RIOCAN REAL ESTATE INVESTMENT TRUST (Toronto symbol REI.UN; www.riocan.com) is Canada’s largest real estate investment trust (REIT), with interests in 346 shopping malls containing over 83 million square feet of leasable area. That total includes 51 U.S. malls with over 14 million square feet.
In the quarter ended September 30, 2013, Rio- Can’s revenue rose 3.1%, to $272 million from $248 million. Cash flow rose 6.6%, to $113 million from $106 million. Cash flow per unit rose 2.8%, to $0.37 from $0.36, on more shares outstanding.
RioCan continues to see growth opportunities in Canada and the U.S. In 2012, it spent $926 million on properties. In the first three quarters of 2013, it bought 16 more for a total of $576 million.
RioCan has a 97.0% occupancy rate. National and multinational chains like Canadian Tire supply 86.1% of this REIT’s rental revenue. That helps cut its risk.
Allied Properties raises monthly distribution, now yields 4.3%
ALLIED PROPERTIES REAL ESTATE INVESTMENT TRUST (Toronto symbol AP.UN; www.alliedpropertiesreit.com) owns 133 office buildings, mostly in major Canadian cities. These mainly Class I properties contain over 9.5 million square feet of leasable area.
Class I refers to 19th- and early-20th-century light industrial buildings that have been converted to retail space. They usually feature exposed beams, interior brick and hardwood floors.
The trust bought $400 million worth of properties in 2012. In the first three quarters of 2013, it added a further $179.0 million worth.
The trust’s new buildings helped increase its revenue by 15.8% in the three months ended September 30, 2013, to $77.5 million from $66.9 million a year earlier. Cash flow per unit rose 18.9%, to $0.44 from $0.37.
The strong results prompted Allied to raise its monthly distribution by 3.7%, to $0.1175 from $0.1133. The units now yield 4.3%.
In July 2012, Allied entered into a joint venture with RioCan REIT to buy buildings in urban areas that they can “intensify” to increase revenue and cash flow, mainly by adding tenants.
RioCan and Allied are combining their expertise to make these buildings into mixed-use office/ retail/residential developments.
In the latest issue of Canadian Wealth Advisor, we look at the progress to date of the joint venture between RioCan and Allied Property REIT. We also consider cash flow projections for these REITs. We conclude with our clear buy-hold-sell advice on these two REITs.
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