Canadian Real Estate Trust

On my other blog I am today writing about possible cheap dividend stocks continue...

I own this stock of Canadian Real Estate Investment Trust (TSX-REF.UN, OTC-CRXIF). In September 2009, I wanted to buy another REIT after having to sell Summit. I already have lots of RioCan. I looked at H&R and CDN REIT. I think that CDN REIT is a better buy. I was not interested in CAP as it is only Apartments.

REIT's tend to have a higher level of yields, but have low distribution growth. You want the growth to be at least at the rate of inflation. The current yield is 4% and the 5 year median yield is 4.24%. The distribution growth is at 3.3% and 2.6% per year over the past 5 and 10 years. Inflation has been low over the past 5 and 10 years according to the Bank of Canada. It was running at 1.6% and 1.8% per year over the past 5 and 10 years.

When looking at the Distribution Payout Ratios, one tends to look at the ratios for cash flow, FFO and AFFO, rather than for EPS. The 5 year median DPR for cash flow is 63.9%, for FFO is 59% and 67%. The DPR for 2013 was 66% for cash flow, 56% for FFO and 62% for AFFO.

The stock's total return over the past 5 and 10 years is at 14.62% and 14.94% per year. The portion of this return from distributions is at 4.65% and 5.53% per year. The capital gain portion of this return is at 9.97% and 9.41% per year.

Outstanding shares have increased by 2.4% and 2.8% per year over the past 5 and 10 years. Shares have increased due to Share Issues and DRIP. Shares have decreased due to Buy Backs. Outstanding shares were not increased due to stock options in 2013. The annual statement mentions that the company buys stocks on the open market for stock options.

Revenues are up by 3.3% and 7% per year over the past 5 and 10 years. The Revenue per Share has increase by 4% and 5.4% per year over the past 5 and 10 years.

There has been minimal growth in EPS over the past 5 and 10 years with growth at 1.9% and 0.8% per year over the past 5 and 10 years. However, 5 year running averages are higher at 9.9% and 3.3% per year over the past 5 and 10 years. The net income shows the same configuration with net income up 4.3% and 3.8% per year over the past 5 and 10 years, but the 5 year running averages up by 8.9% and 8.6% per year over the past 5 and 10 years. Net income and EPS has been consistently averaging higher over the past 5 and 10 years.

There is better growth in FFO (Funds from Operations) and AFFO (Adjusted Funds from Operations). These values are used more for REITs that are the net income and EPS values. The FFO has increased by 4.6% and 7.6% per year over the past 5 and 10 years. AFFO has increased by 5.5% and 7.5% per year over the past 5 and 10 years.

The Return on Equity has been low over the past few years at 5% with the 5 year median ROE also at 5%. The reason for this is that the decline is that with the new IFRS accounting rules, the book value has increased considerable. The 10 year median ROE is at 10.2%. The Return on Assets has also decreased, but not as much. The current ROA is 2.3% and the median ROA over the past 10 years is at 3.4%.

The Liquidity Ratio is quite good currently at 1.97, but this does fluctuate considerably. The Debt Ratios has always been very good with the current Debt Ratio of 1.85. The 5 year median value is also 1.85. The Leverage and Debt/Equity Ratio are ok at 2.18 and 1.18.

I bought this stock for diversification. I have done well with this stock. See my spreadsheet at ref.htm.

This is the first of two parts. The second part will be posted on Tuesday, March 4, 2014 and will be available here. The first part talks about the stock and the second part talks about the stock price.

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. Its web site is here CDN REIT.

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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