National Bank comments H&R REIT Real Estate Investment Trust (HR.UN-T) with an “outperform” rating and $17 target. Average: $16.18.
Firm: “H&R has been busy honing its portfolio focus and in time will probably escape its classification as a diversified REIT. Following the sale of the Bow and spinout of Primaris, the REIT is now more heavily weighted towards its higher-growth segments, namely the U.S. apartment and Canadian industrial portfolios. Meanwhile, the remaining long-term leased office and grocery-anchored retail properties provide stable earnings and a future source of funding that can be timed in accordance with development activity. The latter is an expertise that the REIT has built over years of operations and the focus is on properties with strong relative going-in yields and constrained timelines, limiting potential dilution from capital recycling. At the end of the day, we see H&R as a growth name with a value multiple and expect that this discount will diminish as it puts up strong earnings.”