Thursday, March 18, 2010

Canadian Real Estate Investment

I am reviewing this stock (TSX-REF.UN) today as the annual reported for December 2009 has been published and this is a stock that I own. I bought shares in this company in September 2006 and my total return to date has been 7% per year. I noticed that this company usually raises their dividend every year, and this it did also in 2009. The increase was not great as it was just 1.5%, but inflation is very low at present.

Some of the growth figures are good and others not great. Most of the 10 year growth figures are better than the 5 year figures and some visa versa. For example, the earnings growth for the last 5 and 10 years are 10% per year and 6.8% per year, respectively. If you look at the revenue growth for the last 5 and 10 years, they are 8.3% per year and 12% per year. However, when you look at revenue per share, the growth is not nearly as good with the 5 and 10 year growth at 4.8% per year and 4.6% per year. The much lower revenue per share is because the increase in the number of shares over the past 5 and 10 years has averaged 3.4% per year and 7.3% per year, respectively.

The worse growth figures are for the Book Value and this growth has been, over the last 5 and 10 years, 1.4% per year and 1.1% per year. Part of the distributions each year has been assigned to return of capital. Some of the best growth figures are for Total Return. The 5 and 10 year figures for this have been 15.2% per year and 17.7% per year, respectively. The Distributable Income growth has been increasing much faster than distribution growth. For example, the DI growth for the last 5 year has been at 10% per year. However, the problem with DI figures is that it has not been consistently calculated and it is a non-GAAP item.

On this stock, the Asset/Liability ratio is good at 1.55 and has a 5 year average of 1.51. What you want this ratio to be at is 1.50 and it usually is around there, but has, at times dipped a bit lower. The last item to mention is the Return on Equity and this has been good. The ROE for 2009 was 15.3% and the 5 year average is 12.1%. These are both good figures.

I am happy with my investment in this stock and plan to continue to hold my shares. The reason my return has been at 7% per year is that this stock has not done much over the last couple of years. The market has not done much over the last couple of years either. A lot of my money is in financials and utilities, so I have some invested in REITs to give some balance to my portfolio.

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 centers, industrial and office properties across Canada. This company owns office, industrial, retail properties and some miscellaneous items such as apartment buildings. This stock is rated STA-3M by DBRS. Its web site is See my spreadsheet 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. Also, look at other investing notes on my website at Follow me on twitter.

No comments:

Post a Comment