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Choice Properties: This 5.5% Yielder Collects Almost 100% Of The Rent And Launches A Buyback Program

Published Sat, 21 Nov 2020 11:35:00 -0500 on Seeking Alpha

Seeking AlphaDividend Ideas | Financials  | CanadaChoice Properties: This 5.5% Yielder Collects Almost 100% Of The Rent And Launches A Buyback ProgramNov. 21, 2020 11:35 AM ET|| About: Choice Properties Real Estate Investment Trust (PPRQF)by: The Investment DoctorThe Investment Doctor European Small-Cap IdeasWe zoom in on capital gains and dividend income in European small-capsSummaryAs expected, the rent collection rate almost reached 100% again in Q3, and this means the weak H1 will be a temporary dip.
The dividend payout ratio based on the AFFO has dropped to less than 90%.
Choice is paying an attractive dividend of 5.5% and combines this with a realistic book value.
Introduction
After checking up on the Q2 results of Choice Properties (OTC:PPRQF) I decided to maintain my long position although the payout ratio based on the AFFO came close to 100%. Now, three months later, Choice reported excellent rent collection rates and the payout ratio based on the AFFO has dropped to less than 90%. With a specific focus on retail and having the related Loblaw group as main tenant, the majority of the stores in the Choice asset base were qualified as essential services and remained open during the pandemic.
Data by YChartsChoice Properties has a more liquid listing on the TSX where it’s trading with CHP.UN as ticker symbol. The average daily volume in Canada is almost half a million shares per day.
Almost 100% of the rent was collected and the dividend is covered by the FFO and AFFO
In 2020 (and perhaps well into 2021) the focus of REIT investors should be on rent collection levels: What percentage of the rent billed is actually being paid. Fortunately most REITs provide detailed rent collection results, and Choice Properties is not an exception.
Whereas the REIT ended up collecting just 89% of the rent billed in Q2 2020, this already increased to 98% in the third quarter as virtually every tenant has started to make rent payments again.

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