The federal government’s new tax on income trust distributions comes into effect just under seven months from now, on January 1, 2011.

This new tax will put trusts on an equal tax footing with regular corporations. Many trusts have already converted to corporations in response, or plan to do so later in 2010 or in 2011. Others will continue to …read more »

A couple of our Successful Investor Wealth Management clients asked us about a Canadian real estate investing subject that can be sensitive for investors who are at or nearing retirement — when to sell the family home.

The clients, a married couple, are both 59 and plan to begin collecting Canada Pension next year, at age 60. They recently sold …read more »

Even though today’s house prices are high, mortgage interest costs are near historic lows. And owning your own home has a number of advantages.

For example, owning your house is a great tax shelter. That’s because gains on your principal residence are exempt from capital-gains taxes. However, this tax benefit only applies to your principal residence. You must still pay …read more »

Most real estate investment trusts (REITs), including our recommendations, are exempt from Ottawa’s income-trust tax, which comes into effect on January 1, 2011. As a result, these REITs should attract investor interest this year, as many income trusts convert to corporations and cut their distributions.

Even so, we advise against overindulging in REITs. But if you stick with REITs that have …read more »

Many Canadian firms have tried to expand into the U.S. over the years. Some, like Tim Hortons (symbol THI on Toronto), have had difficulty in the United States. Other companies’ expansion efforts have failed miserably.

Canadian Tire (symbol CTC.A on Toronto) provides a memorable example of a failed U.S. expansion. In 1982, the retailer bought a chain of Whites automotive-retail …read more »

RIOCAN REAL ESTATE INVESTMENT TRUST $18 (Toronto symbol REI.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Units outstanding: 242.3 million; Market cap: $4.4 billion; Price-to-sales ratio: 5.5; Dividend yield: 7.7%; SI Rating: Average) has mainly focused on outdoor shopping malls in Canada since it became a real estate investment trust in 1993.

RioCan recently announced its first investment in the U.S. …read more »

PRIMARIS RETAIL REAL ESTATE INVESTMENT TRUST $17.47 (Toronto symbol PMZ.UN; Units outstanding: 62.5 million; Market cap: $1.1 billion; SI Rating: Extra Risk; Dividend yield: 7.0%) owns large malls in medium-sized Canadian cities. It also owns major shopping centres in suburbs of large cities. In all, the trust owns 26 properties that contain 9.3 million square feet of leasable area.

Primaris has …read more »

ALLIED PROPERTIES REAL ESTATE INVESTMENT TRUST $19.55 (Toronto symbol AP.UN; Units outstanding: 39.0 million; Market cap: $763.3 million; SI Rating: Extra Risk; Dividend yield: 6.8%) owns office buildings in Toronto, Montreal, Quebec City and Winnipeg. These mainly Class I properties contain over 5.8 million square feet of leasable area. Allied has a 96.2% occupancy rate.

Class I refers to 19th and …read more »

Most real estate investment trusts (REITs), including our two new recommendations below, are exempt from Ottawa’s income-trust tax, which comes into effect on January 1, 2011.

Even so, we still advise against overindulging in REITs. But if you stick with REITs that have steady cash flows and sound balance sheets, like the two we recommend on this page, you should earn …read more »

ISHARES CDN REIT SECTOR INDEX FUND $12.03 (Toronto symbol XRE; buy or sell through a broker) holds the 10 Canadian real estate investment trusts (REITs) in the S&P/TSX Capped REIT Index. The weight of any one REIT is limited to 25% of this index’s value.

RioCan REIT makes up 23.7% of the iShares CDN REIT’s total value, followed by H&R REIT …read more »

Members of our Inner Circle service ask us a lot of very interesting questions. For example, one member was buying a new home at what he considered to be an extremely attractive price.

However, he had not yet sold his current home. He worried about the risk of owning two homes, even for a few months. He wanted to hedge …read more »

The best real estate investment trusts (REITs) continue to have high occupancy rates. They are also renewing leases at a steady pace. As well, today’s low interest rates are helping many REITs save money on mortgage refinancing, or fund expansion.

Most REITs, including our recommendations, are exempt from Ottawa’s new income-trust tax, which comes into effect on January 1, 2011.

We still …read more »

RIOCAN REAL ESTATE INVESTMENT TRUST $18.05 (Toronto symbol REI.UN; Units outstanding: 234.4 million; Market cap: $4.2 billion; SI Rating: Average) has announced its first expansion into the U.S.

The trust has formed a joint venture with Cedar Shopping Centers (New York symbol CDR), which owns shopping centres in the northeastern and mid-Atlantic U.S. The joint venture will hold seven of Cedar’s …read more »

The high Canadian dollar and lower U.S. house values have some investors, including members of our Inner Circle service, seeing opportunity in U.S. real estate investing, particularly in the “sunbelt” states, such as Arizona and Florida.

