Real Estate Beat Down

It has been 4 months since my first ever blog post about Real Estate Investment Trusts and let me tell you things haven’t been going well in the sector. People are really taking their time in going back to work in the office, shopping malls along with big box stores haveing more rules and regulations around how many people can enter them. Not to mention people are still either not back at work, have reduced hours or have taken a pay cut. This is all very bad news for mortgage companies as well as the banks. Even the banks haven’t started to bounce back yet and they have the biggest safety net of everyone.

In my first article I talked about 3 Reits H&R(HR.UN), Brookfield Property Partners LP(BPY.UN) and SmartCentres(SRU.UN). I will be talking a little more in depth about them as well as one that has been a little more popular lately which is RioCan(REI.UN). I will be honest though, I feel that with Covid-19 seeming like it will be around for a while until we get a vaccine I personally would NOT keep an eye on any REIT for the time being. But as far as these 4 go and who has performed the best so far and had the best come back since their massive dip in March? Well that goes to Brookfield which should be no surprise, they are by far the biggest of any REIT in Canada including market cap, assets under management and dividend yield.

With that introduction I will lead off with Brookfield Property Partners LP. They are the biggest in size with 450 million square feet of commercial real estate space which is worth about $202 Billion. They are mainly in the Office, Retail and LP investments. They actually own real estate around the world including Sydney, Berlin, New York, London, Los Angeles and Toronto(just to name a few). The biggest thing is that their office space has probably taken their biggest hit as more and more office buildings sit empty with no one looking to buy or rent. In time though I feel that people will be coming back to the office so like i said before keep an eye open. They have also not cut their dividend like most reits have and have in fact raised their dividend even in a time like that. That either shows how safe they are or that they really want people to invest in them anyways.

Brookfield Property Partners LP(BPY.UN)-$13.85/Share, $13.98 Billion Market Cap, -0.41 EPS, N/A P/E, Dividend Yield of 11.98%($1.74/share) and Dividend Payout Ratio of 25.9%.

Next I would like to talk about the second biggest in terms of space and that is H&R reit, they hold assets worth about $14 Billion on roughly 41 Million square feet. They deal with Residential, office, industrial and retail real estate. I have recently actually taken them out of my portfolio for now because in the future I plan to invest in a different reit that I will talk about in a future blog post. The main reason I got rid of them is because they have really fallen behind in the earnings and they cut their dividend. I will still keep an eye on them for now but they are not on any of my next buy watchlist just my reit watch list.

H&R Reit(HR.UN)-$10.11/Share, $2.95 Billion Market Cap, -2.62 EPS, N/A P/E, Dividend Yield of 6.71%($0.69/share) and Dividend Payout Ratio of 79.8%.

The new one that I added to my list is Riocan and they are actually third in terms of space. They currently have 38.6 Million square feet of space over 221 properties. These properties include residential rental, office and development properties. Some of their top retailers in North America are Best Buy, Bed, Bath and Beyond, Costco, Loblaws, The Home Depot and Canadian Tire. There is a pretty big list with many more retailers on their website. Although they are down from when the pandemic first hit in march this year, they have slowly been coming back up. They actually haven’t even cut their dividend and continue to pay it monthly. Their numbers are fairly decent given what has been going on lately and they even still have positive earnings(for now). Hopefully they can keep that trend.

RioCan Reit(REI.UN)-$14.59/Share, $4.73 Billion Market Cap, 0.28 EPS, 9.81 P/E(forward), Dividend Yield of 9.66%($1.44/share) and Dividend Payout Ratio of 74%.

Lastly I would like to talk about SmartCentres. They may be the smallest in terms of space but they are the best looking in terms of their overall numbers. They currently have more then 166 properties over 34.1 Million square feet of space. They have over $10.4 Billion in assets which includes 115 Walmart centers. SmartCentres has also recently announced their intensification program which they will contribute $5.5 Billion to create rental apartments, condos, seniors residences and hotels. They will also develop more retail, office and storage facilities which with all of this will add over 27.3 million square feet of space. These guys are actually on my watch list and they are still down since March but have made a great comeback in share price. They have also kept their dividend the same and continue to also pay it monthly.

SmartCentres(SRU.UN)-$20.81/Share, $3.58 Billion Market Cap, 0.62 EPS, 10.92 P/E(forward), Dividend Yield of 8.78%($1.85/share) and Dividend Payout Ratio of 86%.

So as you can tell REITs haven’t started to make any real comeback yet. If you compare these numbers with the ones I gave 4 months ago(I really only gave the share price) not much has changed. But its all understandable given everything that is going on. More people will be working from home moving forward and that will somewhat hurt reits for now but a good diversified reit will be more then ok. I always talk about diversity and I feel that having a reit in your portfolio is a good way to diversify it but you can also look into what your reits consist of. What companies are making money right now even in a pandemic? Does that company make up a part of your reit? Does your reit hold to much office space? These are all the questions you should be asking when looking for a reit that fits into your portfolio.

That is all for today and remember everyone, invest in yourself first.

*Disclaimer-All share prices are as of close today September 11, 2020. I do not currently hold any of these reits in my portfolio.

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