5 TSX Real estate rental stocks to watch post rent surge - Kalkine Media

November 22, 2022 06:35 AM EST | By Team Kalkine Media
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Highlights

  • In Q3 2022, Boardwalk's rental revenue was C$ 125.5 million.
  • Tricon's net income in Q3 2022 was US$ 178.78 million.
  • Granite's revenue in Q3 2022 was reported at C$ 111.6 million.

Canada's real estate consists of two busy segments- commercial and residential, and within these, there exists a rental market.

With housing being the core necessity, the market is always active. During October, the rent surged across Canada, according to a Rentals.ca report. The rents witnessed a rise of 11.8 per cent YoY (year-over-year) to an average of C$ 1,976 across all types of property. The annual increase in the rents was more than double the annual increase in employees' average hourly wages of 5.6 per cent. There has been a growth in rents across Canada, and the markets have reported reporting double-digit annual rent inflation.

The rise in rents is directly proportional to the rise in interest rates. Despite the lowering of house prices, the rent increase has contributed to the competitiveness of Canada's rental market.

Amid these changes, the investors need to analyze the present and past trends to select their stocks. The current factors alone may not clarify the entire market and sector. Hence, proper research is required to reposition your portfolio per changing trends. Amid the rise, let is look at five real estate rental stocks and explore their recent financial performances:

  1. Boardwalk Real Estate Investment Trust (TSX: BEI.UN)

Boardwalk Real Estate Investment Trust is Canada-based REIT engaged in managing, acquiring, and developing residential multi-family communities. The company generates its revenue from rent from leasing properties under short-term agreements. Boardwalk's presence is in Alberta, Ontario, and Quebec.

In Q3 2022, Boardwalk's rental revenue rose to C$ 125.5 million from C$ 118.4 million in the year-ago quarter.

Meanwhile, Boardwalk REIT's net operating income grew to C$ 76.3 million from C$ 71.8 million for the same period.

Notably, the funds from operations also increased to C$ 42.7 million from C$ 40.5 million. The company's operating margin was noted at 60.8 per cent versus 60.6 per cent.

Boardwalk's monthly dividend per share was noted at C$ 0.09 with a dividend yield of 2.147 per cent. The EPS of the company is C$ 8.68.

  1. Tricon Residential Inc. (TSX: TCN)

Tricon Residential caters to the middle market as a rental housing firm in Canada and the US. The company owns single-family and multi-family rental units.

In Q3 2022, Tricon's net income grew to US$ 178.78 million from US$ 174.34 million in Q3 2021. The core funds from operations increased to US$ 46.4 million from US$ 38.14 million for the same comparative period.

Tricon's dividend per share was posted at US$ 0.058 with a five-year dividend growth of 1.33 per cent. The P/E (price-to-earnings) ratio is 2.9 and the EPS is US$ 4.14.

  1. Granite Real Estate Investment Trust (TSX: GRT.UN)

Granite Real Estate Investment Trust primarily operates in Europe and North America and manages, acquires, and develops industrial properties. The company's portfolio includes corporate and manufacturing offices, product engineering facilities and warehouse and logistics.

In Q3 2022, Granite's revenue witnessed an increase and was reported at C$ 111.6 million versus C$ 98.3 million in Q3 2021. The net operating income rose to C$ 94 million from C$ 84.5 million for the same period.

The funds from operations grew to C$ 70.7 million from C$ 65.2 million. The monthly dividend per share was C$ 0.258 with a dividend yield of 3.949 per cent.

The total market capitalization of BEI.UN, TCN, GRT.UN, CAR.UN and AP.UN:

  1. Canadian Apartment Properties Real Estate Investment Trust (TSX: CAR.UN)

CAPREIT (Canadian Apartment Properties Real Estate Investment Trust) is engaged in leasing and acquiring multiunit residential rental properties in the urban areas of Canada. The company's portfolio includes townhouses and apartments and aims towards luxury and mid-tier markets.

In Q3 2022, Canadian Apartment's net operating income rose to C$ 166.64 million from C$ 158.12 million in Q3 2021.

The operating revenues grew to C$ 252.03 million from C$ 236.09 million for the same comparative period. Meanwhile, the cash and cash equivalents shrank to C$ 101.29 million from C$ 138.43 million.

CAPREIT's funds from operations increased to C$ 105.4 million from C$ 102.96 million. The REIT distributed C$ 0.121 as dividend per share. The EPS of the real estate stock is C$ 2.9.

  1. Allied Properties Real Estate Investment Trust (TSX: AP.UN)

The major operations of the company are located in Montreal and Toronto.

In Q3 2022, Allied Properties' rental revenue grew to C$ 157.16 million from C$ 142.65 million in Q3 2021. The adjusted EBITDA jumped to C$ 103.66 million from C$ 93.94 million for the same comparable period. The company's dividend yield was 6.753 per cent with a monthly dividend of C$ 0.146 per share. The EPS is C$ 3.76.

Bottom Line

There may be certain entry barriers to the real estate sector that may keep some investors at bay. On the other hand, many investors enter the market but do not operate because of a lack of knowledge. To operate in the market, ensure to have sufficient knowledge and research. Study the market trends carefully and strategize your portfolio.

Additionally, add the diversification element to mitigate the risks. Every stock performs differently during market fluctuations and downturns. Hence, analyze the stocks along with the company valuations to understand it better. Follow a long-term approach in the market and shield your portfolio against uncertainties and uncalled situations.

Please note, the above content constitutes a very preliminary observation based on the industry and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.


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