Scott's: High-Yield, North-Of-The-Border REIT

The emergence of opportunities for Canadian retail investors to acquire an interest in real estate assets continues, seemingly unabated. Initially those opportunities were largely confined to assets based north of the 49th parallel, a case of domestic assets being packaged up for domestic investors.

TORONTO — RioCan Real Estate Investment Trust is in the process of selling 14 Canadian properties worth about $645-million. The Toronto-based outlet, plaza and shopping mall operator says the properties are in secondary markets and not core to its business. The announcement Thursday came on the same day RioCan reported a net profit of $468-million or $1.55 per common unit in the fourth quarter. That was up from $241-million or 87 cents per unit a year earlier and far above the consensus estimate of 56 cents per unit in net income.

They keep coming to the market where investors have shown an overwhelming preference to purchase products that are yield-oriented. U.S.-based WPT Industrial Real Estate Investment Trust is the latest entrant to the domestic market. It has filed a preliminary prospectus for an offering, the proceeds of which will be used to purchase 35 industrial properties and two office properties, all in the U.S. from the Welsh Property Trust LLC, a privately held property company that has been around for 35 years.

One month ago, CAP REIT completed the $176.5-million acquisition of Montreal’s Olympic Village property, two 21-storey pyramid shaped buildings that were a major landmark for those who attended the 1976 Olympics and which were a short walk from the other landmark, the non-retractable roofed Big O. Today, CAP REIT will complete a $160.8-million equity financing, a move that means ownership of the iconic east end Montreal buildings will be in the public’s hands.

TORONTO — Highfields Capital, a U.S. hedge fund agitating for drastic change at iconic Canadian coffee-and-doughnut chain Tim Hortons Inc, is set for an uphill battle convincing some long-term institutional investors of the merits of its case. The Boston-based activist investor, which owns a 1.5% stake in Tim Hortons, wants the chain to boost returns aggressively via debt-funded share buybacks, while also scaling back on its U.S. expansion plans.

The latest example of foreign assets being packaged up and sold as yield-generating investments to Canadian investors will be played out Wednesday when Milestone Apartments Real Estate Investment Trust closes its $200-million initial public offering, an offering based on 52 multi-family properties in the United States and predicated on a 6.50% yield. The deal, the largest in Canada by a REIT with all its assets in the U.S. is noteworthy for another reason: Milestone is a U.S. REIT, in contrast to some recent other cross-border deals which have assets in both Canada and the U.S.

By Joseph Ori:This month's REIT Focus is on Realty Income Corporation (O), a publicly traded, self-managed real estate investment trust that primarily owns single tenant corporate, retail and restaurant properties. As of 9/30/12, O owned 2,838 properties comprising 34.3 million sq.ft. located in 49 states.

By Joseph Ori:This month's REIT Focus is on SL Green Realty Corp., (SLG) an independent real estate investment trust that primarily engages in the acquisition, ownership, repositioning and management of Manhattan office properties.