Plaza Retail REIT: An Appealing Yield From A Grocery-Anchored REIT

2025-01-26 10:40:00 ET

Summary

• The REIT's AFFO is robust, even after including sustaining capex, and the stock trades at a reasonable multiple of just under 11 times AFFO.
• The distribution yield of 7.8% is well covered with a payout ratio of around 81%, allowing for retained earnings to fund development.
• Despite a relatively high LTV ratio, the strong AFFO and manageable debt costs make Plaza Retail REIT a compelling option for income-focused investors.

Introduction

As interest rates on the financial markets remain high (and started to increase again), the share prices of REITs have been under pretty severe pressure. I believe this creates new investment opportunities, more specifically in Canada and the Eurozone where valuations have dropped to multiples of just 8-11 times the AFFO. As it has been a while since I last discussed Plaza Retail REIT ( PLZ.UN:CA ) ( OTC:PAZRF ), I figured this is a good moment to have another look at this commercial REIT....

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