By Ian Ardill
REITs—real estate investment trusts—are some of my favourite investment assets. And I believe there are some buying opportunities right now because there has been downward pressure on these assets’ prices.
A REIT is a company that finances or owns income-producing properties, such as apartments, houses or condominiums. Because interest rates have risen significantly over the past couple of years, so has the cost of capital, meaning that assets cost REIT owners more to carry, pushing down their profit margins. Thus, many REITs have seen a writedown in the value of their assets—even if they have had positive yields.
We have also been seeing this phenomenon in the private equity space. As interest rates and thus capitalization rates have increased, businesses have been selling at lower multiples than they were just a few years ago, because the cost to the buyer (cost of capital) is higher.
Lower prices present opportunities for our clients, and signs are pointing toward interest rates coming down—meaning valuations will go up, meaning we believe that now is a great time to buy.
I hear you. The emotional part of your brain might be saying, “I am going to sit on the sidelines. My money is safer in my bank account.” However, the more analytical mind would say that there are some positive buying opportunities now, that may not be here in six to 12 months.
Let’s discuss your investments. I will work with you to determine your investment goals, timeline, knowledge and experience to determine Just the right match for your money.
Ian Ardill, B.A., M.T.S.
Private Wealth Advisor
CEO, Ardill Group
Direct: 1 905 717 5698
Office: 1 905 907 7000
ian@ardillgroup.com
