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Every once in a while I check in with the Canadian REITs to see how they are doing. I can’t believe there are about 30 REITs now - it seemed just a while ago that there was hardly a dozen. For a complete list of the REITs that are included in my scan, skip to the bottom of this post.
The first thing I look at is the S&P500/TSX Capped REIT Index:
As you can see, after bottoming in 2000, REITs have been in a sustained bull market. The blue line shows the 40 week moving average and as you’ll note, price rarely spends much time below it. If anything, when price goes below this long term MA, it is to spike lower to flush out the weak hands. Clearly the trend is up. So why fight the trend?
Another metric I look at is the % of REITs above their moving averages. Right now there are 23% above their 10 day MA, 20% above their 50 day MA and 53% above their 200 day MA. To put this into perspective, although it is not the most oversold state they have been in, things are pretty stretched to the downside here.
Here are the individual REITs that have the strongest relative strength:
Interestingly enough, both of these are mini-REITs, coming out of the Vancouver ‘incubator’. Their potential for earnings growth and their small starting base mean that they could be very good investments. The model, obviously, is Calloway REIT which grew astronomically in a few short years. The lesson is to not ignore them just because of their current small size.
The other REITs with high relative strength are all well established ones:
Ideally, we would want to own the strongest REITs (highest relative strength) but there are some interesting technical setups among the weaker ones. For example, Morguard REIT is very close to a round number, long term support level. Anything around $10 and $10.25 would be a solid entry for it. There is a similar scenario in Primaris REIT (appx. $16.50), Public Storage REIT ($20 - but watch out, it is highly illiquid) and Sunrise Senior Living REIT (appx. $10.50).
So those are the ones which jumped out at me. But if you want to take a closer look at all the Canadian REITs yourself, here they are (symbol in brackets):
Alexis Nihon (AN.un)
Allied Properties (AP.un)
Canadian Apartment Properties (CAR.un)
Canadian Hotel Income Properties (HOT.un)
Canadian REIT (REF.un)
Chartwell Seniors Housing (CSH.un)
H&R REIT (HR.un)
IPC US (IUR.un)
Legacy Hotel (LGY.un)
Public Storage (PUB)
Retirement Residences (RRR.un)
Royal Host (RYL.un)
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