The Real Estate Investment Trust (REIT) space is one which has been clobbered amid a broad market selloff related to the COVID-19 pandemic.
There are concerns about how the virus has hampered economic activity, which, in turn, could impact the ability of counterparties to pay rents over the medium-term.
With this backdrop in mind, it may not seem like the right time to think about owning something like a Riocan REIT (TSX:REI.UN).
But here’s why now may be an excellent time to consider such an investment, particularly for those with a long-term investing time horizon (say, a decade or more).
Riocan operates in the commercial real estate niche. This sector is likely to see very negative performance in the near term due to the aforementioned headwinds I pointed out earlier.
But, this is also a sector which is likely to respond in a very positive way when economic activity does resume its growth pattern.
We would expect this to happen as we eventually come out of the global recession (which it appears we are now entering).
The key question I think all investors need to ask, whether it be with a REIT like Riocan, or any investment for that matter, is if enough (or potentially too much) risk baked into its stock price at this point in time.
If you’ve got a long enough time horizon, and can see out the other side of this mess, companies like Riocan do look attractive at these levels, and may get more attractive from here.
Invest wisely, my friends.
