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To: Johnny Canuck who wrote (49132)	1/29/2013 8:34:28 PM
From: Johnny Canuck	Read Replies (1) \| Respond to of 70330

Apartment REITs a good bet for investors Garry Marr \| Jan 22, 2013 11:43 AM ET More from Garry Marr \| @DustyWallet It’s time for real estate investors to load up on apartment operators and owners if they want to hedge against a rising rate environment, says Mario Saric, an analyst with Scotia Capital. “We recommend [Real Estate Investment Trust] investors concerned about rising rates overweight apartment REITs,” said the analyst in a note to clients. Mr. Saric said in place occupancies in the apartment sector should drive 2% to 5% growth in year over year rent which will act as a hedge against inflation. He says apartment REITs will return above average adjusted fund from operations per unit and net operating income growth in 2013. His recommendation is that REIT investors be overweight on the apartment sector which now only makes up about 15% of the S&P/TSX REIT index. However, Mr. Saric does advise some caution because low capitalization rates in the apartment sector provide a difficult environment for the REITs to make accretive acquisitions. REITs may also face competition to buy from pension funds. There is also the chance that Canada Mortgage and Housing Corp. may be privatized. The Financial Post first reported in 2012 that Finance Minister Jim Flaherty was considering that possibility. Privatization could raise REIT borrowing costs but Mr. Saric noted a final decision may be years away. “We believe apartment REITs provide shelter against two of the larger risks facing the sector (rates and housing market), although we don’t see many bargains out there,” said Mr. Saric, who has Killam Properties as his top pick in the apartment sector.