Private REITs Backfire On Investors Again

The best year on record for Canadian publicly-traded real estate just keeps getting better, driven by an insatiable demand from investors for a decent return. The capital markets had raised a total of $8.208-billion in announced deals as of Thursday , including $5-billion in equity, according to CIBC World Markets Inc. That total dollar amount smashed through the $6.255-billion raised in 2011 which was a record.

The old adage that opportunity arises from adversity seems apt for the evolution of real estate investment trusts (REITs) in Canada. Marking a 20-year milestone this month, the collective real estate ownership investments have evolved into a market with at least 37 TSX-listed trusts, a market capitalization worth at least $72-billion, and assets worth more than $100-billion. Despite a recent dramatic pullback, portents of the demise of this roaring sector are premature.

Brad Case submits:The National Association of Real Estate Investment Trusts (NAREIT, my employer) just came out with a great new tool that investors or investment consultants can use to evaluate how to construct a better real estate portfolio. It's intended to help institutional investors--pension funds, endowments, foundations, and the like--to improve the returns and reduce the risk of their real estate portfolios.

Brian Rezny submits: This past week marked the one year anniversary of last year’s market low. Since that dismal day, the stock markets have staged a rebound (at least for now). So, too, has the market for REITs. That’s great news, right? It would be great news… if it were justified by market fundamentals.

Look for more real estate investment trusts in 2013 which could drive demand for commercial property, says a new report. CB Richard Ellis Canada maintains REITs, along with renewed interest from pension funds and foreign buyers, will boost the investment market which saw $25.8-billion in property change hands in 2012 — down from $28.6-billion in 2011 but still high by historical standards.

AllAboutAlpha.com submits:Real estate is the type of investment you never forget. You may be stuck with a speculative property in foreclosure, or you may have struck gold at the corner of Mink Mile and Bourse Boulevard. Perhaps you’ve discovered, in the real estate jungle, a resilient money tree. For good or ill, real estate investments stick with you.

By Tom Lydon: An exchange traded fund tracking real estate stocks in China and Hong Kong fell 3% on Wednesday and recorded a new 52-week low. The ETF’s roughly 20% loss so far this year is a sign China’s property bubble is bursting. ETF Spotlight on Guggenheim China Real Estate ETF (TAO), part of an ongoing series. Assets: $27 million.

Brad Case submits:I posted an article on November 7 noting that a private real estate investment fund had lost essentially all of its investors’ money and predicting more such announcements over the next few years. Truly, we haven’t seen most of the bad news about commercial real estate defaults and distressed sales. Still, I emphasized, bad news for private real estate investor