H&R REIT $22.11 (Toronto symbol HR.UN; Units outstanding: 258.3 million; Market cap: $16.9 billion; TSINetwork Rating: Extra Risk; Dividend yield: 5.8%; www.hr-reit.com) owns stakes in 40 office buildings, 112 industrial properties and 163 shopping malls across Canada. The trust has a 99.0% occupancy rate.
In the three months ended March 31, 2013, the REIT’s revenue rose 21.2%, to $222.6 million from $183.0 million a year earlier. Cash flow rose 24.3%, to $90.0 million from $72.4 million. Cash flow per unit gained 12.5%, to $0.45 from $0.40, on more units outstanding.
In March 2013, H&R finished building The Bow, a $1.33-billion, two-million-square-foot office building in Calgary. Encana Corp. has already leased the entire building for 25 years.
H&R recently completed the purchase of 27 properties from Primaris REIT for about $3.1 billion. These assets include the aging 567,000-square-foot Dufferin Mall in Toronto’s west end, which has huge redevelopment potential. Eight of the 27 properties will have Target stores as their main tenants by the end of this year.
The REIT raised its distribution by 8%, to $0.1125 per month, or $1.35 a year, starting in January 2013. That gives it a 5.8% yield.
H&R REIT is a buy.
