Is it a good company at a reasonable price? I bought Real Estate companies for diversification purposes. I still think that is a good reason to hold Real Estate companies and this REIT. I have made a reasonable return on this stock and I intend to continue to hold it. I do not expect much in capital gains and I expect most of my return to be in distributions. Currently, this stock is testing as reasonable.
I own this stock of Choice Properties REIT (TSX-CHP.UN, OTC-PPRQF). I got this stock when CDN REIT was acquired by Choice Properties. Choice was originally a spin off from Loblaws. Later George Weston Limited (TSX-WN) in a reorganization received Loblaw’s share of Choice (61.6% interest) and Loblaws minority shareholders got George Weston Limited shares. The Weston Family owns a majority share in George Weston Ltd and George Weston Limited has a controlling interest in Loblaws.
When I was updating my spreadsheet, I noticed I have had Choice since 2018 and I have made a total return of 8.01% with 2.04% from capital gains and 5.48% from dividends. If I look at my total return from CDN REIT and Choice over the past 17 years, I have a total return of 10.06% with 4.43% from capital gains and 5.63% from dividends.
If you had invested in this company in December 2014, for $1,005.12 you would have bought 96 shares at $10.47 per share. In December 2024, after 10 years you would have received $569.68 in dividends. The stock would be worth $1,281.60. Your total return would have been $1,851.28. This would be a total return of 8.72% per year with 2.46% from capital gain and 6.26% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $10.47 | $1,005.12 | 96 | 10 | $569.68 | $1,281.60 | $1,851.28 |
The current dividend yield is good with dividend growth low. The current dividend yield is good (5% to 6% ranges) at 5.50%. The 5, 10 and historical median dividend yields are also good at 5.42%, 5.45% and 5.45%. The dividend increases are low (below 8% per year) at 0.5% per year over the past 5 years. The last dividend increase was in 2024 and it was for 1.3%. Most of the years in the past 5 years had no dividend increases.
The Dividend Payout Ratios (DPR) are fine. The DPR for 2024 for Earnings per Share (EPS) is too high at 70% with 5 year coverage at 96%. The DPR for 2024 for Adjusted Funds from Operations (AFFO) is fine at 88% with 5 year coverage at 91%. The DPR for 2024 for Funds from Operations (FFO) is fine at 73% with 5 year coverage at 76%. The DPR for 2024 for Cash Flow per Share (CFPS) is good at 25% with 5 year coverage at 27%. The DPR for 2024 for Free Cash Flow 1 (FCF 1) is fine at 33% with 5 year coverage at 57%. The DPR for 2024 for Free Cash Flow 2 (FCF 2) is too high at 65% with 5 year coverage at 60%. Currently, the two FCF values to not agree.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 69.96% | 96.00% |
| AFFO | 87.77% | 90.76% |
| FFO | 73.48% | 76.46% |
| CFPS | 25.25% | 27.18% |
| FCF 1 | 33.29% | 56.56% |
| FCF 2 | 64.67% | 59.60% |
Debt Ratios are fine, but debt is high. The Long Term Debt/Market Cap Ratio for 2024 is fine for an REIT at 0.69 and currently at 0.67. The Liquidity Ratio for 2024 is good at 4.64 and 6.64 currently. If you added in Cash Flow after dividends, the ratios are still good at 2.18 and currently at 2.18. The Debt Ratio for 2024 is fine but low at 1.39 and 1.39 currently. The Leverage and Debt/Equity Ratios for 2024 are too high at 3.58and 2.58 and currently at 3.58 and 2.58. Debt is high but REITs do tend to have a lot of debt.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.69 | 0.67 |
| Intang/GW | 0.00 | 0.00 |
| Liquidity | 4.64 | 4.64 |
| Liq. + CF | 2.18 | 2.18 |
| Debt Ratio | 1.39 | 1.39 |
| Leverage | 3.58 | 3.59 |
| D/E Ratio | 2.58 | 2.59 |
The Total Return per year is shown below for years of 5 to 11 to the end of 2024. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2019 | 5 | 0.49% | 4.62% | -0.82% | 5.44% |
| 2014 | 10 | 1.55% | 8.72% | 2.46% | 6.26% |
