When investing REITs, investors should pay close attention to the quality of their properties as well as their tenants—both directly affect their distributions. Here’s one to count on for steady monthly payments.
H&R REIT is executing a major strategic repositioning, divesting from retail and office properties to focus exclusively on residential and industrial assets. This transformation aims to achieve an 80% residential and 20% industrial portfolio mix by 2026.
H&R REIT (Toronto symbol HR.UN; www.hr-reit.com) you tap income from 377 residential, industrial, office and some retail properties in Canada and the U.S. The trust’s overall occupancy rate is a solid 95.9%.
In 2022, H&R spun off most of its retail properties, including all of its enclosed shopping malls, to a new publicly traded REIT called Primaris.
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H&R now focuses on Toronto, Vancouver, Montreal and cities in the U.S. Sunbelt. Since the start of 2024, it has sold or agreed to sell $429.0 million of non-core properties. It plans to be completely out of retail and office properties in the future, focusing on residential and industrial real estate. H&R is also looking to rezone and redevelop $1.4 billion of office properties into approximately 5,900 upscale multi-residential units in growing markets across Toronto and Vancouver.
Dividend Stocks: High yield from H&R REIT comes at an attractive valuation
In the third quarter of 2024, revenue fell 4.8%, to $200.3 million from $210.4 million a year earlier due to property sales. Cash flow fell 33.0%, to $0.242 a unit (or $67.8 million) from $0.361 ($101.2 million) on higher costs.
H&R’s units yield an attractive 6.3%. The units trade at a low 8.1 times the projected 2025 cash flow of $1.18 a unit.
H&R has an Average TSI Dividend Sustainably Rating.
Recommendation in Dividend Advisor: H&R REIT is a buy.
