Canadian Real Estate Investment Trust

First I should probably tell you I have been interviewed by Money Sense magazine. I was at a photo shoot today in connection with the interview. It was interesting. They had me looking at apples, weighing two sets of apples and juggling (or the best I could do) apples.

Now, on to the stock I own this stock Canadian Real Estate Investment Trust (TSX-REF.UN) that I want to review today. I bought this in September 2006 and since that time I have made a total return of 11.8% per year. The portion of my total return attributable to distributions is 4.7% or 40% of my return.

The 5 year median dividend yield on this stock is 4.6%. The growth in dividends over the past 5 and 10 years is 2.1% and 2% per year, respectively. Inflation is running at 1.9% and 2.2% per year over the past 5 and 10 years. So, dividend increases have sort of kept up with inflation. After being invested in this stock for 6 years, my yield on my original investment is 5.5%.

The Distribution Payout Ratios for this company are 68% for cash flow, 60% for Funds from Operations (FFO) and 69% for Adjusted Funds from Operations (AFFO). The company has a fairly good record of increasing dividends since 2002.

The growth rates for this company are ok, but nothing to write home about. The growth in Revenue per shares is just 1% and 5% per year, over the past 5 and 10 years, respectively. Growth in FFO is 4% and 69.6% per year over the past 5 and 10 years, respectively.

There is no growth in EPS. The best is growth in Cash Flow which is 4.4% and 8.5% per year, over the past 5 and 10 years. Book Value jumped in 2011 because of the new accounting rules, so it is hard to judge were this is going. They also have been increasing the units outstanding by 3% and 4.7% per year over the past 5 and 10 years.

As for debt ratios, the Liquidity Ratio has jumped all over the place, which is rather typical for this type of company. It is 1.10 for 2011 and this is fine. The Asset/Liability Ratio is 2.06 at the end of 2011. This is a very good ratio and it is higher than the 5 year median ratio of 1.55.

The current Leverage and Debt/Equity Ratios are good at 1.95 and 0.95 at the end of 2011. They are also better than the corresponding 5 year median ratios of 2.60 and 1.60.

The Return on Equity for 2011 was very low at 2.7%. This is due both to increase in Book Value (98%) and decrease in earnings (72%). The 5 year median ROE is much better at 12.9%. The ROE based on comprehensive income is similar to the above ROE. It is 2.1% for the end of 2011. The 5 year ROE based on comprehensive income is a bit lower over the past 5 years at 9.8%.

This stock has performed much as I would have expected and I plan to continue to keep it. I have made more out of my investment in RioCan than CDN Real Estate, but this stock has lower DPRs and will probably continue to increase its distribution on a modest basis.

Canadian Real Estate Investment Trust 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 here CDN Real Estate. See my spreadsheet at ref.htm.

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 for stocks followed and investment notes. Follow me on twitter.