Parent and spinoff offer yield plus growth

Article Excerpt

The market plunge at the start of the COVID-19 crisis lowered the unit price of most REITs. That’s because the pandemic forced many businesses—and REIT tenants—to temporarily close. However, as the pandemic wanes, the economy is normalizing. That will let these two REITs maintain, or even raise, their current high distributions. H&R REIT, $13.22, is a buy. Through your units in this REIT (Toronto symbol HR.UN; Units o/s: 285.1 million; Market cap: $3.8 billion; TSINetwork Rating: Extra Risk; Dividend yield: 3.9%; you tap income from 416 properties: 27 office buildings, 294 retail developments, 72 industrial buildings and 23 residential properties. The trust’s overall occupancy rate is a high 96.2%. In the quarter ended March 31, 2022, H&R’s revenue fell 24.3%, to $201.7 million from $266.5 million a year earlier. The REIT sold some properties—and spun off Primaris (see below). Cash flow per unit fell 30.0%, to $0.28 from $0.40. H&R recently spun off most of its retail properties, including all of its enclosed shopping malls,…

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