What are the best Canadian REITs to invest in?

The Canadian housing boom has contributed nearly C$ 1 trillion or six per cent to the national net worth in the first quarter of 2021, as per a Statistics Canada report. The country’s real estate sector has added over C$ 2 trillion since 2020, propelled by the rising home prices. Bay Street-based real estate analysts foresee further growth in home prices this year.

As prices continue to soar north, here are five top Real Estate Investment Trusts (REITs) explore on the back of the above development.

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

This real estate trust deals in the development and management of urban offices across Canada, especially in Toronto and Montreal. It generates revenue through rental tenants in its properties.

Its current market cap is C$ 5.81 billion, and its units are trading at C$ 45.66 apiece. The REIT is up almost 21 per this year, and it also distributes a monthly dividend of C$ 0.142 per unit. It offers a healthy dividend of 3.724 per cent. 

The investment trust recorded its one-year high of 46.13 apiece on June 11, 2021. At the previous closing price, it was up 16.37 per cent from its 200-day simple moving price.

It has robust returns on assets and equity of 3.70 per cent and 5.63 per cent, respectively. Its earnings per share (EPS) is C$ 2.57.

In the first quarter of 2021, Allied reported an adjusted EBITDA of C$ 89 million, up four per cent compared to C$ 85.64 million a year ago. In the remaining 2021, the trust expects single-digit growth.

2. RioCan Real Estate Investment Trust (TSX:REI.UN)

The investment trust holds, builds, and manages retail-focused portfolios.

The REIT units have surged more than 30 per cent in 2021. It gained over 35 per cent in the past one year. At the previous close price of 21.80 apiece, the unit was up 22.20 per cent against its 200-day SMA, signalling a long-term uptrend.

It is one of the active REITs on the Toronto Stock Exchange (TSX), with a 30-day average volume of 1.11 million units.

RioCan also pays a monthly dividend of C$0.08 apiece and holds a current dividend yield of 4.04 per cent. Its market cap stands at 6.916 billion.

In the first quarter of 2021, the trust reported a profit of C$ 106.7 million, up against C$ 102.8 million from pre-COVID level in Q1 2020. However, its debt-to-EBITDA ratio soared over 10 times in Q1 2021, up against 9.47x in Q4 2020. It held C$ 1.3 billion in cash and cash equivalents as of March 31, 2021.

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3. Crombie Real Estate Investment Trust (TSX:CRR.UN)

This Canada-based real estate trust is specialized in retail market-related properties. The firm develops and manages a retail-focused portfolio, including grocery and drug stores, shopping centers, stand-alone stores, and offices.

Its unit price is C$ 18.50 apiece, and its market cap is C$ 1.79 billion. It delivers C$ 0.074 apiece monthly dividends to its unitholders. It has a strong dividend yield of 4.811 per cent.

The trust has gained 29 per cent this year and risen more than 44 per cent in one year, beating the Canadian benchmark in both time frames. In the last three months, it has spiked by 19.50 per cent, led by the ongoing real estate market boom.

In the first quarter of 2021, its net property income was over C$ 70 million against 67 million in Q1 2021, an increase of 4.7 per cent on a year-over-year (YoY) basis.

4. Choice Properties Real Estate Investment Trust (TSX:CHP.UN)

This trust builds, retails, and deals in commercial properties and manages a portfolio that includes shopping malls, supermarkets, and stand-alone grocery stores. The firm has leased its properties to Canada’s largest grocer Loblaw Companies Limited (TSX:L), which provides the majority of the rent earnings.

Its units are trading at C$ 14.65 apiece while the market cap stands at C$ 4.79 billion. Its one-year stock price return is nearly 16 per cent, and the year-to-date return is nearly 13 per cent.

The trust unit has a dividend yield of over five per cent. The real estate investment firm pays C$ 0.062 apiece monthly in dividends.

The company’s diversified properties of retail, office, and industrial properties are 97 per cent occupied and rented to quality tenants.

However, the company’s revenues were impacted due to the renewed lockdowns across Canada in the first quarter. In the first quarter of 2021, it registered a net loss of C$ 62.2 million for the first quarter of 2021 as compared to a profit of C$ 332.7 million in Q1 2020.

5. SmartCentres Real Estate Investment Trust (TSX:SRU.UN)

The open-ended mutual fund trust earns most of its revenue from leased properties. It has two segments, include retail and mixed properties. The retail segment manages fitness centers, restaurants, supermarkets, and clothing stores.

The trust distributes a monthly dividend of C$ 0.154 per unit. It has an interesting dividend yield of 6.214 per cent.

Its unit price stands at C$ 29.77 apiece, and it holds a market cap of C$ 4.30 billion. The REIT has swelled nearly 29 per cent this year. It is up almost 40 per cent in one year.

In the first quarter of 2021, the trust posted a net profit of C$ 60.6 million against C$ 64.2 million in Q1 2020, a drop of C$ 3.6 million. However, the firm managed to improve its unsecured/secured debt ratio in Q1 2021.

Please note: The above constitutes a preliminary view and any interest in stocks should be evaluated further from an investment point of view. The reference data in this article has been partly sourced from Refinitiv.



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