The Canadian REITs on our list have the highest free cash flow growth rates over the past five years
SmallCapPower | August 17, 2017: Today we have identified four Canadian REITs with highest free cash flow growth rates over the past five years. These Real Estate Investment Trusts have a minimum market cap of $195 million while the price to earnings ratio varies between 9.0x and 20.0x. Free cash flow, or adjusted funds from operations (AFFO), is an important metric in REITs and is calculated by deducting maintenance costs from FFO (operating cash flow). A high AFFO implies a company is able to generate positive cash flows after meeting all its capex requirements and a high five-year CAGR indicates a company’s long-term capabilities in properly managing its capex requirements.
Morguard Real Estate Trust (TSX: MRT.UN)
Morguard Real Estate Investment Trust owns a real estate portfolio of more than 50 commercial properties consisting of nine million square feet of gross leasable area located in the provinces of Alberta, British Columbia, Saskatchewan, Manitoba, Ontario and Quebec. The retail portfolio comprises full-scale, regional shopping centers and neighborhood and community shopping centers.
- FCF Growth Rate CAGR (FY2011-2016): 37.95%
- Market Cap: $835.8 million
- P/E:13.8
Smart Real Estate Investment Trust (TSX: SRU.UN)
Smart Real Estate Investment Trust focuses on two distinct asset classes, retail and mixed-use. The retail segment, branded as SmartCentres, provides acquisition, asset management planning, development, leasing, operations, property management and construction services. The mixed-use group includes office and residential developments and is branded as SmartUrban.
- FCF Growth Rate CAGR (FY2011-2016): 30.21%
- Market Cap: $4.8 billion
- P/E: 30.90
H&R Real Estate Investment Trust (TSX: HR.UN)
H&R Real Estate Investment Trust operating owns, operates and develops commercial and residential properties across Canada and in the U.S. Its subsidiaries include H&R Portfolio Limited Partnership, Bow Centre Street Limited Partnership, H&R REIT Management Services Limited Partnership, H&R REIT (U.S.) Holdings Inc., Primaris Management Inc. and PRR Trust.
- FCF Growth Rate CAGR (FY2011-2016): 27.6%
- Market Cap: $6.0 billion
- P/E: 21.1
BTB Real Estate Investment Trust (TSX: BTB.UN)
BTB Real Estate Investment Trust owns more than 70 commercial, office and industrial properties in primary and secondary markets in Quebec and eastern Ontario. The Trust’s operating segments include office, commercial, industrial and general purpose properties. The Trust’s leasable area is 5.1 million square feet. The Trust also offers property management services, such as maintenance and repairs, electrical, locks and keys, light bulbs and lens, labor, and other services, such as heating, ventilation, air conditioning (HVAC), access card and parking services.
- FCF Growth Rate CAGR (FY2011-2016): 25.34%
- Market Cap: $195.3 million
- P/E: 4.7
Disclosure: Neither the author nor any of the principals at Small Cap Power, or their family members, own shares in any of the companies mentioned above.
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