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Gold/Mining/Energy : Canadian REITS, Trusts & Dividend Stocks

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To: Cogito Ergo Sum who wrote (1397)	9/10/2001 1:04:49 PM
From: Goldberry	Read Replies (1) of 11633

The point is one(O & G Trusts) is a depleting resource (oil or gas) and the other (RE trusts) are (land, bricks and mortar). Granted some of the OGT's like the oil sands have a very long lifetime while many are quite short. When an OGT needs to replenish its reserves it usually buys the assets issuing more shares causing dilution, some the good ones with savvy leadership did this when the price was very low while others have done so recently and paid prices that should Oil and gas price down to lower levels over the next several years will either have to shut in production on some of the recent purchases or sell at a loss. Real estate on the other hand generally requires maintenance only and because the asset is leased out over 5-10-20 year terms on a net net basis provide a stable known return and other than expansion growth requires no further purchases. Both trusts have a place in the portfolio's of those seeking income. One should however be aware of the associated risks of each. My personal belief is that over the longer term real estate trusts will provide better returns. Most OGT's are IMO fully or over valued at present whereas REITs are generally undervalued with many of the properties held having potential to release the hidden value. For example many who follow REITs may have seen the recent announcement by Riocan (REI.UN) www2.cdn-news.com indicating that they had sold a 20% interest in 4 properties which they had acquired in recent years at a substantial premium to cost. I believe more of this will occur by the REITs to bring out the hidden values and if they don't the smaller ones ie: Summit (SMU.UN) and Morguard (MRT.UN) will be subject to takeover by major Canadian pension funds which are hungry to acquire real estate properties. My references are to Canadian REITS as I have not followed the U.S REITS and am unable to satisfy myself on the values within them.

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