Undervalued?
I'm looking at Riocan which is the largest REIT in Canada and its focus is on the retail sector. Over the last 5 and even 10 years it's stock price has barely budged, an investors returns would be mostly limited to dividends received. To me, this doesn't jive with what I've observed in the 'real' world. In that time frame Canada LT bonds have declined significantly (in the last 5 years, roughly from 3% to sub 1%). In private markets cap rates have compressed in parallel if not more so than the decline Gov't of Canada Yields. I don't understand how NAV would not have increased more dramatically during this period simply through cap rate compression. Any thoughts?
[{"id": "cykvy4n", "text": "Cap rate compression only affects assets at sale. If the REIT is not selling any of their assets, their rents have stayed flat, and retail sales have stayed consistent (affects percentage rent) their cash flow would remain flat. Retail outlook hasn't been all that great, with most retailers struggling. Just a thought though. ", "replies": [{"id": "d1zcdy3", "text": "Kinda late but FYI cap rate compression does not only affect assets at sale. As well, seeing as how Riocan is bought and sold everyday on the TSX it basically is for sale every day. ", "replies": [], "depth": 2}], "depth": 1}]