Pro Picks: 3 Real Estate Stocks on Sale
Three real estate stocks trading at big discounts from Dean Orrico of Middlefield
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Pro Picks from Dean Orrico of Middlefield
1. Canadian Apartment REIT (CAR.UN)
• What it is: The largest apartment REIT in Canada, focused on rental housing. It has been restructuring its portfolio by selling older assets and acquiring newer, non-rent-controlled properties.
• Why it can move higher: The stock is trading at a 15-20% discount to its net asset value, despite historically trading at a 5-10% premium. As rental turnover increases, cash flow should improve.
• Upside potential: Orrico sees at least 25% upside, with the stock potentially reaching $60-$65 per unit, up from the current high $30s to low $40s.
2. Granite REIT (GRT.UN)
• What it is: An industrial and logistics REIT, originally tied to Magna but now significantly diversified across North America and Europe.
• Why it can move higher: It has faced pressure from an oversupply of new developments, but supply is now rolling over, and leasing activity is picking up. With a strong management team, it remains a top-tier industrial REIT.
• Upside potential: Currently trading in the high $60s, Orrico believes it could reach $80-$90 over time, offering compelling value at current levels.
3. RioCan REIT (REI.UN)
• What it does: Canada’s largest retail REIT, primarily focused on grocery-anchored shopping centers rather than enclosed malls.
• Why it can move higher: Retail real estate supply is limited, while demand from major tenants like Loblaws and Metro is increasing. Recent strong earnings have helped investor sentiment.
• Catalysts:
• Successful condo sales: 98% of its pre-sold condos have closed despite concerns over rising interest rates.
• Hidden value in RioCan Living: Its residential division could eventually be spun off or monetized.
• Rebounding investor sentiment: A return to historical valuation multiples could drive further gains.
• Upside potential: Trading around $20 per unit, Orrico believes it could reach $25 in 2025 as it returns to historical valuation levels.
On the next episode of In the Money with Amber Kanwar: Paul Harris of Harris Douglas talking about North American large caps. E-mail questions@inthemoneypod.com and you could be featured on the show!
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