H & R Real Estate Trust 2

On my other blog I am today writing about Investing in REITs in Canada continue...

Sound bite for Twitter and StockTwits is: Stock price seems reasonable. It must have a shock for investors when this REIT cut the dividend in half in 2009. Mostly people invest in REITs to obtain steady income. Their yield is a bit higher than most other REITs and that would suggest a slightly better relative stock price. See my spreadsheet at hr.htm.

I do not own this stock of H & R Real Estate Trust (TSX-HR.UN, OTC- HRUFF). Before I started blogging, I was following a number of REITs and this is one I had followed. It also used to be on a dividend list I followed.

When I look at insider trading, I find $1.2M of insider buying and $4.2M of insider selling with a net of insider selling of $3M. Since this is only 0.05% of the market cap of this stock, it is relatively low. Insiders do have ownership with the CEO owning shares worth around $89.6M and the Chairman owning shares worth around $30.2M. However, these two only hold only around 2% of the outstanding shares of this REIT.

The outstanding shares were increased by 194,000 shares and this number of shares is only 0.07% of outstanding shares. I could not find a book value for these shares but at the end of 2014 this number of shares is worth $4.2M.

The 5 year median Price/Funds from Operations Ratio is 12.84. The current P/FFO Ratio is 12.06 and is some 6% lower. The current P/FFO Ratio is based on 2014 FFO estimate of $1.85 and a stock price of $22.32. The 10 year median P/FFO Ratio is 12.68 and the current P/FFO Ratio is some 4.8% lower than this ratio. This testing suggests that the stock price is relatively reasonable.

The 5 year median Price/Adjusted Funds from Operations Ratio is 15.21. The current P/AFFO Ratio is 13.45 and is some 11.6% lower. The current P/AFFO Ratio is based on 2014 AFFO estimate of $1.66 and a stock price of $22.32. The 10 year median P/AFFO Ratio is 14.65 and the current P/FFO Ratio is some 8.2% lower than this ratio. This testing suggests that the stock price is relatively reasonable.

The 10 year Price/Cash Flow per Share Ratio is 8.80. The current P/CF Ratio is 8.12 based on the most recent Cash Flow of $660 and CFPS of $2.76 and a stock price of $22.32. The current P/CF Ratio is 12.7% lower than the 10 year median P/CF Ratio. This testing suggests that the stock price is relatively reasonable.

The 10 year P/S Ratio is 5.00 and the current P/S Ratio is 4.82, a value some 8.8% lower. The current P/S Ratio is based on 2015 Revenue estimate of $1,334M and Revenue per Share of $4.33. This testing suggests that the stock price is relatively reasonable.

The 5 year median dividend yield is 5.97% and the current dividend yield of 6.05% is higher by 1.4%. The current dividend yield is based on distributions of $1.35 per year and a stock price of $22.32. This testing suggests that the stock price is relatively reasonable.

Looking at historical dividend yields is different. The historical median dividend yield is 6.58% and this is higher than the current dividend yield by 8%. There is not that much of a difference. However, the historical average dividend yield is 7.92% a value some 23.6% higher than the current dividend yield. The current dividend yield is far from both the historical high of 11.31% and the historical low of 4.52%.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus would be a Buy. The 12 month stock price is $25.90. This implies a total return of 22.09% with 16.04% from capital gains and 6.05% from distributions.

In this News Wire report H&R reports a good 3 quarter for 2014. Several analysts recently updated their ratings on H&R.

This is the second of two parts. The first part was posted on Tuesday, March 17, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.

H&R Real Estate Investment trust is an open-ended real estate investment trust. They have a portfolio of office properties, single-tenant industrial properties, retail properties and development projects. They operate across Canada and US. Its web site is here H&R.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

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