Real estate investment trusts (REITs) are some of the best investment opportunities on the market. They allow investors to reap the benefits of being a landlord without actually owning any property or dealing with a host of tenant- and property-related issues.
Here’s a look at some of the best REITs to add to your portfolio.
RioCan Real Estate Investment Trust
RioCan Real Estate Investment Trust (TSX:REI.UN) has over 300 properties in nearly every province, encompassing a whopping 63 million square feet. RioCan’s portfolio is focused primarily on grocery-anchored shopping centres and mixed-use development locations.
Many of these locations feature prominent retail heavyweights, such as Canadian Tire, Loblaw, Metro, Cineplex, and Lowe’s. Not only do these anchor tenants provide a stable source of revenue for the company, but they also draw in traffic to smaller secondary properties on the site.
There are two reasons to invest in RioCan. The first reason is RioCan’s ability to spot a bargain and act on it. The company bought into the U.S. market following the Great Recession, but recently sold those properties, netting a cool US$1.2 billion in the process. That sale not only reduced RioCan’s debt-to-assets ratio significantly, but also freed up a significant amount of capital for the company to use for further expansion, should the opportunity present itself.
The other compelling reason to invest in RioCan is the distribution the company offers. Currently pegged at $0.12 per share, the monthly distribution provides a very impressive 5.35% yield.
Northview Apartment REIT
Northview Apartment REIT (TSX:NVU.UN) is another great REIT to own. Northview has an impressive portfolio of over 24,000 locations spread around the country in eight provinces and two territories.
One point worth considering is that, unlike some of Northview’s competitors, Northview is not overly concentrated in Alberta and Ontario.
Northview’s portfolio is primarily focused on multi-family residential properties, apartments, townhomes and some hotel properties. If there was one word to describe Northview, it would be diversified. The REIT has great coverage around the country in both the north as well as in metro areas without being too concentrated in any one area or type of property.
What really makes Northview attractive, however, is the monthly distribution. At $0.1358 per share, Northview comes in at a very impressive 7.61% yield.
Killam Apartment REIT
Killam Apartment REIT (TSX:KMP.UN) is a REIT focused on multi-family residential homes spread across nearly 14,000 locations in Alberta, Ontario, and Atlantic Canada. Surprisingly, over 40% of Killiam’s NOI is earned from Nova Scotia, which is a welcome change given the hot and cold markets in different parts of the country.
What really impresses me about Killam is how the REIT has historically maintained extremely high occupancy rates of over 90%. Part of this is because the company looks at tenant satisfaction as one of key drivers to revenue growth. Killam has also engaged both employees and tenants on energy- and water-saving programs as a way of reducing expenses.
In terms of a distribution, Killam offers a monthly distribution of $0.05 per share, which amounts to a yield of 5.06%. Even better, Killam’s distribution has a very sustainable payout ratio of just over 80%, and the company can expect to see impressive growth over the next few years.
