Calloway Real Estate Investment Trust 2

I do not own this stock of Calloway Real Estate Investment Trust (TSX-CWT.UN, OTC-CWYUF). Once you have 5 or 6 stocks, you might want to consider a REIT for diversification. REITs are an easy way to investment in real estate. I am therefore following a few REIT stocks and in 2009 I decided to look at a few on the Dividend Achiever's List. Unfortunately, this stock is no longer on the Dividend Achiever's List.

When I look at insider trading, I find no action for the past year. There does not seem to be much in the way of outstanding stock options or insider ownership. However, there are convertible debentures and special voting units outstanding. Special voting units are almost 20% of the outstanding units. The SVUs are not part of the outstanding units, but have voting rights. The difference between basic and diluted outstanding units was mostly influenced by convertible debentures.

As far as stock options go, the outstanding shares were increased by around 240,000 units for these on 2013. They have a Book Value $8M and this number of shares were worth some $6M at the end of 2013. This number of shares is only 0.18% of the outstanding shares. The outstanding shares were increased a relatively small percentage for stock options in 2013.

The 5 year low, median and high median Price/Earnings per Share Ratios are 15.44, 16.94 and 18.45. The current P/E Ratio is 13.72 based on a stock price of $26.62 and 2014 earnings estimate of 1.94. This stock price test would suggest that the stock price is relatively cheap.

Since this is an income trust, we should also look at the Price/AFFO Ratios. The 5 year median P/AFFO Ratio is 15.30. The current P/AFFO Ratio is 15.30 based on AFFO estimate for 2014 of $1.74 and current stock price of $26.62. This stock price test would suggest that the stock price is relatively reasonable.

I get a 10 year Price/Book Value per Share Ratio of 1.54. The current P/B Ratio is 1.10 based on a stock price of $26.62 and current BVPS of $24.10. The current P/B Ratio is some 28% lower than the 10 year median ratio. This stock price test would suggest that the stock price is relatively cheap.

The 5 year median yield is 6.96% and the current dividend yield at 6.01% is some 16% lower. This stock price test would suggest that the stock price is relatively reasonable, but towards the higher end of the reasonableness range. The historical average dividend yield is 9.64% and this is some 37% above the current dividend yield and says the stock price is expensive.

However, if you use the historical median dividend yield, which is 6.29%, the current dividend yield is just 4.5% lower. This stock price test would suggest that the stock price is relatively reasonable.

When I look at analysts' recommendations, I find Buy and Hold Recommendations. The consensus recommendation would be a Hold. The 12 month consensus stock price is $28.60. This implies a total return of 13.45% with 6.01% from dividends and 7.44% from capital gains.

According to a Motley Fool article this REIT as well as Boardwalk REIT (TSX-BEI.UN) and RioCan Real Estate Investment (TSX-REI.UN) are current good buys. The blogger Passive Income Earner has a recent good article about buying Canadian REITs.

Sound bit for Twitter and StockTwits is: Stock price is probably reasonable. A number of stock price tests shows that the stock price is reasonable. I still do not like the complex ownership under this stock. However, it is a good sign that dividends were raised in 2014. See my spreadsheet at cwt.htm.

This is the second of two parts. The first part was posted on Monday, September 08, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

Calloway REIT is the largest owner of large-format unenclosed retail properties in Canada. Its web site is here Calloway 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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