If you want safe monthly income, add Canadian Apartment Properties REIT (TSX:CAR.UN) to your watch list. You can sleep well at night holding the quality units.
Why is it a high-quality REIT? What’s a good valuation (i.e. price range) to buy its units to prevent overpaying and to boost your starting yield? First, let’s see if it’s the kind of business you want to own.
Canadian Apartment Properties REIT Overview
- Market cap: $4.1 billion
- Price: $29.60 per unit
- Yield: 4.2%
- Payout ratio: 72%
Canadian Apartment Properties REIT started out with 2,900 residential suites in 1997 when it had its IPO. Since then, it has grown to a portfolio of about 48,514 suites.
Source: CAPREIT Q2 2016 Presentation – Slide 7
Canadian Apartment Properties REIT is most notable for its assets from the stable Ontario province, which makes up half of its portfolio. Its assets in Ontario, Quebec and British Columbia all maintain high occupancies.
In total, the three provinces make up 83% of the REIT’s portfolio and adds stability to its financial performance. As a result, the REIT’s portfolio occupancy was 98.2% as of the end of June 2016.
Source: CAPREIT Q2 2016 Presentation – Slide 23
The top three provinces from where the company earns the highest net operating income (NOI) margins are British Columbia (an NOI margin of 68.8%), Ontario (60.4%), and Alberta (60.4%).