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  5. CHP.UN: We are retired, primarily income investors. [Choice Properties Real Estate Investment Trust]
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Investment Q&A

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Q: We are retired, primarily income investors. We did hold relatively equal positions in SRU,un and CHP.un, but this has changed rather significantly. In view of the current uncertainty about retail marketing, what is your opinion about investments in these two companies. Would you comment on the sustainability of SRU's dividend? Thank you for all the great ideas and comments.

Asked by Jane on October 05, 2020
5i Research Answer:

SRU has a large debt load and minimal expected growth in the next two years. It will struggle a bit in a covid world. However, its assets are solid, and its dividend payout ratio is around 65%. We can't say the distribution is 100% safe, but it likely can last well enough until covid is over. We would be OK owning it as part of a basket of higher risk income names. On its own it needs to be considered higher than average risk. CHP collected 89% of its rent in the 2Q. We like it a little more, as it as Loblaw as its main tenant, providing stability and good cash flow. The payout ratio is near 80%, but as noted cash flow is more stable. Growth expectations are a little higher as well. With their recent declines naturally reducing portfolio exposure, we would be OK holding these together for income, provided one has a 2 year+ time frame.