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Canadian REITs Performing Strongly, Executive Says

04/10/2013 | By Mitch Irzinski

Nancy Anderson, vice president of financial reporting and CFO with REALpac, joined REIT.com for a video interview at REITWise 2013: NAREIT’s 2013 Law, Accounting and Finance Conference in La Quinta, Calif.

REALpac is Canada’s  senior national industry association for owners and managers of investment real estate.

Anderson provided an overall assessment of the health of the commercial real estate market in Canada.

“Nationally, it was a very strong year for Canadian commercial real estate,” she said. “In 2012 we saw rents trending upward, we saw an active and liquid investment real estate market, and we’re expecting a lot more of the same for 2013.”

Anderson also discussed trends regarding Canadian REITs.

“Canadian REITS are performing really strongly,” she said.  “For example, just shy of 40 percent of all transactions were by REITs in 2012. We also continue to see premium pricing—a lot of that is coming from multiple bids that are happening on properties. Cap rates, too, are really low, and I hear talk of cap rates even potentially compressing further.”

Anderson shared her thoughts on the key development regarding international financial reporting standards in 2013.

“I think it’s two things. It’s what we’re waiting for to come out, and that’s the final revenue standard, which I don’t think will have a big impact. There’s also the leasing standard—we’re supposed to have another exposure draft, which of course stimulates a lot of conversation in our sector, so we’ll wait for that. The second part is standards that are already out there that came out in 2011, which became effective at the beginning of 2013,” she said. “In particular, for IFRS 11 with joint venture accounting, we used to have the option of proportioning consolidation for joint ventures. That no longer exists, so we’re going to see quite a bit of a difference when we have to equity account for a lot of the investments that we were allowed to use proportionate consolidation for.”

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