Chief investment officer on REIT outlook

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One chief investment officer says the Bank of Canada’s shift from interest rate hikes to cuts continues to be a driving factor in the real estate sector.

Dennis Mitchell, CEO and chief investment officer at Starlight Capital, joins BNN Bloomberg to share his outlook for REITs amid lower rates.

“The forecast this year is to cut another four times this year and another four times the year after,” Mitchell said. “And there’s potential for more cuts this year. So when we look at our fund, since the Bank of Canada started the rate cut cycle in May, the fund has outperformed the benchmarks significantly.”

“If you look at Canadian equities, U.S. equities or global equities, they are flat to slightly down over that same time period.”“Sector leadership is rotating away from the Magnificent Seven, if you will, those big seven tech stocks, towards things that are more interest rate sensitive, like utilities, and like REITs. Our fund is benefitting disproportionately from that.”

“In the short term, you might have people crowding into things that have been disproportionately beat up, regardless of their balance sheet or their payout ratio. You might get a short term pop out of that and be able to brag to your neighbour over the back fence as you’re grilling on your BBQ,” he said.

 

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