Retail REITs for a Solid 5% Income | The Motley Fool Canada

Retail REITs for a Solid 5% Income | The Motley Fool Canada: "Largest Canadian REIT

RioCan Real Estate Investment Trust (TSX:REI.UN) is Canada’s largest REIT. At $25 per share, it yields 5.6%. It owns shopping centres and has interests in over 350 retail properties.

Its rental income is very safe because the income is diversified across 8,000 tenants with no one contributing over 3.8% of rental revenue. RioCan delivers stable and reliable cash distributions to unitholders, and it has been doing so for over nine years. Its payout ratio of about 85% gives a margin of safety for its distributions.

RioCan is fairly valued with a price-to-funds-from-operations ratio (P/FFO) of about 15.

Small but growing

Plaza Retail REIT (TSX:PLZ.UN) is both an owner and developer of retail properties with assets of about $1 billion. It only has a market cap of $419 million compared to RioCan’s $8 billion. However, Plaza Retail has had 15 years of profitable growth.

Currently, the REIT has over 300 properties across eight provinces. At $4.60, it yields almost 5.5%.

Its growing FFO allowed it to increase distributions every year since 2003. It last increased its distribution in January 2015 by 4.2%, and investors can expect another hike in the New Year.

Director Earl Brewer bought $69,720 worth of units in August for $4.2 per unit. Further, both CIBC and RBC Capital Markets give Plaza Retail a target price of $5. At $4.60 per unit, the shares are discounted by 8.7%. Based on a P/FFO ratio of 15, the shares are fairly valued.

Originally called Calloway REIT with the ticker TSX:CWT.UN, Smart REIT (TSX:SRU.UN) is another retail REIT that has done well in the past year. At $32 per unit, it yields 5.1%."



'via Blog this'