3 Top Canadian REITs to Buy in April 2022

Real estate investment trusts provide investors exposure to the real estate sector as well as the opportunity to earn a stable stream of dividend income.

| More on:
edit Real Estate Investment Trust REIT on double exsposure business background.

Image source: Getty Images

For anyone looking to gain exposure to real estate, investing in REITs, or real estate investment trusts, is a solid option. Basically, a REIT owns and manages a portfolio of income-generating properties. It uses the capital of shareholders to acquire properties and offers them benefits via dividend payouts.

But similar to every other asset class, investing in REITs also carries certain risks. You can lose money when the value of your REIT units declines due to weak fundamentals, macroeconomic headwinds, and more.

Alternatively, REIT investing will allow you to derive a stable and predictable stream of passive income over time. Here, we’ll look at three top REITs Canadian investors can buy right now.

BTB REIT

A small-cap REIT valued at $361 million by market cap, BTB REIT (TSX:BTB.UN) offers investors a tasty dividend yield of 7%. It has returned 132% to investors in the last 10 years after adjusting for dividends.

BTB ploughed in over $180 million to acquire properties in Canada last year. Additionally, its same-property net operating income rose by 6.9% year over year in Q4 of 2021 on the back of higher occupancy rates and an increase in average lease renewal rates.

The company ended the quarter with 75 properties with six million square feet of net leasable area and an asset value of over $1 billion. Its rental income in 2021 surpassed $100 million, increasing 7.9% year over year. Comparatively, net operating income surged by 10% to $56 million last year.

Morguard North American REIT

Morguard North American REIT (TSX:MRG.UN) is one of the largest REITs in Canada. Valued at a market cap of $1.07 billion, Morguard offers investors a forward yield of 3.6%.

In Q4 of 2021, the company completed the refinancing of four Canadian properties that allowed it to derive gross mortgage proceeds of $194.2 million at an interest rate of 2.72% and a weighted average term of 10.5 years.

As of February 2022, the REIT’s rental income collection exceeded 99% through 2021 in Canada and the United States. The average monthly rent in 2021 was 2.3% higher compared to the year-ago period. However, occupancy declined from 94.9% at the end of 2020 to 93.6% in 2021.

Automotive Properties REIT

The final stock on my list is Automotive Properties REIT (TSX:APR.UN), which is valued at $700 million by market cap. Its forward yield stands at a juicy 5.6%. The REIT focuses on owning and acquiring income-producing automotive dealership properties in Canada.

In Q4 of 2021, Automotive Properties REIT collected 100% of its Q4 of 2021 contractual base rent due under its leases and rent-deferral agreements with tenants. It continued to generate growth in revenue, NOI, and AFFO (adjusted funds from operations) per unit, driven by organic growth from rent increases and property acquisitions.

The company’s management team emphasized it has seen acquisition opportunities in the market and has deployed $65 million on acquisitions in Q1 of 2022.

The Foolish takeaway

REITs provide you with an easy way to invest in real estate without actually having to buy property. However, you still need to make strategic decisions in terms of the type of REIT you want to buy and hold for the long term.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool owns and recommends AUTOMOTIVE PROPERTIES REIT. The Motley Fool recommends MORGUARD NA RESIDENTIAL REIT UNITS.

More on Dividend Stocks

Money growing in soil , Business success concept.
Dividend Stocks

Top Canadian Dividend Stocks to Buy and Hold for the Long Term

These Canadian companies have been paying dividends for more than four decades and have been consistently growing the same.

Read more »

edit Safety First illustration
Dividend Stocks

How to Generate Inflation-Proof Passive Income

Inflation-resistant, passive-income stocks like Enbridge (TSX:ENB)(NYSE:ENB) should be on your list.

Read more »

Increasing yield
Dividend Stocks

Dividend Chasers: 3 Stocks With Yields of 8% or More

Three TSX stocks are appetizing for investors whose strategy is to chase after dividend beasts.

Read more »

Simple life style relaxation with Asian working business woman healthy lifestyle take it easy resting in comfort hotel or home living room having free time with peace of mind and self health balance
Dividend Stocks

Become a Laidback Landlord Easily With Canadian REITs

Do you want to continue earning rental income but reduce your workload? You should dig deeper into REIT investing!

Read more »

data analyze research
Dividend Stocks

Stocks for Beginners: 3 Reliable Dividend Stocks to Buy Now

The best time to start investing is in a market correction. If you are a new investor, here are three…

Read more »

funds, money, nest egg
Dividend Stocks

Canadian Retirees: 2 Top TFSA Stocks for Tax-Free and Passive Retirement Income

Invest in these two top stocks to enjoy high-yielding, tax-free dividend income in your TFSA amid the market pullback.

Read more »

financial freedom sign
Dividend Stocks

Generate Enough Passive Income to Retire

Looking to generate a stream of passive income to retire on? Here are several stocks to start building out your…

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

3 Stocks to Hold for a Reliable Source of Passive Income

Are you looking for a way to produce a reliable source of passive income? Hold these three stocks!

Read more »