I own this stock of Choice Properties REIT (TSX-CHP.UN, OTC-PPRQF). I got this stock when CDN REIT was acquired by Choice Properties. Choice was originally a spin off from Loblaws. The Weston Family via George Weston Ltd now owns a big piece of it.
When I was updating my spreadsheet, I noticed this stock is relatively new with only 5 years of data as it was spun off form Loblaws in 2013. They stock has done fairly well so far in a short period.
REITs tend to have good yields and low growth. This REIT is not any different. The current yield is good at 5.52% with 5 year median at 5.79% and from inception at 5.57%. They have not done increases every year. They did increases in 2016 and 2017. There was no increase in 2018. The 5 year growth is low at 2.63% per year.
For REITs you look at Dividend Payout Ratios using Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO). The DPR for FFO for 2018 was 72% with 5 year coverage at 69%. The DPR for AFFO for 2018 was 89% with 5 year coverage at 86%. I think that these are fine.
The only Debt Ratio that I really like to the Long Term Debt/Market Cap Ratio at 0.72. The Liquidity Ratio is really low at 0.22 where current assets cannot coverage current liabilities. However, if you add back in current portion of the long term debt and cash flow after distributions, you get a ratio of 1.80. So, the implication is that to pay current liabilities the company is depending on rolling over debt and cash flows. The Debt Ratio is low at 1.29 where I would prefer it at 1.50.
The Total Return per year is shown below for years of 5 to the end of 2018. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See charts below. The total return over the past 5 years is satisfactory.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 2.63% | 8.14% | 1.83% | 6.31% |
The 5 year low, median, and high median Price/AFFO per Share Ratios are 13.79, 14.89 and 16.23. The current P/AFFO Ratio is 15.76 based on a stock price of $13.40 and AFFO estimate for 2019 of $0.85. This stock price testing suggests that the stock price is relatively reasonable but above the median.
The 5 year low, median, and high median Price/FFO per Share Ratios are 11.23, 11.92 and 12.99. The current P/FFO Ratio is 12.97 based on a stock price of $13.40 and FFO estimate for 2019 of $1.00. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a Graham Price of $16.80. The 10 year low, median, and high median Price/Graham Price Ratios are 0.79, 0.84 and 0.89. The current P/GP Ratio is 0.80 based on a stock price of $13.40. This stock price testing suggests that the stock price is reasonable and below the median.
I get a 5 year median Price/Book Value per Share Ratio of 1.12. The current P/B Ratio is 1.07 based on a Book Value of 3,491M, Book Value per Share of $12.53 and a stock price of $13.40. The current P/B Ratio is 4.9% below the 5 year ratio. This stock price testing suggests that the stock price is reasonable and below the median.
I get an historical median dividend yield of 5.57%. The current dividend yield is 5.52% based on dividends of $0.74 and a stock price of $13.40. The current yield is 0.85% below the historical median. This stock price testing suggests that the stock price is reasonable but above the median.
The 5 year median Price/Sales (Revenue) Ratio is 6.77. The current P/S Ratio is 6.63 based on Revenue estimate for 2019 of $1,350, Revenue per Share of $2.02 and a stock price of $13.40. The current ratio is some 2.1% below the 5 year ratio. This stock price testing suggests that the stock price is reasonable and below the median.
Results of stock price testing is that all the tests show the price at reasonable, but some above and some below the median.
When I look at analysts’ recommendations, I find Strong Buy (1) and Hold (8). The consensus would be a Hold. The 12 month stock price is $13.53. This implies a total return of 6.49% with 0.97% from capital gains and 5.52% from dividends.
See what analysts are saying about this stock on Stock Chase. It is considered to be a defensive stock. Vishesh Raisinghani on Motley Fool says it has a great yield but is too concentrated in retail. Bruce Howe on Simply Wall Street talks about using FFO in various calculations for this REIT. A Herdon Staff Writer on Herdon Gazette says the Williams Percent Range is -11.70 which is in overbought territory.
Choice Properties Real Estate Investment Trust invests in, manages, and develops retail and commercial properties across Canada. The company's portfolio primarily consists of shopping centres anchored by supermarkets, and stand-alone supermarkets. The properties are mostly located in Ontario and Quebec, followed by Alberta, Nova Scotia, British Columbia, and New Brunswick. Its web site is here Choice Properties REIT.
The last stock I wrote about was about was Manulife Financial Corp. (TSX-MFC, NYSE-MFC) ... learn more. The next stock I will write about will be Atrium Mortgage Investment Corp (TSX-AI, OTC-AMIVF) ... learn more on Friday, February 22, 2019 around 5 pm. Tomorrow on my other blog I will write about Investing Now… learn more on Thursday, February 21, 2019 around 5 pm.
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