Comments on: Time to buy REITs?

By: Canadian Capitalist

Canadian Capitalist — Wed, 12 Jan 2011 16:05:18 +0000

@Jazz, @DivsRgood: Generally speaking, it is better to hold income producing assets in tax-deferred accounts such as RRSPs and TFSAs. If you don’t have contribution room then taxable accounts are an okay place to hold REITs because the bulk of the distributions are in the form of tax-advantaged return of capital or capital gains.

I’m a passive investor and the asset allocation dictates how much should be in REITs. For what it’s worth, I think REITs are fairly valued right now. They offer a healthy premium over bonds and trade at a slight premium to analyst NAV estimates. But you should keep in mind that this is just guesswork and involves a number of variables that are constantly changing.

By: DivsRgood

DivsRgood — Wed, 12 Jan 2011 13:21:05 +0000

I had the same question as Jazz. What are the tax implications / considerations for holding the iShares real estate investment trust (REIT) exchange traded fund XRE? Does XRE receive favourable income tax consideration in Canada? Or, is it better to hold the XRE ETF in a non-taxable account (RRSP or TFSA)?

By: Jazz

Jazz — Sun, 09 Jan 2011 19:48:15 +0000

Could I get an update on whether or not reits are a good investment as of Jan 2011. What do you think of IYR a US reit? Thanks.

By: Jazz

Jazz — Sun, 09 Jan 2011 19:46:09 +0000

Would it be better to hold a reit inside or outside an RRSP as far as tax implications are concerned?

By: Canadian Capitalist

Canadian Capitalist — Tue, 01 Sep 2009 15:49:06 +0000

@PC: I think REITs are reasonably valued now. I use RioCan as a proxy for the sector. RioCan yields 8.2% now, a healthy spread over bonds though some of it is in the form of Return of Capital. RioCan has bounced sharply off the lows, the yields were even better a few months back. However, compared to where REITs were trading prior to 2008 or even when I wrote that post, the values seem a lot better now.

By: PC

PC — Tue, 01 Sep 2009 02:06:06 +0000

CC,

Government 10-year bond is at 3.4% right now. Let’s be conservative and assume this year’s XRE cash distribution only reach 60 cents whole year. That would be roughly a 5.7% yield. Still higher than bond.

Would it be even a better time to buy XRE now?

By: Mazzawi

Mazzawi — Tue, 19 May 2009 23:24:46 +0000

Phil S,

if you like leverage and making money off the spread then consider XRE it gives you more margin that reits

the canadian reits trading above 3$ a share are margined at 50%

XRE bieng an ETF gives 70% margin,, ie you only need to put up 30% of the price.

so you get even more leverage.

if you brokerage account charges 3% and XRE yields 10%

then you margin it you end up with 27% yield instead of the 7% spread

but you know margin works both ways.

By: Connecting News, Commentaries and Blogs at NineReports.com -

Connecting News, Commentaries and Blogs at NineReports.com - — Wed, 30 Jan 2008 18:06:34 +0000

[...] is an … millionaire now! – Last Updated – Sunday January 27 Request a Trackback Time to buy REITs? Not too long ago, investors couldn’t get enough of Real Estate Investment Trusts (REITs) [...]

By: Steve

Steve — Wed, 23 Jan 2008 16:07:19 +0000

So perhaps the bank representative was wrong when she told me that the interest rate I was borrowing at would not change? I was finding it a little too good to be true.

By: Steve

Steve — Wed, 23 Jan 2008 16:05:51 +0000

That was a typo. I meant COC (cost of capital).