Canadian Real Estate Investment Trust

Sound bite for Twitter and StockTwits is: Canadian REIT. If we exclude the stock price testing on historical median dividend yield, then we are getting a stock price that is from cheap to reasonable. The offer to buy this is $53.61, but the stock price has not gone to there yet. See my spreadsheet on Canadian Real Estate Investment Trust.

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 thought that CDN REIT was a better buy at that time. I was not interested in CAP as it is only Apartments.

I have done very well with this REIT. I have had it for just over 11 years and my total return is 9.54% per year with 4.72% from Capital Gains and 4.82% from distributions. I note that the article taking about the takeover of this REIT says the deal will be in stock and cash. I will all stock if I have that opportunity.

REITs tend to have moderate to good dividend and low dividend growth. This REIT is not different. The current dividend yield is 3.80% with the 5, 10 and historical median dividends at 4.02%, 4.06% and 6.02% respectively. Dividend growth was at 4.75%, 3.43%, 2.97%, 2.98% and 5.03% over the past 5, 10, 15, 20 and 23 years.

I have had this REIT for just over 11 years. My yield on my original purchase is 7.09% and my dividends have covered some 66.6% of the cost of my stock. You buy REITs for diversification and also for the good dividends that you get.

Long term returns over the past 5 years have been low, but other durations from 10 to 23 have been good. With this REIT being bought out, the 5 year return will be better. The 5, 10, 15, 20 and 23 total return has been at 5.20%, 9.26%, 15.39%, 13.20% and 16.28% per year. The portion attributed to capital gains is 1.27%, 4.86%, 8.70%, 6.68% and 7.86%. The portion attributable to distributions is 3.92%, 4.40%, 6.69%, 6.52%, and 8.42%. In most years 43% to 51% of the total return is in the distributions.

The 5 year low, median and high median Price/Earnings per Share Ratios are 21.11, 23.10 and 25.10. The 10 year ratios are 19.41, 22.83 and 26.26. The historical ratios are 14.54, 16.18, and 17.81. Note that in a lot of cases the IFRS account rules affect EPS for REITs. The current P/E Ratio is 14.92 based on a stock price of $49.23 and 2018 EPS of $3.30. This stock price testing suggests that the stock price is relatively cheap.

For REITs we also look at Price/AFFO Ratios or Price/FFO Ratios. For this stock I will look at Price/AFFO Ratios. The 5 year low, median and high median P/AFFO Ratios are 15.70, 17.88 and 19.88. The 10 year P/.AFFO Ratios are 15.16, 16.61 and 18.46. The current P/AFFO Ratio is 17.77 based on 2018 AFFO estimate of $2.89 and a stock price of $49.23. This stock price testing suggests that the stock price is reasonable and below the median.

I get a Graham price of $59.13. The 10 year low, median and high median Price/Graham Price Ratio is 0.97, 1.12 and 1.29. The current Price/Graham Price Ratio is 0.83. This stock price testing suggests that the stock price is relatively cheap.

The 10 year median Price/Book Value per Share Ratio is 1.47. The current P/B Ratio is 1.05 based on Book Value of $3,456M, Book Value per Share of $47.08 and a stock price of $49.23. The current P/B Ratio is some 29% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

The current dividend yield is 3.80%. The 5, 10 and historical median dividend yields are 4.02%, 4.06% and 6.02%. Note that this REIT had much higher rates prior to 2006 than after that date. In any event all the median dividend yields are higher than the current one with the current rates being 5.5%, 6.5% and 36.9% below the median rates. This stock price testing suggests that the stock price is from relatively expensive to relatively reasonable but above the median.

I get a 10 year median Price/Sales (Revenue) Ratio of 7.66. The current P/S Ratio is 7.51 a value some 2% lower. The current P/S Ratio is based on 2018 revenue estimate of $481, Revenue per Share of $6.55 and a stock price of $49.23. This stock price testing suggests that the stock price is relatively reasonable and below the median.

When I look at analysts' recommendations I find I find Buy (3) and Hold (4) Recommendations. The consensus recommendations would be a Hold. The 12 month stock price consensus is $53.51. This implies a total return of 12.49% with 8.69% from capital gains and 3.80% from distribution based on a current stock price of $49.23. This is not really accurate as the REIT will probably be bought out before the year end. The Capital gains of 8.69% will certainly a given.

The Weston family through Choice Properties Real Estate Investment Trust plan to buy this REIT according to a recent article in the Financial Post. Articles do not say when this will happen. The CEO of this REIT gave a positive review of the past year at NASDAQ Globe News Wire. Ambrose O'Callaghan talks about REITs including this one on Motley Fool. See what analysts are saying about this stock on Stock Chase. This REIT is not reviewed often but analysts think well of the company.

Canadian Real Estate Investment Trust is a real estate investment trust. The Company owns and operates a portfolio of retail, industrial and office properties. Its web site is here Canadian Real Estate Investment Trust.

The last stock I wrote about was about was Home Capital Group (TSX-HCG, OTC-HMCBF)... learn more. The next stock I will write about will be Bombardier Inc (TSX-BBD.B, OTC-BDRBF)... learn more on Monday, February 26, 2018 around 5 pm.

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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