Canadian retail property owner CT Real Estate Investment Trust (TSX:CRT.UN), or CT REIT, continues to reward income investors with relentless consistency. After markets closed on Monday, May 5, 2025, the trust reported robust first-quarter earnings, marked by growing cash flows, a higher monthly distribution, and a unit price trading at a steep discount to net asset value (NAV). With a defensive portfolio, low leverage, and a 6.4% annualized distribution yield (paid monthly), this undervalued dividend stock deserves a closer look.
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CT REIT’s portfolio strength: Anchored by Canadian Tire
CT REIT owns 377 net-leased retail properties spanning 31 million square feet, with Canadian Tire as its anchor tenant. The retailer occupies 92.8% of the REIT’s leasable area and contributes 91.8% of its base rent. This revenue concentration is mitigated by Canadian Tire’s sterling reputation: the company boasts an investment-grade balance sheet, an expanding store footprint, and consistent free cash flow generation, all signalling a low risk of rent default.
The REIT’s portfolio is a model of stability, with a 99.4% occupancy rate and a weighted average lease term of 7.5 years. Such metrics provide visibility into cash flows for nearly a decade, making CT REIT a compelling “set-and-forget” income play to buy and hold in a long-term-oriented portfolio.
Q1 2025 highlights: Growth in key areas
CT REIT delivered a strong start to 2025. Rental revenue increased by 4.3% year over year to $150.4 million, while net operating income (NOI) rose 4.6%, helping to grow the trust’s adjusted funds from operations (AFFO) — a key measure of distributable cash flow.
The REIT’s AFFO payout ratio improved from 73.1% a year ago to 72.2%. It’s among the safest levels in the Canadian REIT sector. The improved payout ratio underscores CT REIT’s ability to sustain and grow its monthly distributions.
Notably, the trust raised its monthly distribution yesterday, extending its dividend-growth streak to 11 consecutive years.
Balance sheet flexibility
CT REIT maintains a conservative debt-to-asset ratio of 40.3%. It’s among the least levered trusts among peers. The REIT has ample liquidity and capacity to raise new debt to capitalize on acquisitions and lucrative development opportunities without diluting existing unit holders. For context, some peers operate with debt ratios above 70%, exposing investors to higher volatility during market downturns and periods of interest rate spikes. This prudence, combined with a 5.8% year-over-year increase in NAV per unit to $17.52, reinforces the trust’s margin of safety.
CT REIT looks undervalued
Despite its operational strength, CT REIT traded under $15 per unit at writing, while its latest earnings report showed an increase in NAV to $17.52, implying a 15.4% discount. This gap suggests significant upside potential, particularly if falling interest rates release pressure on the leveraged asset class.
For income seekers, the trust’s 6.4% annualized yield (paid monthly) represents a rare combination of reliability and value.
Investor takeaway
CT REIT offers a rare trifecta: monthly income, a growing distribution, and a margin of safety via its NAV discount. With low leverage, a fortress-like portfolio, and an 11-year track record of rewarding shareholders, this REIT stands out as a resilient choice for long-term passive-income portfolios.
