REIT plan is a big win for Loblaw

Article Excerpt

Loblaw has risen almost 34% since the start of this year. That’s mainly because it’s unlocking hidden value with its plan to form a real estate investment trust (REIT) that will hold its highly valuable properties. The move will let it keep spending $1.0 billion a year on capital upgrades, including store renovations, new computer systems and improved supply networks. That will help it keep prospering in Canada’s intensely competitive grocery business. LOBLAW COMPANIES $44.75 (Toronto symbol L; Shares outstanding: 281.8 million; Market cap: $12.1 billion; TSINetwork Rating: Above Average; Dividend yield: 2.0%; www.loblaw.ca) is Canada’s largest food retailer, with about 1,000 stores. In the three months ended March 23, 2013, Loblaw’s sales rose 3.8%, to $7.2 billion from $6.94 billion a year earlier. Overall sales at its supermarkets rose 3.4%, while same-store sales rose 2.8%. Revenue from its financial services division, which mainly issues credit cards, rose 27.9%. Before one-time items, earnings rose 11.6%, to $0.48 a share from…