Monday, August 13, 2007

The little REIT that could

Disclosure: I own Artis REIT

Turbulent markets are as good a time as any to look back on the choices you made in your past, and see how they've held up.

Around this time last year, eager to capitalize on Alberta's red-hot economy and eager to get my first exposure to the REIT space, I took a position in Westfield REIT (now called Artis REIT). The REIT focuses on office, commerical and industrial space in Western Canada, primarily in Alberta.

In the past year, it's been a great little performer for me, up nearly 23% from when I bought it. I know -- one-year returns aren't what long-term investing is all about, but still, considering I've been plowing the distributions back into the REIT as part of their DRIP, it feels good to look back on a call that appears to have panned out for me.

In February, I wrote this post talking about how I was planning on moving over to the REIT ETF (XRE on the TSX) for the long term, just to be a little more diversified. I noted that the ETF had actually outperformed Artis to that point.

Things change. I haven't been payign much attention to the REIT space of late. I sort of assumed it was holding up , if nto steadily increasing, just like Artis has been. But it hasn't. Look at these two stock charts. On the left is the 1-year for XRE. On the right, Artis.

The more-diversified ETF has been on a slide since the spring, while Artis seems to be holding steady.
What am I thinking? Well, I still like Artis in the short term (the "Alberta + real estate = good" story continues) so I have no plans to sell, but XRE seems to be taking an unfair beating. If I wanted to move into the ETF long-term (as I plan to) this correction seems to have given me an entry point. But what with increasing my stake in Biovail last week, I'm a little short of cash at the moment.
We'll see how this plays out. As usual, do your own homework. But I'm curious for what any of the other REIT investors out there are thinking right now.

1 comment:

mariam said...


Definitely XRE is something that I'm looking into. The more beat up the better as here's my chance to diversify since I don't own a house. However, if you are fee conscious, the "experts" say you are better off buying the XRE holdings individually if you have ultra low trade commissions like with Interactive Brokers to save on the MER of 0.55% It only has 13 companies. Personally, I'm just going to buy XRE to save on the headache.