According to Morguard, a major North American real estate and property management company, the Canadian real estate investment market is likely to continue the positive performance on the back of improving economic fundamentals. The commercial property market will continue to provide investors with stable and positive income and attractive returns in 2014. Capital inflows in the property investment sector are expected to remain strong over the near term boosted by the eventual return of investors. Increased construction activity in the industrial and office sectors over the next few years will drive growth in the sector.
The Bloomberg Canadian REIT Index (BBCREIT Index) has returned over 3% year-to-date, while it has returned around 6.6% during the past three months. The REIT stocks are estimated to gain approximately 13% in 2014, based on a Bloomberg survey of consensus 12-month price targets. By contrast, the stocks of sector peers in insurance and banking are forecasted to rise by an average of 3.1% and 2.3% respectively. Analyst Kevin Avalos at Raymond James predicts that the funds from operations (FFO) of REITs will rise by 6% this year on a per-unit basis, with strength among those positioned for internal growth as rates rise. By comparison, the average increase in FFO per unit among diversified Canadian REITs during 2013 was 7.1%
Ubika Research has shortlisted seven Canadian REIT stocks which are estimated to register strong growth in 2014 according to Bloomberg consensus. These REITs are estimated to register strong FFO growth and EPS growth during 2014. Moreover, these stocks are attractively valued since they are currently trading at low price to FFO ratio compared to industry average. These stocks have provided attractive dividend yield during the trailing twelve months and are estimated to pay attractive dividends in 2014. We note that majority of the shortlisted stocks have recorded gains during the past three months with average traded volume in excess of 100,000.
|
Company Name |
Exchange |
Ticker |
Market Cap |
Last Price |
Average Volume |
Price Change (1-Month) |
FFO Growth |
EPS Growth |
Price to FFO Ratio |
TTM Dividend Yield |
Dividend Yield |
|
Temple Hotels Inc |
TSX |
TPH |
234.0 |
5.82 |
104,354 |
-5.2% |
63.3% |
70.0% |
7.4 |
7.0% |
9.3% |
|
Dundee International Real Estate Investment Trust |
TSX |
DI-U |
1,016.8 |
9.33 |
419,500 |
13.6% |
3.7% |
350.0% |
10.7 |
8.6% |
8.6% |
|
Cominar Real Estate Investment Trust |
TSX |
CUF-U |
2,303.4 |
18.13 |
772,516 |
3.8% |
3.1% |
4.9% |
9.9 |
7.9% |
8.0% |
|
HealthLease Properties Real Estate Investment Trust |
TSX |
HLP-U |
274.1 |
10.70 |
79,514 |
11.1% |
127.6% |
NA |
11.2 |
5.9% |
7.9% |
|
Artis Real Estate Investment Trust |
TSX |
AX-U |
1,992.3 |
15.64 |
415,428 |
10.8% |
0.4% |
NA |
10.7 |
7.5% |
6.9% |
|
Crombie Real Estate Investment Trust |
TSX |
CRR-U |
978.8 |
13.47 |
231,112 |
2.4% |
16.0% |
413.9% |
12.0 |
6.5% |
6.6% |
|
Chartwell Retirement Residences |
TSX |
CSH-U |
1,791.8 |
10.32 |
436,689 |
6.2% |
6.0% |
129.5% |
13.3 |
5.2% |
5.2% |
Source: Bloomberg
FFO – Funds from Operations
Company Description:
Temple Hotels Inc (TSX: TPH)
Temple Hotels Inc invests directly or indirectly, in the ownership and operation of hotel properties, businesses and assets.
Dundee International Real Estate Investment Trust (TSX: DI-U)
Dundee International Real Estate Investment Trust is a real estate investment trust formed to invest in real estate outside of Canada. The company’s objectives are build a diversified, growth-oriented portfolio of commercial properties based on an initial portfolio in Germany.
Cominar Real Estate Investment Trust (TSX: CUF-U)
Cominar Real Estate Investment Trust is an unincorporated closed-end investment trust. The Trust’s portfolio consists of income producing office, retail, industrial, and mixed use properties primarily located in the Greater Quebec City Area.
HealthLease Properties Real Estate Investment Trust (TSX: HLP-U)
HealthLease Properties Real Estate Investment Trust provides real estate products and services. The company offers real estate investment trust services. HealthLease primarily operates in Canada.
Artis Real Estate Investment Trust (TSX: AX-U)
Artis Real Estate Investment Trust is a real estate investment trust that acquires and maintains a portfolio of properties. The company’s initial focus is on retail and industrial commercial properties located in Western Canada.
Crombie Real Estate Investment Trust (TSX: CRR-U)
Crombie Real Estate Investment Trust invests in real estate. The company invests in income producing retail, office, and mixed-use properties in Canada with future growth strategy focused primarily on the acquisition of retail properties.
Chartwell Retirement Residences (TSX: CSH-U)
Chartwell Retirement indirectly owns and operates a complete range of residences from independent supportive living through assisted living to long term care.
