Blue-chip Canadian REITs
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Created by arnabdgp
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Date updated:03-28-2007

Recent Canadian legislation has stipulated that only those companies that derive not less than 95% of its revenues from real or immovable properties can qualify as a REIT. Preferential tax treatment will end for primarily lodging REITs that have ancillary revenue sources from food sales.Against the backdrop of strong performance from the Canadian REIT sector for 3 years running,investors should take a look at 2 quality names that trade at a P/FFO discount to its US peers and pay higher dividend yields.Since the legislation does not go into effect till 2011,you are not just buying these names for the short-run.The real benefit of holding a REIT in your portfolio is to take advantage of rising income unlike a fixed-income instrument.

symbol name last price % change open
  • +
  • INN-UN.TO
    Innvest Real Esta
  • $4.63
  • 0.00%
  • $4.77

With 137 properties,Innvest owns Canada's largest hotel portfolio.The majority of the hotels are limited-service hotels, and all are flagged with internationally recognized brands such as Comfort Inn, Ramada Inn.Innvest has in the most recent past outpaced its peers in terms of RevPar(revenues per available room)growth as it has successfully balanced rapid growth in resource rich Western Canada with moderate growth in manufacturing driven Eastern Canada. Trades at 12x AFFO and yields 8%.

People owning INN-UN.TO also tend to own: HOT-UN.TO

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Owns or manages 32 hotels in the mid-market and upscale category. Has consistently been a favorite among street analysts for its low leverage,prudent payout policy, and disciplined acquisitions.They have just announced a review of strategic alternatives so look to act on this name quickly as they solicit bids.Trades at 11x AFFO and yields 6%.

People owning HOT-UN.TO also tend to own: INN-UN.TO

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