H & R Real Estate Trust

Sound bite for Twitter and StockTwits is: Dividend Growth REIT. The stock price is relatively reasonable and around the median. Some tests show the stock price above the median and some below the median. Outstanding shares have grown faster than Revenue, which is not good. 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.

When I was updating my spreadsheet, I noticed outstanding shares have grown but revenue has not. Shares have grown by 1% and 7% per year over the past 5 and 10 years. Because of uneven growth in revenues, I am looking at 5 and 10 year Running Averages. The 5 and 10 year running averages show growth of 9%. And 8.5%. If you Look at Revenue per Share, 5 year running averages show growth of 0.2% and 0.5%. This shows that no real progress has been made on revenue.

The 5 year running averages for the past 5 years show average growth for the 5 years ending in 2018 compared to the 5 year average growth to 2013. The 5 year running averages for the past 10 years show average growth for the 5 years ending in 2018 compared to the 5 year average growth to 2008.

Dividend yield are good. The current dividend is 5.97% with 5, 10 and historical median dividend yields at 6.21, 6.01% and 6.47%. The dividend growth is low. See the table below. Nine years ago, the dividends were cut by 50%. They are not quite back to were they were in 2008. In 2008, dividends were at $1.44 and current they are at $1.38.

The Dividend Payout Ratios are probably fine. The DPR for EPS for 2018 is 1285 with 5 year coverage at 103%. Since this is a REIT, the DPR is usually calculated using FFO and AFFO. The DPR for 2018 for FFO is 80% with 5 year coverage at 73%. The DPR for 2018 for AFFO is $98% with 5 year coverage at 91%.

Debt Ratios are not what I would like to see and there is some vulnerability here. The Long Term Debt/Market Cap Ratio for 2018 is 0.98. The Liquidity Ratio for 2018 is 0.99, but if you add in cash flow after dividends the ratio is 1.32. The Debt Ratio is good at 1.96. Leverage and Debt/Equity Ratios for 2018 are 2.04 and 1.04.

The Total Return per year is shown below for years of 5 to 22 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.

From	Years	Div. Gth	Tot Ret	Cap Gain	Div.
2013	5	0.44%	5.74%	-0.71%	6.45%
2008	10	-0.42%	20.77%	10.73%	10.04%
2003	15	0.80%	8.75%	1.76%	6.98%
1998	20	1.47%	12.92%	3.59%	9.34%
1996	22	3.43%	12.24%	3.35%	8.89%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 14.51, 16.71 and 18.91. The corresponding 10 year ratios are 13.53, 15.96 and 18.21. The corresponding historical ratios are 11.53, 14.25 and 16.23. The current P/E Ratio is 13.06 based on a stock price of $23.12 and 2019 EPS estimate of $1.77. This stock price testing suggests that the stock price if relatively cheap.

Since this is a REIT, we need to repeat this test using FFO. The 5 year Price/Funds from Operations Ratios are 10.96, 11.66 and 12.69. The corresponding 10 year ratios are 11.68, 11.98 and 12.87. The current P/FFO Ratio is 12.70 based on 2010 FFO estimate of 1.82 and a stock price of $23.12. This stock price testing suggests that the stock price if relatively reasonable but above the median.

I get a Graham Price of $32.23. The 10 year low, median, and high median Price/Graham Price Ratios are 0.65, 0.70 and 0.79. The current P/GP Ratio is 0.72 based on a stock price of 23.12. This stock price testing suggests that the stock price if relatively reasonable but above the median.

I get a 10 year median Price/Book Value per Share Ratio of 0.96. The current P/B Ratio is 0.96. The current P/B Ratio is 0.92 based on a Book Value of $7,200M, Book Value per Share of $25.20 and a stock price of $23.12. The current ratio is 4% below the 10 year median ratio. This stock price testing suggests that the stock price if relatively reasonable and below the median.

I get an historical median dividend yield of 6.57%. The current dividend yield is 5.97% based on dividends of $1.38 and a stock price of $23.12. The current yield is 7.8% above the historical median yield. This stock price testing suggests that the stock price if relatively reasonable but above the median.

The 10 year median Price/Sales (Revenue) Ratio is 5.16. The current P/S Ratio is 5.08 based on 2019 Revenue estimate of $1,299M, Revenue per Share of $4.55 and a stock price of $23.12. The current ratio is 1.5% below the 10 year median ratios. This stock price testing suggests that the stock price if relatively reasonable and below the median.

Results of stock price testing is that the stock price is relatively reasonable and around the median. Some tests show the stock price above the median and some below the median.

When I look at analysts’ recommendations, I find Buy (6) and Hold (3). The consensus would be a Buy. The 12 month stock price is $24.78. This implies a total return of 13.15% with 7.18% from capital gains and 5.97% from dividends.

See what analysts are saying about this stock on Stock Chase. One analyst said that the dividends are safe, but growth will be modest. Nelson Smith on Motley Fool thinks the 6% dividend is great. A writer on Simply Wall Street says this company has recently had positive investor sentiment. Caroline Biscotti on Brookville Times says Piotroski F-Score of 5 where 9 is financial strength and 1 is financial weakness. Cheyenne Larson on Press Oracle about recent analysts ratings.

H&R Real Estate Investment Trust is a real estate investment trust principally involved in the ownership of properties in Canada and the U.S. H&R owns and manages a real estate portfolio rather equally divided between property in the Canadian provinces of Ontario and Alberta and in the U.S. Its web site is here H & R Real Estate Trust.

The last stock I wrote about was about was Allied Properties Real Estate Investment Trust (TSX-AP.UN, OTC-APYRF) ... learn more. The next stock I will write about will be Canadian Tire Corp (TSX-CTC.A, OTC-CDNAF) ... learn more on Monday, March 11, 2019 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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