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SmartCentres Real Estate Investment Trust (SRU.UN)
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Killam Apartment Real Estate Investment Trust (KMP.UN)
Q: Please comment on 5 year total return potential for kmp.un and sru.un . Thank you.
5i Research Answer:
REITS, due to their structure, pay out most cash flow as distributions, and this leaves less capital for growth. Few REITs have really high growth. Lower interest rates and occupancy gains, and acquisitions though can still result in earnings improvements and unit price gains. KMP is up 87% over ten years. SRU.UN is down 10%. SRU is cheaper on valuation, but its retail exposure turns investors off. KMP is residential and more stable. KMP has a lower yield because of this. We would prefer KMP today and would expect slow stable growth. SRU may still lag, but we would expect better performance than from the last 10 years.