CT REIT: Key Rate Cuts And Expected Earnings Growth Make This My Largest Canadian REIT Position

Core Viewpoint - The article discusses the performance and outlook of CT Real Estate Investment Trust (CT REIT), highlighting its strong financial metrics despite rising interest expenses and the potential for future growth in earnings and dividends as interest rates decrease [2][3][20]. Financial Performance - The net operating income (NOI) increased by approximately 4.4% year-over-year, reaching nearly C$115 million, with a quarter-over-quarter increase of about 1$74.25 million [12][14]. - The AFFO per share is projected to be C$1.26 annually, with a current distribution of C$0.925 per unit, yielding approximately 6.03% based on the recent share price [17][19]. Debt and Interest Expenses - Total interest and finance expenses increased by approximately C$1.7 million year-over-year, with net interest expenses rising by about C$2.3 million [5][7][10]. - The average cost of debt was approximately 4.13% at the end of June 2024, and the REIT has primarily fixed-rate debt, insulating it from rising interest rates [10][11]. Dividend and Distribution Growth - CT REIT has a history of gradually increasing its distributions, with the current annualized distribution being about 20% higher than in 2019 [18]. - The AFFO payout ratio is around 73%, indicating a healthy balance between earnings and distributions [19]. Market Position and Valuation - The stock is trading at a discount of nearly 10% to its net asset value (NAV), based on a multiple of approximately 16 times the NOI from Q2 [20]. - The current price-to-AFFO multiple is around 12, which is considered attractive [20].