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number cruncher

What are we looking for?

For this number cruncher we will look at valuation for the 10 largest public REITs in Canada.

The screen

We used StockCalc’s screener to select the top 10 listed real estate services investment trusts by market capitalization on the TSX. We then used StockCalc’s valuation tools to calculate fundamental, or intrinsic, valuation for each stock to see if it is undervalued or overvalued compared with its price.

Overview of the techniques used:

  • Discounted cash flow is a valuation technique in which cash-flow projections are discounted back to the present to calculate value per share.
  • A price comparables technique values the company on the basis of ratios from selected comparable companies;
  • An adjusted book value is calculated by multiplying book value per share by a stock’s 10-year average price-to-book ratio.
  • If a stock has analyst coverage, we may look at the consensus target price.

More about StockCalc

StockCalc is a fundamental valuation platform with tools to calculate and report on value per share for thousands of public companies listed on major North American stock exchanges. StockCalc also contains numerous tools to understand what the stocks you are investing in are worth. Globe Unlimited subscribers can subscribe to StockCalc using the promo code ‘Globe30′, which offers a 30-day free trial and special pricing for the second month.

What we found

REIT valuations

NameTickerMarket Cap ($ Mil)Recent Close ($)StockCalc Val ($)Diff (%)DCF Value($)Price Comps($)ABV ($)Analyst Target ($)1 Year Return(%)Dividend Yield(%)
Riocan REITREI-UN-T5549.618.4719.435.2-14.9321.9723.9621.50-4.15.9
Granite REITGRT-UN-T4898.277.3177.910.1-0.7548.1094.9490.69-3.84.2
Choice Properties REITCHP-UN-T4517.113.7814.313.873.128.0617.8015.170.15.5
Boardwalk REITBEI-UN-T4205.578.0878.610.166.1490.6861.4183.7543.81.5
SmartCentres REITSRU-UN-T3955.823.2324.083.621.4528.0236.7526.32-5.68.0
Dream Industrial REITDIR-UN-T3777.713.1813.250.1-2.898.6114.5116.62-5.65.3
CT Real Est ITCRT-UN-T3360.414.2714.884.37.7110.2717.3815.50-5.46.3
First CapitalFCR-UN-T3333.315.7115.45-1.6-25.890.3119.0618.195.45.5
Crombie REITCRR-UN-T2482.613.6915.4813.116.3216.5714.9515.43-4.36.5


This sector comprises real estate operations that cover a wide spectrum of the Canadian landscape and economy: Holdings for these companies include housing and apartment complexes, hotels, commercial and industrial space, retail locations and office buildings. Like other asset intensive businesses, our valuation models weigh the adjusted book value highly in the overall calculation.

We are expecting interest rates to fall this year. There are now rate cuts of 0.25 per cent (25 basis points) projected for the U.S. Federal Reverse meetings in June, September and December, according to the CME FedWatch tool and we expect similar reductions in the Bank of Canada’s policy rate. A falling rate environment reduces borrowing costs for this asset-intensive industry and makes dividend yields more attractive compared to lower-risk fixed income. Both of those are supportive to underlying stock prices and dividends.

Over the past 12 months, with the exception of Boardwalk REIT, year-over-year stock prices for these trusts have moved 6 per cent or less. The average dividend yield for companies on this list is just over 5 per cent. From a valuation perspective, our weighted models are showing most companies at or near current price but with an upward bias.

Let’s look at a few of these companies:

CAPREIT CAR-UN-T is a real estate investment trust primarily engaged in the acquisition and leasing of multiunit residential rental properties located near major urban centres across Canada. The company derives nearly all of its income in the form of rental revenue with the majority of its assets located in the Greater Toronto and Greater Montreal regions. Our valuation models – discounted cash flow excluded – support the current stock price.

Boardwalk REIT BEI-UN-T is engaged in the acquisition, development, and management of residential multifamily communities throughout Canada with the majority of its units located in Alberta. We see BEI.UN-T has outperformed the rest of this list over the last 12 months. Net international and interprovincial population inflows to Alberta have been driving demand for their properties. Our valuation models for BEI.UN-T are both above and below current price with our weighted value essentially at current price.

Crombie Real Estate Investment Trust CRR-UN-T is an unincorporated open-ended real estate investment trust investing in income-producing commercial, retail and residential properties in Canada. All of our models as well as the analyst target are above Crombie’s current stock price and it is showing as the most undervalued on our list.

You can see in the accompanying table the percentage difference between each stocks recent closing price and its intrinsic value. The StockCalc Valuation column is a weighted calculation derived from the models and analyst target data if used.

Investing involves risk. StockCalc accepts no liability whatsoever for any loss or damage arising from the use of this analysis.

The author owns units in Riocan REIT.

Brian Donovan, CBV, is the president of StockCalc, a Canadian fintech based in Miramichi, N.B.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 24/05/24 4:00pm EDT.

SymbolName% changeLast
Crombie Real Estate Investment Trust
Boardwalk Real Estate Investment Trust
CDN Apartment Un
Riocan Real Est Un
Granite Real Estate Investment Trust
Choice Properties REIT
Smartcentres Real Estate Investment Trust
Dream Industrial REIT
CT Real Estate Investment Trust
First Capital REIT Units

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