4 Canadian REITs with High Return on Capital

The Canadian REITs on our list have above average return on capital relative to their peers

SmallCapPower | August 13, 2019: Return on capital is a profitability ratio that indicates how effective a company is at turning capital into profits. It is calculated by subtracting dividends from net income, then dividing that value by the company’s debt + equity. Today we have identified four Canadian REITs that have generated some of the highest annual returns on capital. For reference, the average annual return on capital of our peer group of 24 Canadian REITs is 5.7%.

 *Share prices as at close Friday, August 9, 2019, data obtained from S&P Capital IQ

Canadian Apartment Properties Real Estate Investment Trust (TSX:CAR.UN) – $50.40

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 57,475 residential units, comprising 45,798 residential suites, 72 manufactured home communities, and 11,677 land lease sites as of July 2019. These sites are located in and near major urban centres across Canada and The Netherlands.

  • Market Cap: $8.1B
  • YTD Return: 14.31%
  • 90 Day Average Trading Volume: 300,000
  • Return on Capital: 12.8%

Dream Global Real Estate Investment Trust (TSX:DRG.UN) – $14.45

Dream Global Real Estate Investment Trust is an owner and operator of a diversified portfolio of office and industrial properties located in Western Europe, with a focus on Germany and the Netherlands. As of July, the Company’s in-house platform comprises over 140 local leasing, property management, asset management, and development professionals operating out of 13 offices in Europe and North America. On August 8, Dream Global Real Estate Investment Trust reported its financial results for Q2/19. These results featured total revenue of $148.9M, an increase of 57% from the previous quarter. The Company also posted a net income of $248.1M, an increase of 14% from the previous quarter.

  • Market Cap: $2.8B
  • YTD Return: 21.5%
  • 90 Day Average Trading Volume: 400,000
  • Return on Capital: 12.0%

Granite Real Estate Investment Trust (TSX:GRT.UN) – $61.90

Granite Real Estate Investment Trust is a Canada-based REIT engaged in the acquisition, development, ownership, and management of industrial, warehouse, and logistics properties in North America and Europe. As of July, Granite owns over 80 rental income properties, representing ~34M square feet of leasable area. On July 31, Granite Real Estate Investment Trust announced its results for Q2/19. These results featured total revenue of $67.3M, an increase of 7% from the previous quarter. The Company also posted a net income of $98.7M, an increase of 26% from the previous quarter.

  • Market Cap: $3.1B
  • YTD Return: 15.3%
  • 90 Day Average Trading Volume: 130,000
  • Return on Capital: 12.9%

Allied Properties Real Estate Investment Trust (TSX:AP.UN) – $50.30

Allied Properties Real Estate Investment Trust is an owner, manager, and developer of distinctive urban workspace in major cities in Canada. The Company also focuses on network-dense urban data centres in Toronto that form Canada’s hub for global connectivity. On August 6, Allied Properties Real Estate Investment Trust announced that it has launched an offering of a minimum of $225M aggregate principal amount of series D senior unsecured debentures. On July 31, the Company announced results for its Q2/19 ending on June 30, 2019. These results featured total revenue of $117.8M, an increase of 1% from the previous quarter. The Company also posted net income of $99.9M, a decrease of 30% from the previous quarter.

  • Market Cap: $5.8B
  • YTD Return: 14.6%
  • 90 Day Average Trading Volume: 300,000
  • Return on Capital: 9.2%

Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.

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