Why investors should just on an alluring prospect
For anyone already worried about the dismal environment for office real estate, Slate offered an example of just how bad things can get. But is it typical of other office REITs?
The unit price fell 84 per cent over the two-year period from the start of 2022 through the end of 2023, as office occupancy rates fell and interest rates climbed to multi-year highs. Rising rates increased borrowing costs and undermined the appeal of dividend-generating investments such as REITs.There are a few reasons why Slate stuck out from the crowd.
The decline contributed to a credit rating downgrade from Moody’s on June 11. Allied Properties’ unit price has fallen 7.5 per cent since then, driving the dividend yield toward a troubling 12 per cent.The Bank of Canada recently cut its key interest rate after inflation subsided. Additional rate cuts should bolster the appeal of dividend-paying REITs, ease pressure on borrowing costs and support economic activity that will generate jobs and demand for office space.
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