| 2013 | 11 | 1.41% | 8.35% | 2.19% | 6.16% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 13.77, 14.61 and 15.45. The corresponding 10 year ratios are 11.14, 12.66 and 14.18. The corresponding historical ratios are 12.32, 13.32 and 14.44 (11 years). The current ratio is 13.46 based on a stock price of $13.83 and EPS estimate for 2025 of $1.03. The current ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I also have Adjusted Funds from Operations (AFFO) data. The 5-year low, median, and high median Price/Adjusted Funds from Operations Ratios are 14.44, 16.69 and 18.82. The corresponding 10 year ratios are 14.15, 16.05 and 17.92. The current ratio is 14.41 based on a stock price of $13.83 and AFFO estimate for 2025 of $0.96. This ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I also have Funds from Operations (FFO) data. The 5-year low, median, and high median Price/Funds from Operations Ratios are 12.09, 13.94 and 1600. The corresponding 10 year ratios are 11.69, 13.33 and 14.85. The current ratio is 13.17 based on a stock price of $13.83 and FFO estimate for 2025 of $1.05. This ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $18.59. The 10-year low, median, and high median Price/Graham Price Ratios are 0.87, 0.98 and 1.06. The current ratio is 0.74 based on a stock price of $13.83. The current ratio is below the low ratio of the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a 10-year median Price/Book Value per Share Ratio of 1.25. The current ratio is 0.93 based on Book Value of $4,891M, Book Value per Share of $14.92 and a stock price of $13.83. The current ratio is 26% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a 10-year median Price/Cash Flow per Share Ratio of 6.51. The current ratio is 6.26 based on Cash Flow for the last 12 months of $424.7M, Cash Flow per Share of $2.21 and a stock price of $13.83. The current ratio is 4% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year historical median dividend yield of 5.45. The current dividend yield is 5.50% based on dividends of $0.76 and a stock price of $13.83. The current dividend yield is .8% below the 10 year and historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and above the median. (Note that in this case historical is just 11 years.)
The 10-year median Price/Sales (Revenue) Ratio is 7.13. The current P/S Ratio is 6.68 based on Revenue estimate for 2025 of $1,498M, Revenue per Share of $2.07 and a stock price of $13.83. The current ratio is 6% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
Results of stock price testing is that the stock price is probably reasonable. The dividend yield testing is showing that the current dividend yield is very close to the 10 year median dividend yield. The P/S Ratio testing is showing the stock price as reasonable and below the median. Most of the rest of the testing is showing the stock price as either cheap or reasonable and below the median.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (4), Hold (3). The consensus would be a Buy. The 12 month stock price consensus is $15.50 with a high of $16.00 and a low of $15.00. The consensus stock price of $15.50 implies a total return of 17.57% with 12.08% from capital gains and 5.50% from dividends.
The analysts’ recommendations in 2025 on Stock Chase are buys. Stock Chase gives this stock 5 stars out of 5. Amy Legate-Wolfe on Motley Fool says to buy this stock for passive income. Demetris Afxentiou on Motley Fool thinks this is a REIT to buy and hold forever. The company put out a Press Release about their results for the fourth quarter of 2024.
There is an article about this stock on Sure Dividend. Simply Wall Street gives this stock 2 and one half stars out of 5. They have 3 warnings out on this stock of interest payments are not well covered by earnings; shares are highly illiquid; and large one-off items impacting financial results.
Choice Properties Real Estate Investment Trust invests in commercial retail, industrial, mixed-use, and residential properties across Canada. Choice Properties generates the majority of its revenue from leasing properties to its tenants. The company's principal tenant, the large-format retailer Loblaw Companies, contributes the vast majority of the total rent. Its web site is here Choice Properties REIT.
The last stock I wrote about was about was Intact Financial Corp (TSX-IFC, OTC-IFCZF) ... learn more. The next stock I will write about will be Canadian Tire Corp (TSX-CTC.A, OTC-CDNAF) ... learn more on Friday, February 28, 2025 around 5 pm. Tomorrow on my other blog I will write about China’s Huge Surplus.... learn more on Thursday, February 27, 2025 around 5 pm.
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