Thursday, September 11, 2008

CDN Real Estate

To diversify my portfolio, I have invested in some REITs. These are Real Estate Income Trusts. I have only invested in REITs that have commercial properties. I bought this stock in September 2006 and since that time I have made some 11.3% return. This includes the dividends I received. Since the beginning of the year, I have made a return of 7.7%. This stock has been going down with the bear market, but has not done as badly as the TSX.

The following values are all for the last 5 years to December 31, 2007, which is the last annual statement date. The positive features of this stock are that the revenues has been increasing at a rate of 12.3%, the Funds from Operations (FFO) has been increasing at the rate of 9.7% and the Closing Price by 24.9%. The FFO is more important than the Earnings per Share (EPS), but the EPS has only been increasing at the rate of 3.7%.

The other positives on this stock are that the Operation Profit Margin is 38% (this is higher than both the 5 year and 10 year average) and the Return on Equity (ROE) is a very good 12.9% for 2007. The negatives that I see are the Asset/Liability Ratio is 1.48 (but this is only slightly lower than the 1.50 I like to see), the Accrual Ratio is 9.8% (and anything over 5% is high) and the Asset/Book Value Ratio is high at 3.08 (but not unusual high for a REIT).

Dividend increases on this stock in the last 5 years has been at 2% per year, which is barely at the rate of inflation. However, the increase for this calendar is a better 3%. This REIT is rated STA-3M by DBRS. DBRS rate Income Trust stocks from STA-1 to STA-7, with the STA-1 rating being the best. REITs usually get a STA-2 or STA-3 rating.

This is an equity real estate trust, which acquires and owns a portfolio of income-producing properties. It specializes in the acquisition and ownership of community shopping centres, and industrial and office properties across Canada. This company owns office, industrial, retail properties and some miscellaneous items such as apartment buildings. Its web site is See my spreadsheet on this company at

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. See my website at for a list of the stocks for which I have put up spreadsheets on my web site.

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