CA - CT REIT: A 6.4% Yield With A 73% Payout Ratio Trading At A Discount

2024-03-16 11:40:00 ET

Summary

• CT REIT has a strong relationship with its largest tenant, Canadian Tire, resulting in a high occupancy rate of 99.1% and positive NOI and AFFO performance.
• FFO and AFFO increased in the fourth quarter and throughout 2023, showing improvement despite increasing interest rates.
• CT REIT's debt ratio remains low, and the properties are valued at an acceptable multiple, making it an attractive investment.

Introduction

I have a decent-sized long position in CT Real Estate Investment Trust ( CRT.UN:CA ) ( CTRRF ) as I like the Canadian REIT’s exposure to Canadian Tire ( CTC.A:CA ) ( CDNAF ) ( CDNTF ) which is where CT REIT was spun out off. Canadian Tire remains the REIT’s largest tenant , accounting for approximately 91% of the rental income (including all related brands). For some investors, that is a ‘no go,’ but I see it as a positive element. Canadian Tire has a vested interest to maintain a strong relationship with CT REIT as it is its largest shareholder and tenant....

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