By Dr. Maurice Yeates, Vincent Kakuk and Dr. Tony Hernandez

This CSCA Research Insight examines the underlying bases of real estate investment trusts (REITs). Using annual reports and associated financial information, our analysis revolves around examination of certain propositions in the context of the ‘fair value’ of assets held in seven traditional categories: Industry; Residential; Health Care/Retirement; Hotels; Office; Retail, and Diversified. We question whether there is an underlying rationale for the magnitude of the distributions and number of units proffered based on the value of properties held?  We also look at a number of operating metrics (NOI, FFO, AFFO and AFCO) to ascertain performance of Canadian REITs, highlighting the varied reporting practices of Canadian REITs. Our findings point to the underlying importance of reinvestment in property assets to maintain recurring profitability in REITs, and an increasing move towards redevelopment of properties particularly amongst Retail focused REITs.