Investment with safety margin: buy 1 trade of high value stocks at a low price
Morguard Real Estate Investment Trust (TSX: MRT.UN) is a Real Estate Investment Trust (REIT) whose primary business objective is to accumulate a Canadian portfolio of high quality real estate assets and then deliver the benefits of real estate ownership to unitholders. . The main advantage of owning stocks is a reliable and, over time, increasing cash distribution.
Reliable cash flow
The REIT manages distributions to ensure that sufficient cash is maintained to meet fixed obligations while ensuring reliable cash flow to unitholders. It owns a diversified real estate portfolio of 47 commercial, office and industrial buildings with a gross leasable area (SGL) of approximately 8.3 million square feet located in the provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario and Quebec.
The Company’s asset management team is focused on continuously improving the returns on assets currently held and on making long-term accretive quality acquisitions. As part of the Company’s strategy to continually improve the quality of the REIT’s real estate portfolio, the Company undertakes the divestiture of properties in cases where cash flows and values have been maximized, when the properties no longer match. to the REIT’s portfolio, or when market trends indicate that superior ROI opportunities are available elsewhere.
Reduced operating costs
Morguard REIT’s management team are encouraged to maintain occupancy levels and rents above local markets. The company has set the highest standards to maintain the quality of the REIT’s portfolio and these efforts are reinforced by a sustainability program that tracks utility usage and savings over time. These savings are passed on to the REIT’s tenants through reduced operating costs, which increases the company’s reputation as a responsible owner.
The company’s management team relies on contracted property management activities, information systems services and risk management administration. The choice to contract for property management provides the REIT with a platform for day-to-day operations that is both best-in-class and profitable.
In addition, the REIT’s borrowing strategy involves the use of conventional mortgages or secured bonds specific to real estate, unsecured convertible debentures and secured variable rate bank financing. The REIT is currently pursuing a capital structure that maintains an aggregate leverage ratio of no more than 50% of gross assets. Through the Company’s Declaration of Trust, the REIT has the ability to increase the Company’s overall debt ratio to 60%.
The risk and reliability characteristics of real estate asset classes are different, and achieving the primary objective requires a mix of assets that balances risk and rewards. Morguard REIT’s retail portfolio includes two broad categories of income-producing properties, including large-scale gated regional malls which dominate primary markets and community malls which are primarily food retailers, department stores discount and banking institutions. Investing in these two broad asset classes allows the REIT to expand the company’s tenant base, thereby reducing exposure to a single class retailer.
In addition, Morguard REIT’s office portfolio is focused on high quality properties well located in major Canadian urban centers. The portfolio is balanced between single tenant properties under long term government leases and large national tenants, who work to secure the cash flow of the business.
If you enjoyed this article, click the link below to get the best market information straight to your inbox!
The 10 best stocks to buy this month
Renowned Canadian investor Iain Butler just named 10 stocks Canadians can buy TODAY. So, if you are tired of reading about other people getting richer on the stock market, today might be a good day for you.
Because Motley Fool Canada is offering 65% off the list price of its best stock picking service, along with a full membership fee money back guarantee on what you pay for the service. Just click here to find out how you can take advantage of it.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We are straight! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer, so we post sometimes articles that may not conform to recommendations, rankings or other content.
Foolish contributor Nikhil Kumar has no position on any of the stocks mentioned.