for example, 100,000 sq ft of industrial space in suburban Winnipeg, would it really be that easy to kick out the renter and find another business to occupy that space?

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