The Canadian REITs on our list have a stable major tenant and distributions that analysts consider sustainable
SmallCapPower | October 23, 2020: Real Estate Investment Trusts, or REITs, have become popular with income investors, especially in this ultra-low interest rate environment. Unfortunately, much of the real estate sector has been hurt badly as a result of the COVID-19 related lockdown and other restrictions that have weighed on revenue generation. Today we have filtered through and found three Canadian REITs that have a stable major tenant on a long-term lease that account for a large percentage of its cash flow. The REITs mentioned also have solid balance sheets with distributions that analysts consider sustainable.
*Returns are based on closing stock prices as of October 22, 2020
Choice Properties Real Estate Investment Trust (TSX:CHP.UN) – $12.54
Choice Properties REIT 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 continued to operate during the COVID-19 lockdown. Choice has one of the highest weighted-average lease terms in real estate sector at 7.8 years and a $1.1-billion development pipeline, which should boost growth. CHP.UN has a current dividend yield of 5.9%.
- One-Year Return: – 1%
Crombie Real Estate Investment Trust (TSX:CRR.UN) – $13.25
Crombie REIT is 42% owned by Empire Co. Ltd., the parent company of supermarket chains Sobeys, Safeway, and FreshCo that account for about 54% of the REIT’s annual rent. Crombie’s leases have an average of 13 years remaining. The REIT’s other tenants include banks, pharmacies, dollar stores and government offices. CRR.UN has a current dividend yield of 6.7%.
- One-Year Return: – 5%
CT Real Estate Investment Trust (TSX:CRT.UN) – $14.07
CT REIT derives about 92% of its income from Canadian Tire stores, including its affiliates such as Mark’s, Sport Chek and Pro Hockey Life. These stores have an average remaining lease term of more than nine years. CRT.UN has a current dividend yield of 5.7%.
- One-Year Return: 5%
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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