Canada’s real estate sector is facing a huge challenge, as the Bank of Canada (BoC) has committed to an aggressive rate-tightening path. The central bank was forced to act as Canada’s inflation rate soared to troubling levels. Indeed, the inflation rate rose to 7.7% in the month of May — a nearly 40-year high. Despite that, real estate investment trusts (REITs) are not expected to feel a major pinch in the near term. Today, I want to look at three REITs that are deeply discounted in late June. Let’s jump in.
This REIT looks deeply discounted in late June
Summit Industrial Income REIT (TSX:SMU.UN) is a Toronto-based REIT that is focused on operating a portfolio of light industrial and other related properties across Canada. Shares of this undervalued REIT have dropped 25% in 2022 as of close on June 23. This has pushed the stock into negative territory in the year-over-year period.
This company released its first-quarter 2022 results on May 10. It reported net rental income growth of 11%, while total revenues climbed 12.2% in the year-over-year period. The Summit Industrial REIT accomplished near-full occupancy of 98.2% in the first quarter of 2022. Moreover, same property net operating income (NOI) delivered 1.8% growth.
Shares of this REIT currently possess a very favourable price-to-earnings (P/E) ratio of 2.3. Moreover, it last had an RSI of 33. That puts Summit just outside technically oversold territory. This REIT offers a monthly dividend of $0.048 per share, representing a 3.4% yield.
Here’s a dirt-cheap REIT that also offers big income
Dream Industrial REIT (TSX:DIR.UN) is another Toronto-based REIT. This one is focused on industrial properties in Canada, the United States, and Europe. It has completed over $3 billion in acquisitions in the last half-decade. This REIT has plunged 28% so far in 2022. Its shares are down 20% compared to the previous year.
In Q1 2022, Dream Industrial delivered huge net income growth of 364% to $442 million. Moreover, diluted funds from operations (FFO) per unit jumped 16% to $0.22. Total assets have climbed 10.8% from the fourth quarter of 2021 to $6.7 billion.
This REIT last had an extremely attractive P/E ratio of three. It currently possesses an RSI of 29, which puts Dream Industrial in technically oversold territory. The REIT offers a monthly dividend of $0.058 per share. That represents a very strong 5.7% yield.
One more strong REIT to snatch up today
Choice Properties REIT (TSX:CHP.UN) is the third and final REIT I’d look to snatch up in the beginning of the summer. This Toronto-based REIT owns and operates high-quality commercial and residential properties. Shares of Choice Properties have climbed 10% in the year-to-date period.
The company unveiled its first-quarter 2022 earnings on April 27. Net income surged $449 million year over year to $386 million. Meanwhile, rental revenue rose marginally to $328 million. This REIT possesses a solid P/E ratio of 20 at the time of this writing. It offers a monthly distribution of $0.062 per share, which represents a 5.4% yield.
