New Purchase Plaza REIT

plaza reit

Hey guys back in November I announced that I sold Boardwalk REIT and that gave me around $3,700 to put back into the market and I have since made two purchases with that money. The first purchase I will talk about today on November 20th I purchased shares of Plaza REIT. At the beginning of my search I didn’t know anything about Plaza REIT, I knew a couple of fellow investors own shares. The numbers after doing some research looked pretty good in my opinion.

So what is Plaza REIT?

Plaza Retail REIT (Plaza) is a Canada-based open-ended real estate investment trust. The Company’s objective is to deliver a growing yield to unitholders from a diversified portfolio of retail properties. The Company develops, owns and manages retail real estate primarily in Atlantic Canada, Quebec and Ontario. The Company offers a business strategy that differs from various peers in the real estate industry. The Company’s portfolio includes interests in approximately 310 properties totaling over 7.1 million square feet, which are predominantly occupied by national tenants and additional lands held for development. These include properties indirectly held by Plaza through its subsidiaries and through joint arrangements. The Company’s properties are located in Alberta, Newfoundland and Labrador, New Brunswick, Nova Scotia, Manitoba, Ontario, Prince Edward Island and Quebec. The Company’s subsidiaries include Plaza Master Limited Partnership and Scott’s Real Estate Limited Partnership.

(Source: RBC Direct Investing)

Let’s get into the numbers shall we.

Property Locations

Province Number
Alberta 10
Newfoundland and Labrador 12
New Brunswick 51
Nova Scotia 37
Manitoba 6
Ontario 73
Prince Edward Island 11
Quebec 98

As you can see Plaza REIT is in several provinces across Canada with their biggest presence being in Ontario and Quebec. I like the fact that their properties are spread out throughout 8 provinces so if one province is struggling economically the company won’t suffer too much. I thing I would like to see is Plaza spread out further possibly into BC, Saskatchewan to increase the diversification of their portfolio further.

Largest Tenants

Here is the biggest tenants for Plaza REITΒ  as of September 30, 2017 all national chains. Shoppers Drug Mart is by far the largest tenant at 26% of Plaza’s locations. Other than Shoppers I think Plaza is in a good position in case any of these chains suffer economic hard ship as we all know what the retail market has gone through here in Canada and now the United States, for example here in Canada for the past few years we have seen Furture Shop, Sears and Target, HMV all disappear.

Tenancy Mix

Plaza REIT’s main tenants are national chains and is a focus for them as they tend to be more stable and more recognizable to the public.

Occupancy Level

Occupancy levels are quite high and seem to always be between 95 to 97 percent year after year.

Revenues

Even through the turmoil in the retail market Plaza has been able to grow the business year after year. Whether through developing new properties or purchasing them Plaza has been able to grow their revenues and fund from operations which for dividend investors is a very good thing.

Funds From Operations

Same story here as with revenues, the funds from operations (FFO) have continuously grown.

Dividends

I only focused on 2010 to 2017 for the chart above to show you Plaza’s dividend growth but in fact I could have gone bigger as Plaza has grown it’s dividend for 15 consecutive years which is very impressive in my opinion. When they announced their 3rd quarter in November they announced an increase which will take effect with the January 2018 payment. Plaza is a monthly dividend payer it currently pays $0.225 per month. The yield on the stock is 6.41%

FFO Payout Ratio

Plaza uses FFO as a guide for their payout ratio as we can see in 2016 the payout ratio was at 78.5%. Plaza still has room to grow the dividend in the coming years if they want with the current ratio.

My Purchase

On November 20th I purchased 500 shares at $4.37 per share for a cost of $2,185 + $9.99 trading fee for a total cost of $2,194.95.

Income

From this purchase I should receive $11.25 per month or $135 annually.

 

So that wraps up my first purchase. What do you think? Do you like my purchase?Β  Do you own Plaza? Would you be interested in owning it? Please feel free to leave a comment in the comment section.

Either next week or the week after I will reveal what I did with the remaining funds from my sale of Boardwalk REIT.

Thanks for reading

Matthew

 

 

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15 thoughts on “New Purchase Plaza REIT

  1. Mathew, Thank you for doing this stock analysis. It is very professional and well done. I can learn a thing or two here for my own stock analysis. One question, do you have any concern about the heavy investment in brick and mortar retailers with the threat of Amazon weakening Plaza’s customer base? I own Reality Income which operates in a similar business model and have been wondering about that question. Thanks again, Tom

    Liked by 2 people

    1. Hi Tom and thanks for stopping by. I appreciate the kind words. Am I worried about Amazon? Good question no I am not I think here in Canada it will be a few years before Amazon has a big effect. For example Plaza’s three biggest tenants Shoppers, KFC and Dollarama, with Shoppers Canada’s population is aging and so sales of medication will only rise Amazon isn’t in that market. Dollarama sales are booming here and will continue to go higher. So at the moment I am not worried about the Amazon effect I think Plaza is well diversified at the moment. Thanks for the comment.

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  2. I went with SOT instead a while ago. Higher yield and higher risk therefor. From personal experience I see more people moving from the big plazas and offices to smaller and medium-sized ones.

    Liked by 1 person

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