Act Fast: 75 Only!
Real estate is one of the world’s most popular investments, but buying and managing a rental property is simply not for everyone. Fortunately, there are real estate investment trusts (REITs) that offer the benefits of owning rental properties, such as monthly income, without the hassles that come with purchasing a property or being a landlord. With all of this in mind, let’s take a look at four REITs that you could buy today.
Summit Industrial Income REIT (TSX:SMU.UN)
Summit is one of Canada’s largest owners and managers of industrial real estate. As of December 31, 2017, its portfolio consists of 83 industrial properties and one data centre facility, which are located across five provinces and total approximately 8.88 million square feet.
Summit currently pays a monthly distribution of $0.043 per unit, equating to $0.516 per unit annually, which gives it a yield of about 6.4% today.
It’s important to note that the REIT’s 2.4% distribution hike in May 2017 has it on pace for 2018 to mark the second straight year in which it has raised its annual distribution and that it has a goal of growing its distribution by 2-4% annually.
I think Summit’s record portfolio growth in 2017, in which it acquired 30 light industrial properties and one data centre for a total cost of approximately $409.5 million, has it positioned to achieve record financial results for the next several years, which will allow it to easily achieve its distribution-growth target for the next five years at least.
InterRent Real Estate Investment Trust (TSX:IIP.UN)
InterRent is one of the largest residential landlords in Ontario and Quebec. As of December 31, 2017, it owns and manages a portfolio of over 8,500 residential suites in mid-sized population markets across the two provinces.
InterRent currently pays a monthly distribution of $0.0225 per unit, equating to $0.27 per unit annually, which gives it a yield of about 2.7% today.
Its yield is far lower than other REITs, so it’s of the utmost importance to note that it has raised its annual distribution each of the last six years, and that its 11.1% hike in November 2017 has it positioned for 2018 to mark the seventh straight year with an increase.
I think InterRent’s consistently strong financial performance, including its 11% year-over-year increase in adjusted funds from operations (AFFO) to $0.374 per unit in 2017, and its growing property portfolio that will fuel future growth, including its 7.5% year-over-year increase to 8,660 suites in 2017, will allow it to continue to grow its distribution in 2019 and beyond.
Canadian Apartment Properties REIT (TSX:CAR.UN)
CAPREIT, like InterRent, is a residential landlord, but it’s one of the largest in the country rather than one specific region. As of December 31, 2017, it has ownership interests in 50,624 residential units, which are located in and near major urban centres across the country.
CAPREIT currently pays a monthly distribution of $0.10667 per unit, equating to $1.28 per unit annually, which gives it a yield of about 3.6% today.
Foolish investors must note that CAPREIT has raised its annual distribution for six straight years, and that its 2.4% hike in February 2017 has it on track for 2018 to mark the seventh straight year with an increase.
CAPREIT also has a long-term target annual payout ratio of between 70% and 80% of its normalized funds from operations (NFFO), so I think its consistent NFFO growth, including its 4% year-over-year increase to $1.842 per unit in 2017, and its ongoing acquisition activity that will fuel future NFFO growth, including its “accretive acquisition of 1,924 suites” in 2017, will allow its streak of annual distribution increases to continue for another seven years or more.
Plaza Retail REIT (TSX:PLZ.UN)
Plaza Retail REIT is one of Canada’s largest owners and managers of retail real estate. As of December 31, 2017, its portfolio consists of 298 properties, which are located across eight provinces and total approximately 7.83 million square feet.
Plaza currently pays a monthly distribution of $0.0233 per unit, equating to $0.28 per unit annually, which gives it a yield of about 7.1% today.
It’s important to note that Plaza has raised its annual distribution each of the last 14 years, giving it the second-longest active streak for a public REIT in Canada, and that its 3.7% hike that took effect in January has it positioned for 2018 to mark the 15th consecutive year with an increase.
I think the Plaza’s consistently strong AFFO growth, including its 9.1% year-over-year increase to $0.325 per unit in 2017, and the ongoing improvement of its payout ratio, including 83.1% of its AFFO in 2017 compared with 87.6% in 2016, will allow it to remain one of the top distribution-growth stocks in the real estate industry for the foreseeable future.
