riocan real estate investment trust

CANADIAN REIT $33.46 (Toronto symbol REF.UN; Units outstanding: 66.5 million; Market cap: $2.3 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.3%; www.creit.ca) owns over 160 properties, including retail, industrial and office buildings located across Canada and in the Chicago area. These properties contain over 22 million square feet of leasable area. Its occupancy rate is 94.2%. In the three months ended March 31, 2010, the real estate investment trust’s revenue fell slightly, to $81.3 million from $81.7 million a year earlier. Cash flow per unit fell 7.1%, to $0.52 from $0.56. Canadian REIT provides high-interest loans to developers who are building properties that it might take an interest in. It is now making fewer of these loans; that was the main reason for the lower results. Instead, the REIT is focusing on buying lower-risk properties that will provide long-term cash flows. For example, it recently agreed to buy two fully leased malls in Mississauga, Ontario, for $171.0 million....

Three of Canada’s big-five banks, BANK OF NOVA SCOTIA, $58.49, Toronto symbol BNS, CANADIAN IMPERIAL BANK OF COMMERCE, $84.40, Toronto symbol CM, and TORONTO-DOMINION BANK, $84.15, Toronto symbol TD, have joined a new consortium called Maple Group Acquisition Corp. Other members of this group include National Bank and five major pension funds. Maple wants to buy a controlling interest in TMX Group Inc. (Toronto symbol X), which operates the Toronto Stock Exchange, the TSX Venture Exchange and the Montreal Exchange. In February 2011, TMX accepted a takeover offer from the London Stock Exchange Group. Under the terms of that offer, TMX shareholders would own 45% of the combined company, which would be the world’s second-largest stock exchange by market cap....

RIOCAN REAL ESTATE INVESTMENT TRUST $25.21 (Toronto symbol REI.UN; Units outstanding: 259.8 million; Market cap: $6.6 billion; TSINetwork Rating: Average; Dividend yield: 5.5%; www.riocan.com) spent $91.9 million buying new Canadian properties in the first quarter of this year. The trust has also agreed to buy two more properties in Canada for $41 million, plus four U.S. properties for $95 million U.S. These are big purchases for RioCan, which earned $303.0 million, or $1.23 a unit, in 2010. However, these malls have national retailers, such as Home Depot and Costco, as anchor tenants. That cuts the risk of these purchases. RioCan is a buy.

Real estate investment trusts (REITs) resemble income trusts, but with a key difference: REITs invest in income-producing real estate, such as office buildings and hotels. High-quality real estate investment trusts can make attractive, lower-risk additions to your portfolio. Even so, we continue to advise against overindulging in REITs. But if you’re thinking of investing in some of Canada’s top REITs, here are 2 reasons why now is a great time to do so:...

PLEASE NOTE: Our next Hotline will go out on Friday, April 15, 2011. TECK RESOURCES LTD., $55.06, Toronto symbol TCK.B, rose 8% this week after the company reached a new deal with the union at its Elkview metallurgical coal mine in B.C. The deal should end a two-month strike. Elkview is the second-largest of Teck’s six coal mines in B.C., so settling this dispute will help the company take advantage of rising demand for its coal by steelmakers in Asia. As well, the company continues to benefit from higher copper prices. It should also see higher demand for its coal and zinc as Japan rebuilds following last month’s earthquake and tsunami....

RioCan Real Estate Investment Trust, symbol REI.UN on Toronto, operates 297 retail properties in Canada, mainly outdoor shopping malls. It also owns 31 malls in the U.S. through joint ventures, including its partnership with Cedar Shopping Centers Inc. (New York symbol CDR). RioCan owns 80% of the joint venture with Cedar, and 14% of Cedar itself. In 2010, the real estate investment trust’s revenue rose 17.0%, to $887.0 million from $758.0 million in 2009. The real estate investment trust’s earnings jumped 166.0%, to $303.0 million from $113.9 million in 2009. Earnings per unit rose 151.0%, to $1.23 from $0.49, on more units outstanding. The increase was mostly due to a one-time non-cash reversal of future income tax charges. In 2010, RioCan acquired 19 properties in Canada and 29 in the U.S. for a total of $986 million....

RIOCAN REAL ESTATE INVESTMENT TRUST $23.94 (Toronto symbol REI.UN; Units outstanding: 250.9 million; Market cap: $6.0 billion; TSINetwork Rating: Average; Dividend yield: 5.8%; www.riocan.com) is Canada’s largest real estate investment trust (REIT). It has interests in 297 shopping malls in Canada, including 10 under development. These properties contain over 70 million square feet of leaseable area. The trust has a 97.4% occupancy rate. RioCan also owns stakes in 31 malls in the U.S. through joint ventures. As well, it owns 14% of Cedar Shopping Centers, a U.S. REIT that owns malls anchored by supermarkets and drug stores, mainly in the northeastern U.S. In the three months ended December 31, 2010, RioCan’s revenue rose 21.7% to $222.8 million from $183.1 million a year earlier. Cash flow per unit rose 25%, to $0.35 from $0.28. RioCan’s units yield 5.8%....

CGI GROUP INC., $19.17, Toronto symbol GIB.A, is Canada’s largest provider of computer-outsourcing services. The company’s services help its customers automate certain routine functions, such as accounting and buying supplies. That makes its clients more efficient, and lets them focus on their main businesses. In its fiscal 2011 first quarter, which ended December 31, 2010, CGI earned $126.6 million. That’s up 13.8% from $111.2 million a year earlier. The company paid $81.0 million to buy back shares during the quarter. Due to fewer shares outstanding, earnings per share rose 21.6%, to $0.45 from $0.37. That easily beat the consensus earnings estimate of $0.34 a share. As a result, the stock gained 5% this week. Revenue rose 22.7%, to $1.1 billion from $913.0 million a year earlier. If you exclude the negative impact of exchange rates, revenue would have risen 25.9%. Canadian revenue rose 0.5%, but U.S. revenue jumped 77.1%, because the company won a number of new federal government contracts. The U.S. gain also reflects the contribution of Stanley Inc., which CGI bought last year. Stanley provides computer-outsourcing services to military and civilian agencies of the U.S. government....

CGI GROUP INC. $18.09, Toronto symbol GIB.A, is our Stock of the Year for 2011. Next week, Stock Pickers Digest, our newsletter for aggressive investors, will reveal its #1 pick for 2011. If you’re not already a Stock Pickers Digest subscriber, click here to learn how you can get one month—including the Stock Pickers Digest Stock of the Year—FREE. CGI is Canada’s largest provider of computer-outsourcing services. The company’s services help its customers automate certain routine functions, such as accounting and buying supplies. That lets CGI’s clients focus on their main businesses, and improve their efficiency. CGI is more speculative than most of our other recommendations. It does not pay a dividend, and its major shareholders control the company through multiple-voting shares. Its aggressive growth-by-acquisition strategy also adds risk....

RIOCAN REAL ESTATE INVESTMENT TRUST $22.22 (Toronto symbol REI.UN; Units outstanding: 250.9 million; Market cap: $5.6 billion; TSINetwork Rating: Average; Dividend yield: 6.2%; www.riocan.com) has raised $150.7 million by selling 6.4 million new trust units at $21.75 a unit. RioCan will probably use the proceeds to pay down loans related to its recent purchase of shopping malls in the U.S. Most of these properties have grocery stores as anchor tenants. That helps cut the risk of these purchases, because these retailers stay busy no matter what the economy is doing. RioCan is a buy.