4 Canadian REITs Trading at a FFO Discount to its Peers

The Canadian REITs on our list are generating industry-high Funds From Operations (FFO) yields

SmallCapPower | December 12, 2017: REITs offer a stable investment opportunity for income-seeking-investors along with high dividend yields. Today, we have identified four Canadian REITs that return the highest Funds from Operations as a portion of their current market price (FFO Yield). The trusts listed offer attractive FFO yields, significantly higher than the industry average 9%. Funds from Operations is a common industry metric, used to define a REIT’s cash flow from operations. The metric is calculated by adding depreciation and amortization to earnings and subtracting any gains on sales.

American Hotel Income Properties REIT LP (TSX:HOT.UN) – $9.07
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: $708 Million
  • Month over Month Return: -2.4%
  • FFO Per Share (TTM): $ 1.12
  • FFO Yield: 12.37%

Melcor Real Estate Investment Trust (TSX:MR.UN) – $8.49
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 7 million square feet in additional rental space.

  • Market Cap: $95 Million
  • Month over Month Return: -2.1%
  • FFO Per Share (TTM): $ 1.04
  • FFO Yield: 12.24%

Morguard Real Estate Investment Trust (TSX:MRT.UN) – $13.80
Commercial REITs

Morguard REIT is a Canada-based trust that operates a variety of commercial and industrial properties across six provinces in Canada. 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: $837 Million
  • Month over Month Return: -0.9%
  • FFO Per Share (TTM): $ 1.66
  • FFO Yield: 12%

Slate Retail REIT (TSX:SRT.UN) – $13.06
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: $565 Million
  • Month over Month Return: -0.8%
  • FFO Per Share (TTM): $1.51
  • FFO Yield: 11.56%

Disclosure: Neither the author nor any of the principals at SmallCapPower, or their family members, own units in any of the companies mentioned above.

To read our full disclosure, please click on the button below: