When I write about investment ideas, I do not aim to make heroic calls.
In that light, one sector that doesn't require a heroic call to yield satisfactory risk-adjusted returns at current prices (in my opinion) are Canadian REITs. Unit prices have come down across the board and debt remains cheap. Meanwhile going-in capitalization rates on real estate deals in Canada are compressing, such that implied cap rates on Canadian REITs unit prices relative to net operating income are higher than transacting for real estate directly. Therefore, one theme I expect to play out in 2014 is significant M&A activity in the Canadian REIT sector as these players attempt to buy underlying real estate at higher implied cap rates through...
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