Looking for some analysis from a REIT person So this board is kinda dominated by TimeBuilder making useless posts about info that's easy to see or find... Let's alter that a bit.
So I've owned Cominar for exactly 4 years, mostly it's been a sour experience caused by my own inexperience and missunderstanding of what I was doing or trying to do with this investment and couple that with I'd say poor company management in the past. Basically I was once excited to own this broken company. My current cost per share (on purchase price) is $13.13 and yield on cost is 2.74%, pretty ugly I know. Let's add to my stupidity and add I own this in a taxable account so I'm gonna get hit with capital gains likely on the sale as the return on capital over the years I've held is rather decent as despite the numbers looking ugly, I'm actually positive by just under 16% (4%/year) over the life of this investment do to previous higher payouts, originally I had 11.2% yeild on cost that 2 months later fell to 8.7% and continued downhill from there. I was trying to buy something that I thought was just getting a lack of love from the market, I didn't identify that the company outlook was broken.
I'm looking at exiting now, because I no longer wish to hold a REIT in my taxable account, I'm not willing to move this over to my TFSA directly as it acts like a sale in my taxable account and I think I can do much better on selecting something of quality to hold for longer term in my TFSA. That said, the company is turning things around it seems and I don't wish to sell stupidly.
With the pricing turn around something I kinda expect to continue, with my relative understanding the balance sheet looks to be improving from the recent past, but I have a couple things I need help understanding:
- REITs need to payout a certain amount to shareholders to keep tax shelter status as an entity, in my looking up info that number is suppose to be 90% of Adjusted Funds From Operations (I believe it's 100% here in Canada). Here is where is gets fuzzy, on the Cominar website and my tax print outs, all of last years distributions were considered Return of Capital, is that because Cominar was negative in AFFO last year? In 2019 only 10.7% of distributions were ROC because we had capital gains from selling non-core properties triggering capital gains and other incomes.
- now adding on the above, in the most recent earnings they mention last years same quarter AFFO payout ratio was 100% (because we received more in distributions than earned in AFFO obviously), yet last quarters is only 45%, of course we had the dividend cut in half, does that mean if we compare quarters than that number would have been 90% had the dividend not been cut? Also does this mean that we should see a doubling of the dividend back to previous levels to meet the proper payout ratio?
If someone could explain and project those things so I could understand it yet a bit better that would be awesome. Obviously I do not wish to get out before a distribution increase as I would expect share price to jump on that news nor do I want to miss more upward price action.
My plan is put a trailing stop sale order on the shares so that I participate in the upside, but if we drop too much, I'll stop myself out and call it a day. I'll adjust the stop price as I feel the need if we go higher. And if we go flat too long with no positive news in sight I'll just sell out. That said I'm not in a hurry to exit unless there is reason to run, so I'm willing to drag this process out over months if it's worth my time.
Thank you in advance!
[Keep in mind I'm not saying the company is a poor investment currently as for others it might be a solid preforming investment and for the future, it just doesn't fit my portfolio appropriately for my uses and purposes]