The Canadian REITs on our list could provide great value for the income portion of your portfolio
SmallCapPower | January 10, 2018: Real Estate Investment Trusts (REITs) can provide investors with strong and stable long-term dividend yields. Despite falling retail presences, Canadian REITs continue to maintain high occupancy rates. Today, we have identified some Canadian REITs with high Funds From Operations (FFO) yields relative to their peers. Funds From Operations is a metric primarily used for REITs, calculated by adding depreciation and amortization to earnings and subtracting gains on sales. Using FFO as a metric more accurately shows a REIT’s performance, as property sales are non-recurring and REIT properties generally appreciate. When the FFO per share is high, the Company receives a large proportion of the share price from dividends.
Temple Hotels Inc. (TSX:TPH) – $3.28
Specialized REITs
Temple Hotels is a Canada-based company engaged in owning and operating hotel property investments across Canada. The hotel portfolio of the Company consists of over 30 hotel and investment properties comprising ~3,880 rooms. The hotel portfolio includes two extended-stay properties (Stanton Suites Hotel, Yellowknife and Clearwater Timberlea) and one investment property (Cortona Residence). It has equity interests in limited partnerships, which own hotels in London and Ottawa.
- Market Cap: $82.9 Million
- Funds From Operations Per Share Yield: 21.6%
- Peer Average Funds From Operations Per Share Yield: 8.4%
- Funds From Operations Per Share: 0.71
- 1 Month Total Return: -5.2%
Melcor Real Estate Investment Trust (TSX:MR.UN) – $8.54
Commercial REITs
Melcor REIT focuses on the acquisition and operation of commercial properties in Western Canada. The Company’s portfolio currently comprises 37 assets covering ~2.7 million square feet with an aggregate property value of $667 million. In addition, Melcor REIT is backed by Melcor Developments Ltd (real estate developer), providing the trust with a strong acquisition pipeline for up to seven million square feet in additional rental space.
- Market Cap: $95.2 Million
- Funds From Operations Per Share Yield: 12.4%
- Peer Average Funds From Operations Per Share Yield: 8.4%
- Funds From Operations Per Share: 1.04
- 1 Month Total Return: 0.9%
Slate Retail REIT (TSX:SRT.UN) – $12.82
Commercial REITs
Slate Retail REIT is a Canada-based trust that focuses renting out properties, primarily to grocery stores across the United States. The Company owns and operates 84 real estate properties in 21 states that comprise ~11 million square feet. Slate’s major tenants include Walmart, Lowe’s and Stop & Shop.
- Market Cap: $557.0 Million
- Funds From Operations Per Share Yield: 12.2%
- Peer Average Funds From Operations Per Share Yield: 8.4%
- Funds From Operations Per Share: 1.61
- 1 Month Total Return: -1.5%
American Hotel Income Properties REIT LP (TSX:HOT.UN) – $9.35
Specialized REITs
American Hotel Income Properties REIT (AHIP) is a Canada-based trust that focuses on hotel assets, primarily across the United States. AHIP’s portfolio comprises a total of 11,570 hotel rooms across 113 properties, including 41 restaurants.
- Market Cap: $729.6 Million
- Funds From Operations Per Share Yield: 43.6%
- Peer Average Funds From Operations Per Share Yield: 8.4%
- Funds From Operations Per Share: 1.09
- 1 Month Total Return: 4.2%
Morguard Real Estate Investment Trust (TSX:MRT.UN) – $13.70
Commercial REITs
Morguard REIT is a Canada-based trust that operates a variety of commercial and industrial properties across six provinces. The Company’s real estate portfolio includes 49 commercial properties totaling ~8.8 million square feet. The properties mainly comprise office buildings and shopping malls across the country with an aggregate value of $2.9 billion.
- Market Cap: $831.2 Million
- Funds From Operations Per Share Yield: 11.2%
- Peer Average Funds From Operations Per Share Yield: 8.4%
- Funds From Operations Per Share: 1.53
- 1 Month Total Return: -0.7%
Disclosure: Neither the author nor his/her family own shares in any of the companies mentioned above.
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