investment trusts

Today, we look at two of Canada’s leading Real Estate Investment Trusts (REITs)....

ISHARES CDN REIT SECTOR INDEX FUND $17.31 (Toronto symbol XRE; buy or sell through brokers; ca.ishares.com) holds the 15 Canadian real estate investment trusts in the S&P/TSX Capped REIT Index.

iShares CDN REIT’s expenses are 0.60% of its assets. The fund yields 4.7%.

The ETF’s largest holding is RioCan REIT at 20.0%, followed by H&R REIT (13.5%), Canadian REIT (7.1%), Canadian Apartment REIT (7.0%), Allied Properties REIT (6.6%), Calloway REIT (6.6%), Dream Office REIT (6.4%), Cominar REIT (4.4%), Boardwalk REIT (5.0%), Chartwell REIT (4.5%), Artis REIT (4.3%), Granite REIT (4.3%), Crombie REIT (2.2%), Pure Industrial REIT (2.1%) and Northern Property REIT (1.7%).

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ISHARES CDN REIT SECTOR INDEX FUND $17.31 (Toronto symbol XRE; buy or sell through brokers; ca.ishares.com) holds the 15 Canadian real estate investment trusts in the S&P/TSX Capped REIT Index. iShares CDN REIT’s expenses are 0.60% of its assets. The fund yields 4.7%. The ETF’s largest holding is RioCan REIT at 20.0%, followed by H&R REIT (13.5%), Canadian REIT (7.1%), Canadian Apartment REIT (7.0%), Allied Properties REIT (6.6%), Calloway REIT (6.6%), Dream Office REIT (6.4%), Cominar REIT (4.4%), Boardwalk REIT (5.0%), Chartwell REIT (4.5%), Artis REIT (4.3%), Granite REIT (4.3%), Crombie REIT (2.2%), Pure Industrial REIT (2.1%) and Northern Property REIT (1.7%)....

SCITI Trust, $9.13, symbol SIN.UN on Toronto (Units outstanding: 30.3 million; Market cap: $276.6 million; www.scotiamanagedcompanies.com), first issued units at $10 and began trading on Toronto in April 2003. The trust was scheduled to wind up on April 29, 2008, but unitholders voted to keep it going for another five years in March 2008 and again in March 2013. It’s now scheduled to wind up on April 30, 2018, though it could be extended again. The trust’s portfolio is based on the Scotia Capital High-Yielding Equity Index, which tracks the highest-yielding stocks (including many real estate investment trusts and former income trusts) on the Toronto exchange. SCITI Trust now holds the top 50 highest-yielding issues in the index, on a roughly equal-weight basis....

Building on the strong performance of its shopping mall empire, RioCan REIT unlocks more property value in a deal with Hudson’s Bay.

Pat McKeough responds to many requests from members of his Inner Circle for specific stock market advice as well as questions on investment strategy and the economy. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions. We give you Pat’s buy-hold-sell recommendation as well as his analysis of the stock. This is part of the specific buy, hold and sell advice we offer you in our daily posts. Every week you get “A Stock to Sell” on Monday, “Best Canadian Stocks” on Tuesday, and “U.S. Stock Picks” on Thursday.

Recently we had a question from an Inner Circle member about one of Canada’s bigger Real Estate Investment Trusts. Canadian Apartment Properties REIT—also known as CAP REIT—focuses primarily on rental properties like apartment buildings and townhouses but also on land-lease properties, largely in trailer parks. Almost 80% of the company’s revenue comes from Ontario and Quebec. Pat examines the company’s latest financial results and looks at its prospects at a time when low interest rates favour home and condominium buying over renting.

Q: Pat: What is your recommendation on Canadian Apartment Properties REIT? Thanks.

A: Canadian Apartment Properties REIT (symbol CAR.UN on Toronto; www.capreit.net) is a real estate investment trust that owns multi-unit residential properties, including apartment buildings and townhouses.

In all, the trust owns 41,958 units, including 35,674 residential suites and 30 manufactured-home communities, or trailer parks, with a total of 6,284 land-lease sites. Its occupancy rate is 97.9%.

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ISHARES CDN REIT SECTOR INDEX FUND $17.54 (Toronto symbol XRE; buy or sell through brokers; ca.ishares.com) holds the 15 Canadian real estate investment trusts in the S&P/TSX Capped REIT Index. iShares CDN REIT’s expenses are 0.60% of its assets. The fund yields 4.7%. The ETF’s largest holding is RioCan REIT at 19.7%, followed by H&R REIT (14.6%), Canadian REIT (7.5%), Calloway REIT (7.1%), Canadian Apartment REIT (6.9%), Allied Properties REIT (6.4%), Dream Office REIT (6.4%), Cominar REIT (6.1%), Boardwalk REIT (4.9%), Chartwell REIT (4.8%), Artis REIT (4.6%), Granite REIT (4.6%), Crombie REIT (2.2%), Dream Global REIT (2.1%) and Northern REIT (1.7%)....

Every Tuesday we bring you “Best Canadian Stocks.” You get our specific recommendations on the stocks we profile, with a full explanation of how we arrived at our opinion. You’ll read about stocks making moves you should know about, from coverage in one of our three newsletters featuring Canadian stocks—The Successful Investor, Stock Pickers Digest and Canadian Wealth Advisor.

VERESEN (Toronto symbol VSN; www.vereseninc.com) owns pipelines, power plants and gas-processing facilities across North America.

A major holding is 50% of the Alliance gas line, which runs 3,000 kilometres between Chicago and Fort St. John, B.C.

Veresen also owns the Alberta Ethane Gathering System, 42.7% of the Aux Sable NGL plant, and the Hythe/Steeprock natural gas gathering and processing complex in the Cutbank Ridge region of Alberta and B.C.

In the quarter ended September 30, 2014, Veresen’s cash flow per share rose 4.5%, to $0.23 from $0.22.

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Pat McKeough responds to many requests from Members of his Inner Circle for advice on specific investments as well as questions on investment strategy and the economy. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle Members. And each week we offer you a report on one of the stocks profiled in these Q&A sessions. We give you Pat’s buy-hold-sell recommendation as well as his analysis of the stock. This is part of the specific buy, hold and sell advice we offer you in our daily posts. Every week you get “A Stock to Sell” on Monday, “Best Canadian Stocks” on Tuesday, and “U.S. Stock Picks” on Thursday. This week an Inner Circle member asked us about several real estate investment trusts (REITs) that focus on industrial properties. Dream Industrial REIT, formerly Dundee Industrial REIT, owns buildings spread fairly evenly across Canada. Pure Industrial REIT also owns buildings across the country, but with almost half of them in Ontario. Both host a number of well-established tenants. Pat looks at the revenues and cash flow generated by these two REITs and their ability to sustain their distributions and high dividend yields. Q: Hi, Pat. I have a significant weighting in real estate investment trusts, including these two industrial REITs: Dream Industrial REIT and Pure Industrial REIT. Can you please comment on industrial REITs in general and these specifically? Thanks....

Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a beginning or experienced investor, these weekly updates are designed to give you specific investment tips and stock market advice. Each Investor Toolkit update gives you a fundamental piece of investment advice, and shows you how you can put it into practice right away.

Today’s tip: “There are three ways you can ensure that you get the maximum profit, and tax benefit, from your tax free savings account.”

The federal government first made the tax free savings account (TFSA) available to investors in January 2009. These accounts let you earn investment income — including interest, dividends and capital gains — tax free. You could contribute $5,000 in 2009 to start your tax free savings account.

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