CT REIT Q3-2020 Earnings, Price Target Forecast
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CT REIT (CRT.UN-TSX) was established in Oct-2013 to acquire ownership of retail shopping centre properties previously owned directly by Canadian Tire Corp.(CTC-TSX) valued at approximately $6.1B. CTC has been in business for over 90 years. Canadian Tire offers a range of products and services to Canadians through a portfolio of the leading retail banners in Canada including; Canadian Tire, PartSource, Petroleum, Gas+, Party City, Mark's, Mark's Work Wearhouse, L'Équipeur, Helly Hansen, SportChek, Sports Experts, Atmosphere, Pro Hockey Life, National Sports, Sports Rousseau, and Hockey Experts. Canadian Tire Corp. operates 1,742 retail and gasoline outlets in Canada. CT REIT's holding (Sept-30-2020) consisted of 350 retail properties, four industrial properties, one mixed-use commercial property and three development properties located in each of the provinces and in two territories across Canada. Together the properties comprise 28M sq. ft. Canadian Tire Corp(CTC) occupies 92.1% of total leasable area and contributed 91.5% of annual rent. CTC leases are triple net; utilities, operating costs and capex paid by the tenant. The Canadian Tire store leases contain contractual annual rent escalations of approximately 1.5% per year, on average, over the initial term of the leases and have an average remaining lease term 9.8 years. Distributions have been increased every year since the IPO.
The majority shareholder at Canadian Tire Corp.(CTC) is M. G. Billes, controlling 61.4%. Canadian Tire Corp. (CTC) owned 85.5% of CT REIT as of Sept-30-2018 and 69.1% as at Sept-30-2020. CTC has reduced their interest with secondary offerings combined with treasury offerings.
By leasable area 42% of properties are located in Ontario, Quebec- 23%, western Canada- 27% and Atlantic Canada-8%. In total approximately 47% of properties are located in one of six major Canadian urban centres. The properties are located in each of the provinces and in two territories across Canada. Included in CT REIT's portfolio are 10 properties which are situated on ground leases with remaining initial terms up to 37years, and an average remaining initial term of 14 years. Assuming all extensions are exercised, the ground leases have remaining terms between 23 and 71 years with an average remaining lease term of 37 years.
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