riocan

RIOCAN REAL ESTATE INVESTMENT TRUST $27.04 (Toronto symbol REI.UN; Units outstanding: 285.0 million; Market cap: $7.7 billion; TSINetwork Rating: Average; Dividend yield: 5.1%; www.riocan.com) has a joint venture with U.S.-based Tanger Factory Outlet Centers to build between 10 and 15 discount shopping malls in major Canadian cities.

RioCan and Tanger have now agreed to team up with privately held Orlando Corp. to build factory outlet stores on the grounds of Orlando’s Heartland Town Centre mall in Mississauga, Ontario. This could lead to similar deals to develop more of Orlando’s Toronto properties.

RioCan is still our #1 safety-conscious buy for 2012.

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RIOCAN REAL ESTATE INVESTMENT TRUST $27 (Toronto symbol REI.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Units outstanding: 280.8 million; Market cap: $7.6 billion; Priceto- sales ratio: 5.0; Dividend yield: 5.1%; TSINetwork Rating: Average; www.riocan.com) reports that its cash flow rose 14.4% in the three months ended March 31, 2012, to $103 million from $90 million a year earlier. Cash flow per unit rose 5.7%, to $0.37 from $0.35, on more units outstanding. Revenue rose 15.6%, to $274 million from $237 million.

The trust continues to acquire and open new shopping malls and expand existing ones. This was the main reason for the improved results. RioCan’s occupancy rate is a high 96.9%. Moreover, well-established national chains, such as Wal-Mart and Metro, supply 85.7% of its revenue.

RioCan is a buy.

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ENBRIDGE INC. $40 (Toronto symbol ENB; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 785.0 million; Market cap: $31.4 billion; Price-to-sales ratio: 1.6; Dividend yield: 2.8%; TSINetwork Rating: Above Average; www.enbridge.com) owns 100% of Enbridge Gas New Brunswick Inc. (EGNB), which distributes natural gas to 11,000 customers in that province. Enbridge is now expanding EGNB’s system to connect to an additional 30,000 clients. However, the New Brunswick government recently enacted new regulations that limit the rates that EGNB can charge its customers. That makes it harder for Enbridge to recoup the funds that it has already invested in this business. As a result, the company will write down this investment by $262 million. That’s equal to 24% of the $1.1 billion, or $1.48 a share, that Enbridge earned in 2011. Enbridge is still a buy....

Plazacorp Retail Properties Ltd., $4.80, symbol PLZ on Toronto (Shares outstanding: 60.3 million; Market cap: $289.4 million; www.plaza.ca), owns strip malls and enclosed shopping malls throughout the Atlantic provinces, Quebec and Ontario. Plazacorp owns interests in 115 properties, which together contain 5.1 million square feet of leasable area. The Atlantic provinces account for 71% of the company’s square footage, followed by Quebec (24%) and Ontario (5%). The trust’s occupancy rate is 95.7% at the strip malls and 96.1% at the enclosed malls. National and regional chains, such as Shoppers Drug Mart, Dollarama and Staples, account for 93.6% of the Plazacorp’s tenants. In 2011, Plazacorp’s revenue rose 8.4%, to $55.6 million from $51.3 million in 2010. Overall cash flow rose 4.4%, to $14.1 million from $13.5 million. However, cash flow per share fell 3.3%, to $0.263 from $0.272, on more shares outstanding. The company’s long-term debt of $317.5 million is equal to 116% of its market cap....

RIOCAN REAL ESTATE INVESTMENT TRUST $27.04 (Toronto symbol REI.UN; Units outstanding: 285.0 million; Market cap: $7.7 billion; TSINetwork Rating: Average; Dividend yield: 5.1%; www.riocan.com) has a joint venture with U.S.-based Tanger Factory Outlet Centers to build between 10 and 15 discount shopping malls in major Canadian cities. RioCan and Tanger have now agreed to team up with privately held Orlando Corp. to build factory outlet stores on the grounds of Orlando’s Heartland Town Centre mall in Mississauga, Ontario. This could lead to similar deals to develop more of Orlando’s Toronto properties. RioCan is still our #1 safety-conscious buy for 2012.

