With Canadian Tire Corp planning to create a $3.5B REIT later this year(the company has one of the largest CRE portfolios in the country), look for other big retailers to follow suit, according to analysts. The REIT conversion is absolutely a trend right now within the Canadian retail space, says Edward Jones equity analyst Bobby Hagedorn. Bobby adds REITs allow retailers to get a better read on the value of the real estate they own, which they felt was not being accurately reflected in their stock prices. (The wheel was an important discovery, but don't forget about shelter.)
Loblaws plans to complete its REIT IPO in July. Not a ton of news there--we're waiting for a prospectus to be filed. Bobby says the other thing about these REITs: Retailers can use the REIT as a long-term source of capital to fund further growth in their operations, make acquisitions, or return cash to shareholders. And who knows? In the case of Loblaws, maybe it'll knock down food prices a little bit.
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