Before you consider such a move, you should first make sure that buying a vacation property doesn’t leave your investments overweighted in real estate. What’s …read more »

ISHARES CDN REIT SECTOR INDEX FUND $10.16 (Toronto symbol XRE; buy or sell through a broker) holds the 11 Canadian real estate investment trusts (REITs) in the S&P/TSX Capped REIT Index. The weight of any one REIT is limited to 25% of this index’s value.

RioCan REIT makes up 24.9% of the index’s total value; H&R REIT, 14.7%; Canadian REIT, 11.5%; …read more »

With mortgage rates at historic lows, many investors, including some members of our Inner Circle service, are becoming more interested in Canadian real estate investing.

A house is the biggest investment and consumer purchase most of us ever make. The house itself is the consumer purchase; the land underneath is the investment. Your house depreciates as surely as your car, but …read more »

Given today’s low prices and interest rates, a lot of people seem to be thinking about real estate investing. It’s also a topic that members of my Inner Circle service ask me about from time to time.

Personal real estate investing certainly has tax benefits. You write off your interest costs against current income; your gains are deferred and are …read more »

RIOCAN REAL ESTATE INVESTMENT TRUST $15.28 (Toronto symbol REI.UN; Units outstanding: 233.1 million; Market cap: $3.6 billion; SI Rating: Average) is Canada’s largest REIT. It has interests in a portfolio of 247 shopping malls across Canada, including 13 under development. In all, these contain over 59 million square feet of leasable area. RioCan’s occupancy rate stands at 97.5%.

In the three …read more »

CANADIAN REIT $24.60 (Toronto symbol REF.UN; Units outstanding: 66.2 million; Market cap: $1.6 billion; SI Rating: Extra Risk) owns more than 160 properties. These consist of retail, industrial and office buildings located across Canada and in the Chicago, Illinois, area. Canadian REIT’s occupancy rate is 96.5%.

The trust buys properties in prime locations, usually near major cities, that attract strong tenants, …read more »

H&R REAL ESTATE INVESTMENT TRUST $10.98 (Toronto symbol HR.UN; Units outstanding: 147.8 million; Market cap: $1.6 billion; SI Rating: Extra Risk) owns interests in 35 office properties, 123 industrial properties and 120 retail properties. Together, these contain over 41 million square feet. Over half of H&R’s properties are in the Greater Toronto Area. The rest are in other parts of …read more »

A member of my Inner Circle recently asked us whether a reverse mortgage would be a good way to tap into the equity she had built up in her home.

Reverse mortgages in Canada typically let homeowners (age 60 or older) borrow on their home equity (maximum 40%). The loan and accumulated interest are repaid only if the house is sold …read more »

Part-time real estate investing can be very profitable. However, the best returns are mainly a result of three key factors that are easy to overlook when investing in real estate: leverage, sweat equity and higher risk.

It’s easier to get financing to buy real estate than stocks, because real estate tends to be less volatile and easier to appraise, and it …read more »

RIOCAN REAL ESTATE INVESTMENT TRUST $13.51 (Toronto symbol REI.UN; Units outstanding: 222.1 million; Market cap: $3.0 billion; SI Rating: Average) is Canada’s largest real estate investment trust (REIT).

RioCan has issued $180 million worth of new bonds. The trust will use the proceeds to retire $55 million of bonds that are due this year. That will leave it with $125 million, …read more »

RIOCAN REAL ESTATE INVESTMENT TRUST $12 (Toronto symbol REI.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Units outstanding: 222 million; Market cap: $2.7 billion; Price-to-sales ratio: 3.7; SI Rating: Average) is Canada’s largest real estate investment trust (REIT). It owns 241 retail properties, including 16 under development. RioCan specializes in “Big Box” outdoor malls. Most are in suburban areas where …read more »

ISHARES CDN REIT SECTOR INDEX FUND $7.22 (Toronto symbol XRE; buy or sell through a broker) holds the 11 Canadian real estate investment trusts (REITs) in the S&P/TSX Capped REIT Index. The weight of any one REIT is limited to 25% of this index’s value.

