The Real Estate Investment Trust (REIT) space is one which has whipsawed in recent weeks as investors digest the potential impact of stimulus in relation to the ultimate impact the coronavirus could have on the global consumer.
In this context, it’s hard to gauge exactly what may lie ahead for REITs. On one hand, low interest rates make for attractive financing terms and generally lead to higher property valuations.
But on the other hand, if tenants (be they residential renters, commercial/industrial tenants, or retail storefronts) can’t pay their bills, the economics of the entire REIT sector could be in trouble, from a revenue standpoint.
That said, investors who believe this pain we are all feeling will indeed be temporary ought to consider specific companies in this environment. I’ve been advocating for a "rifle" stock-picking strategy vs a "shotgun" fund ownership strategy for the past while, and I think such a strategy is more important now than ever.
Using my "investment rifle", one REIT I really like in this environment is the European Commercial Rental REIT (TSX:ERE.UN), a Canadian-run REIT with European exposure, particularly in the commercial real-estate sector.
This trust’s European exposure has resulted in a massive plunge in this stock, and I would encourage patience for the next few months as the dust settles on just how bad this global recession is expected to be. This is a stock I’m definitely keeping on my watch list and will revisit later this year.
Invest wisely, my friends.
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