The Canadian REITs on our list could provide a decent return on an initial investment over a relatively short period of time
SmallCapPower | March 23, 2018: The Canadian REITs on our list today, which are commercial-focused, have high “funds from operations (FFO) yields.” Funds from operations is a metric used primarily for REITs, calculated by adding depreciation and amortization to earnings and subtracting gains on sales. Using FFO as a metric more accurately shows the performance of a REIT, as property sales are non-recurring and REIT properties generally appreciate. When FFO per share is high, investors receive a larger proportion of their returns from dividends.
American Hotel Income Properties REIT LP (TSX:HOT.UN) – $8.12
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: $633.7 Million
- 3 Month Total Return: -9.4%
- Funds From Operations Per Share FY2018: 1.1
- Funds From Operations Per Share Yield FY2018: 13.6%
Slate Retail REIT (TSX:SRT.UN) – $12.72
Commercial REITs
Slate Retail REIT is a Canada-based trust that focuses on 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. The Company’s major tenants include Walmart (NYSE:WMT), Lowe’s (NYSE:LOW) and Stop & Shop.
- Market Cap: $547.4 Million
- 3 Month Total Return: 1.0%
- Funds From Operations Per Share FY2018: 1.7
- Funds From Operations Per Share Yield FY2018: 13.4%
Melcor Real Estate Investment Trust (TSX:MR.UN) – $8.19
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., providing the trust with a strong acquisition pipeline for up to seven million square feet in additional rental space.
- Market Cap: $108.0 Million
- 3 Month Total Return: -1.7%
- Funds From Operations Per Share FY2018: 1.0
- Funds From Operations Per Share Yield FY2018: 12.0%
Nexus Real Estate Investment Trust (TSXV:NXR.UN) – $2.00
Commercial REITs
Nexus REIT is a Canada-based trust focused on industrial and commercial properties. The Company operates 27 industrial properties across Canada, as well as 36 office and retail properties primarily in Quebec, representing ~3.5M sq. ft. of rental space. Nexus partners with RFA Capital and TriWest Capital Partners to grow its portfolio.
- Market Cap: $177.8 Million
- 3 Month Total Return: 1.0%
- Funds From Operations Per Share FY2018: 0.2
- Funds From Operations Per Share Yield FY2018: 11.7%
Morguard Real Estate Investment Trust (TSX:MRT.UN) – $13.60
Commercial REITs
Morguard REIT is a Canada-based trust that operates a variety of commercial and industrial properties across six provinces. 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: $825.4 Million
- 3 Month Total Return: 1.9%
- Funds From Operations Per Share FY2018: 1.6
- Funds From Operations Per Share Yield FY2018: 11.5%
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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