RioCan REIT makes up 23.3% of the index’s total value; Canadian REIT, 14.1%; Boardwalk REIT, 11.3%; …read more »

RIOCAN REAL ESTATE INVESTMENT TRUST $21 (Toronto symbol REI.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Units outstanding: 212.0 million; Market cap: $4.5 billion; SI Rating: Average) has formed a second joint venture with U.S.-based real estate developer Kimco Realty Corp. This new 50-50 partnership has agreed to buy 10 retail shopping centres in central and eastern Canada. RioCan will …read more »

ARBOR MEMORIAL SERVICES INC. $27 (Toronto symbol ABO.A; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 10.7 million; Market cap: $288.9 million; SI Rating: Average) owns 41 cemeteries, 27 crematoria, four reception centres located on cemetery premises and 90 funeral homes in eight provinces. In its second fiscal quarter ended April 30, 2008, Arbor earned $0.60 a share, down 9.1% from …read more »

RioCan Real Estate Investment Trust $22 (Toronto symbol REI.UN Aggressive Growth Portfolio, Manufacturing & Industry sector; Units outstanding: 212.0 million; Market cap: $4.7 billion; SI Rating: Average) is Canada’s largest real estate investment trust. It owns 214 retail properties, including 12 under development, comprising an aggregate of almost 55 million square feet.

RioCan specializes in “New Format” shopping centres. These are …read more »

Real Estate Investment Trusts (REITs) are among the most stable of the royalty and investment trusts. That’s because they own non-depleting assets, and can lock in lease rates and financing costs for long terms.

The best REITs have good management, well-located properties and balance sheets strong enough to weather an economic downturn. They have high-quality tenants, and carefully match their debt …read more »

In July, we warned that we were in a particularly dangerous time in the market — a time you might call the ‘hey, this-is-easy’ segment of the market cycle. At times like that, it may seem you (or your broker) can do no wrong.

Market declines often follow such times, and that’s exactly what happened. The Toronto Exchange index hit an …read more »

The Canadian economy grew at an annualized rate of 3.4% in the second quarter, well ahead of the Bank of Canada’s forecast of 2.8%. That followed strong growth of 3.9% in the first quarter.

Consumer spending, which makes up almost 60% of our economy, grew at an annualized rate of 4.9% in the second quarter, up from 3.4% in the first …read more »

The Bank of Canada held interest rates steady at 4.25% at its April meeting. The rate has remained stable since May, 2006.

The Bank did note that core inflation has increased faster than expected, and will likely rise above its target rate of 2% in coming months.

Core inflation excludes eight volatile components identified by the Bank of Canada, including gasoline, fuel …read more »

A stream of negative newspaper and other media headlines continue to give new reasons almost weekly why the U.S. economy will slow.

The most recent warn of how defaults on subprime mortgages will have a devastating effect on housing markets — and hence on the U.S. economy as a whole.

However, the latest statistics indicate that housing markets are instead recovering.

The U.S. …read more »

RIOCAN REAL ESTATE INVESTMENT TRUST $22.86 (Toronto symbol REI.UN; SI Rating: Average) has agreed to form a joint venture with a U.S.-based finance company that will invest up to $500 million in real-estate assets. Like a similar fund that RioCan headed up in 2003, this one will focus on distressed retail properties that it can refurbish and sell for a …read more »

IUNITS S&P/TSX CAPPED REIT INDEX FUND $14.22 (Toronto symbol XRE; buy or sell through a broker) holds 12 Canadian real estate investment trusts (REITs). In the Capped REIT Index, the weight of any one REIT, in terms of market capitalization (unit price times units outstanding), is limited to 25%.

RioCan REIT makes up 24.6% of the index’s value; H&R REIT, 14.7%; …read more »

High quality Real Estate Investment Trusts, or REITs, are among the most stable of the royalty and investment trusts. That’s because they own non-depleting assets, and can lock in lease rates and financing costs for long terms.

REITs we recommend hold top-quality assets. In contrast, many other types of trusts hold low-quality assets in volatile industries such as resources and commodities, …read more »

RIOCAN REAL ESTATE INVESTMENT TRUST $23.07 (Toronto symbol REI.UN; SI Rating: Average) is Canada’s largest REIT. RioCan has total assets of $4.2 billion consisting of ownership interests in a portfolio of 201 retail properties across Canada, including 14 under development. These properties contain over 50 million square feet of gross leasable area.

RioCan is Canada’s largest owner of neighbourhood shopping centres. …read more »

LEGACY HOTELS REAL ESTATE TRUST $8.05 (Toronto symbol LGY.UN; SI Rating: Extra risk) owns 24 luxury hotels with over 10,000 guestrooms in Canada and the United States, including The Fairmont Royal York in Toronto and the Fairmont Le Château Frontenac in Quebec City. Fairmont Hotels & Resorts Inc. (see box) owns roughly 24% of Legacy, and manages all of Legacy’s …read more »

RIOCAN REAL ESTATE INVESTMENT TRUST $23 (Toronto symbol REI.UN; SI Rating: Average) owns or invests in over 200 retail properties in Canada, mainly large, outdoor suburban malls. Ontario and Quebec account for roughly 80% of its revenue.

In the three months ended September 30, 2005, RioCan earned $0.22 a unit (total $41.8 million) from continuing operations, up 4.8% from $0.21 a …read more »