The Canadian REITs we’ve identified are least likely to be hurt by the economic impact of COVID-19
SmallCapPower | May 14, 2020: REITs are generally sound long-term investments, as they typically offer high dividend yields plus the potential for moderate, long-term capital appreciation. Because of the strong dividend income REITs provide, they are an important investment both for retirement savers and risk-adverse investors. REITs can fuel their dividends from the stable stream of contractual rents paid by the tenants of their properties. Today we have located three Canadian REITs we think have the best chance to outperform their peers this year.
*Returns are based on closing stock prices as of May 13, 2020
Canadian Apartment Properties Real Estate Investment Trust
(TSX:CAR.UN) – $46.28
REITs
Canadian Apartment Properties Real Estate Investment Trust (CAPREIT) is one of Canada’s largest residential landlords. CAPREIT is a growth-oriented investment trust owning interests in approximately 63,478 suites and sites across Canada, the Netherlands and Ireland. It owns, directly in Canada and indirectly in Netherlands through its investment in European Residential Real Estate Investment Trust (ERES), a total of 59,844 residential units, comprising 48,167 residential suites and 72 manufactured home communities comprising 11,677 sites located in and near urban centers. Despite concerns about tenants not being able to pay rent due to COVID-19 related job losses, people will always need a roof over their head. On May 1, 2020, CAPREIT announced that it had collected approximately 98% of April rents. CAR.UN has a current dividend yield of about 3%.
- One-Year Return: – 3% (Excluding dividends)
NorthWest Healthcare Properties Real Estate Investment Trust
(TSX:NWH.UN) – $8.87
REITs
NorthWest Healthcare Properties operates a portfolio of healthcare real estate assets, comprised of interests in about 149 properties located throughout major markets in Canada, Brazil, Germany, Australia, and New Zealand. It owns and manages medical office buildings and healthcare facilities from coast to coast, including Calgary, Edmonton, Toronto, Montreal, Quebec City and Halifax. Its properties are a mix of professional office, laboratory, clinical, and pharmaceutical space, which makes most of its tenants essential service providers during COVID-19. NorthWest Healthcare recently acquired six private hospitals in the United Kingdom, which is expected boost revenue from $366 million in 2019 to $435 million in 2021. NWH.UN has a current dividend yield of about 8.6%.
- One-Year Return: – 20% (Excluding dividends)
Choice Properties Real Estate Investment Trust (TSX:CHP.UN) – $11.95
REITs
Choice Properties owns, manages and develops a portfolio of 756 properties that total 68M sq. ft of gross leasable area. Its portfolio can be broken down into 602 retail properties, 115 industrial properties, 15 office complexes, 4 multi-family residential buildings and 20 development properties. Choice Properties has a strategic alliance with its principal tenant, food retail giant Loblaw Companies Limited, but also has prominent tenants such as Dollarama, which continues to operate during the COVID-19 lockdown. CHP.UN has a current dividend yield of about 6.2%.
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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