H & R Real Estate Trust

Sound bite for Twitter and StockTwits is: Price is cheap to reasonable. They have exposure to Alberta, but a lot of that is under long term leases. Long Term this REIT should do fine and currently you can earn some very good yields. No one seems to think that distributions will be cut and some believe they will be raised. See my spreadsheet on H & R Real Estate Trust.

I do not own this stock of H & R Real Estate Trust (TSX-HR.UN, OTC-HRUFF). Before I started blogging, I was following a number of REITs and this is one I had followed. It also used to be on a dividend list I followed.

The outstanding shares have been increasing at 13.9% and 9.7% per year over the past 5 and 10 years. Shares have increased due to Debenture Conversions, DRIP, Stock Options and Share Issues. Because of this per shares values are the important ones to use to determine growth.

Revenue growth is good, but Revenue per Share is not. Revenue has grown at 14% and 9.3% per year over the past 5 and 10 years. Revenue per Share has grown at 0.09% and a negative 0.38% per year over the past 5 and 10 years. Cash Flow is better with Cash Flow growth at 25.9% and 15.6% per year over the past 5 and 10 years and Cash Flow per Share growth at 10.6% and 5.4% per year over the past 5 and 10 years.

Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO) growth is rather a mixed bag with AFFO growth at 4.7% and 0.8% per year over the past 5 and 7 years. AFFO is a newer measure than FFO. FFO growth is 8.8% and 1.2% per year over the past 5 and 10 years.

The growth in distributions looks like the growth in FFO with the 5 and 10 years growth at 11.4% and 0.34%. The reason for the low 10 year growth is because distributions were cut in by 50% in 2009 because they were having some problems. The distributions were at $1.44 before this cut and this REIT has not made it back to this amount, but it is close at $1.35.

Distribution yield is good and growth is a bit inconsistent. The current distribution yield is 6.98% which is rather high. This is based on distributions of $1.35 and a stock price of $19.33. The 5 year growth of 11.4% looks good, but this is because they had cut the distributions in half in 2009 and they have been trying to catch up to previous distributions.

There has been no distribution increase since 2013. A number of analysts expect a small increase in the 2.2% range either for 2016 or 2017. Most REITs have distributions slightly above inflation and this REIT will probably to back to this sort of growth in distributions.

As this is a REIT, it makes more sense to look at P/FFO and P/AFFO Ratios than Price/Earnings per Share Ratio (P/E Ratio). The 5 year low, median and high median P/AFFO Ratios are 13.50, 15.08 and 16.80. The current P/AFFO is 11.30. This is based on a stock price of $19.33 and 2016 AFFO estimate of $1.71. This stock price test suggests that the stock price is relatively cheap.

The 5 year low, median and high median P/FFO Ratios are 11.27, 12.51 and 13.76. The 10 year corresponding ratios are similar 11.16, 12.68 and 13.89. The current P/FFO is 10.12. This is based on a stock price of $19.33 and 2016 FFO estimate of $1.91. This stock price test suggests that the stock price is relatively cheap.

This REIT also had some past very high yields as its historical high is just over 12%. The historical median yield is 6.49% and this is some 7.6% lower than the current yield of 6.98%. The current yield is based on a stock price of $19.33 and distributions of $1.35. This stock price testing suggests that the stock price is relatively reasonable and below the median.

The 5 year median yield is lower at 5.95% and the current yield of 6.98% is some 17.4% higher. This stock price testing suggests that the stock price is relatively reasonable and below the median.

When I look at analysts' recommendations, I find Buy and Hold Recommendations. The recommendations are evenly split between these two categories. The consensus would then be a Buy. The 12 month target price is $23.53. This implies a total return of 28.71% with 6.98% from dividends and 21.73% from capital gains. This calculation is based on a stock price of $19.33.

In this article by Kay Ng of Motley Fool points out that the reason for this REITs high yield is that it is highly exposed to Alberta and therefore to the energy business. Seth Hatwan on Hilltop News talks about recent analysts' recommendations on this stock. On February 17, 2016, this REIT talks about their fourth quarterly results via Newswire. View recent analysts' comments on Stock Chase.

I will have only one entry for this stock this year. However, I did a more complete report on this company in 2015 and you can see those reports here and here.

On my other blog I wrote yesterday about something to buy March 2016 learn more . The next stock I will write about will be Canadian Tire Corp. (TSX-CTC.A, OTC-CDNAF)... learn more on Monday, March 14, 2016 around 5 pm.

Also, on my book blog I have put a review of the book Sapiens by Yuval Noah Harari. learn more...

H&R Real Estate Investment trust is an open-ended real estate investment trust. They have a portfolio of office properties, single-tenant industrial properties, retail properties and development projects. They operate across Canada and US. Its web site is here H & R Real Estate Trust .

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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