BSR Real Estate Investment 5 00 convertible unsecured subordinated debentures T.HOM.DB.U

Ryan Irvine

[retiredcf]

From last Thursday. Disclosure: I own them both. GLTA

Your Stock Our Take

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Stock Comparison – Granite Industrial REIT (GRT.UN) versus BSR REIT (HOM.U)

Basic Information:

• Granite Industrial REIT (GRT.UN) owns industrial facilities globally. These include manufacturing facilities, primarily rented to Magna Corporation, and warehouse distribution facilities which are used for ecommerce. Granite pays a yield of 4% and has a market capitalization of $4.6 billion.
• BSR REIT (HOM.U) is an apartment REIT with properties located in markets within the Sunbelt region of the United States. BSR pays a yield of 4.7% and has a market cap of $324 million.

Factors to Compare

Growth

• Granite: In the most recent quarter, net operating income increased 28% to $77 million, same property NOI increased 3.2% and cash flow (FFO) per share increased 3.2%. For the year-to-date period, cash flow per unit was up 10%.
• BSR: In the most recent quarter, net operating income increased 4.8% to $15.2 million, same property NOI increased 4.9% and cash flow per unit declined by 9.9%. For the year-to-date period, cash flow per share was down 24%.

Balance Sheet

• Granite: The REIT has the lowest debt leverage of any REIT on the Canadian market. Debt to assets at the end of the last quarter was 29% and interest coverage was 8.8 times.
• BSR: Debt to assets was 51% and interest coverage of 2.2 times.

Distribution and Payout

• Granite: Distributions were increased 3.2% in 2020. This was the 8th consecutive year of distribution increases. The payout ratio to cash flow is approximately 50%.
• BSR: The REIT has a shorter history and has only been public since 2018. There have been no distribution increases in the company’s history. The payout ratio to cash flow is approximately 88%.

Valuation

• Granite REIT trades at a valuation of approximately 20 times cash flow.
• BSR trades at a valuation of approximately 19 times cash flow.

Not comparing apples to apples, but you can see why we may prefer Granite as a REIT generally, versus BSR at present.