Canadian Real Estate has delivered a +5.4% ytd total return (XRE a/o 11/09). US REITs are +11.6%, and the CAD is -2.8% vs USD. US REITs have benefitted from Lodging, Healthcare, and Data Centers, sectors that are underrepresented in in Canada. This report updates valuations and has brief comments on companies with recent news.
Bursting of the AI mania and a US move towards fiscal consolidation (more likely under divided government) could lead to lower US interest rates, a weaker USD, and a rebound in real estate values and transaction volumes.
Topics:
H&R Unitholder Meeting 11/13
Valuation Comparison ($)
Quick Takes ($) CAPREIT, Dream Industrial, Dream Office, Granite, Nexus, Riocan, and Smartcentres
H&R Unitholder Meeting 11/13
Save the date, and your control number (LINK)
The GO/CRAL deal has about as much support as chlamydia and Donald Trump. I expect overwhelming rejection on Friday. Unanimous support from the existing trustees for the CO/CRAL deal makes it essential for new leadership to protect the interests of unitholders. That might occur immediately after the meeting, over the weekend, or might require a proxy fight at the 2027 Annual Meeting. The unit price for the rest of the year will depend on investor confidence in these potential outcomes:
No direction - in the absence of any asset sales and management changes H&R could drop back towards $9.
Lantower REIT with Office and Development assets segregated as “non-Core” could be worth over $11.
Lantower REIT with a Sunbelt market recovery could be worth $13 by YE27.
US multifamily REIT 3Q26 results have shown cautious optimism about a Sunbelt recovery. Demand remains strong and supply is being absorbed. Higher interest rates raise financing costs for the REITs, depress the transaction market and raise market cap rates, but also support tenant demand because renting is more affordable than homebuying. In the past week housing and REITs have traded as beneficiaries of sudden caution about AI themes.
It’s encouraging to see unitholders with experience in investor activism stepping up to offer some direction for H&R:
Mill Pond Capital demanded replacement of four existing trustees with independent nominees acceptable to the current board and Mill Pond.
Sandpiper Group retained legal counsel and a proxy advisor in connection with its opposition to the GO/CRAL deal.
They don’t have a stake large enough to impose their preferences, but I believe unitholders should welcome their involvement.
H&R’s website shows a 3Q26 conference call scheduled for 11/17 even though the usual quarterly press release announcement was not distributed.