CANADIAN PACIFIC RAILWAY LTD., $75.67, Toronto symbol CP, is starting to benefit from its recent efficiency improvements. As well, more of its trains are running on time, thanks to the warmer-than-usual winter. In the three months ended March 31, 2012, CP’s average train speed rose 27% from a year earlier. It also had 28% more railcars in service, and terminal dwell (the time to load and unload railcars) fell 27%. As a result, CP now believes that it earned $0.80 to $0.83 a share in the quarter. That’s a lot better than the consensus estimate of $0.65 a share....

RIOCAN REAL ESTATE INVESTMENT TRUST $27.12 (Toronto symbol REI.UN; Units outstanding: 267.0 million; Market cap: $6.9 billion; TSINetwork Rating: Average; Dividend yield: 5.1%; www.riocan.com) reported revenue of $988 million in 2011, up 12.0% from $882 million in 2010. That’s mainly due to the 38 new malls the trust bought during the year. (In all, RioCan purchased $1.1 billion of new properties in 2011.) Cash flow per unit rose 7.5%, to $1.43 from $1.33.

RioCan yields 5.1%. It paid out 96.5% of its cash flow in 2011. However, 22% of its investors prefer to receive new units instead of cash. On this basis, the actual payout was just 74.8% of its cash flow.

RioCan is still our #1 safety-conscious buy for 2012.

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RIOCAN REAL ESTATE INVESTMENT TRUST $27.12 (Toronto symbol REI.UN; Units outstanding: 267.0 million; Market cap: $6.9 billion; TSINetwork Rating: Average; Dividend yield: 5.1%; www.riocan.com) reported revenue of $988 million in 2011, up 12.0% from $882 million in 2010. That’s mainly due to the 38 new malls the trust bought during the year. (In all, RioCan purchased $1.1 billion of new properties in 2011.) Cash flow per unit rose 7.5%, to $1.43 from $1.33. RioCan yields 5.1%. It paid out 96.5% of its cash flow in 2011. However, 22% of its investors prefer to receive new units instead of cash. On this basis, the actual payout was just 74.8% of its cash flow. RioCan is still our #1 safety-conscious buy for 2012.

ISHARES CDN REIT SECTOR INDEX FUND $15.72 (Toronto symbol XRE; buy or sell through brokers; ca.ishares.com) holds the 13 Canadian real estate investment trusts (REITs) in the S&P/TSX Capped REIT Index. The weight of any one REIT is limited to 25% of the ETF’s value.

iShares CDN REIT’s expenses are just 0.55% of its assets. The fund yields 4.7%.

As mentioned, RioCan REIT is the fund’s largest holding, at 23.9%, followed by H&R REIT (13.1%), Canadian REIT (8.5%), Calloway REIT (8.2%), Dundee REIT (7.0%), Boardwalk REIT (6.9%), Canadian Apartment Properties REIT (6.5%), Primaris Retail REIT (5.8%), Allied Properties REIT (4.4%), Cominar REIT (4.4%), Chartwell Seniors Housing REIT (4.3%), Artis REIT (4.3%) and Extendicare REIT (2.3%).

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RIOCAN REAL ESTATE INVESTMENT TRUST $25.79 (Toronto symbol REI.UN; Units outstanding: 267.0 million; Market cap: $6.9 billion; TSINetwork Rating: Average; Dividend yield: 5.4%; www.riocan.com) is Canada’s largest REIT. It has interests in 331 shopping malls in Canada, including 10 under development. These properties contain over 91 million square feet of leasable area.

RioCan also owns stakes in 38 malls in the U.S. through joint ventures. In addition, it owns 14% of Cedar Shopping Centers, a U.S. REIT whose malls are mainly in the northeastern U.S.

In the three months ended September 30, 2011, revenue rose 15.1%, to $236 million from $205 million a year earlier. Cash flow per unit rose 5.7%, to $0.37 from $0.35. RioCan’s units yield 5.4%.

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