January 20, 2019

Cominar Real Estate Investment Trust (CUF)

The Cominar Real Estate Investment Trust (CUF) is an extremely focused Investment Trust that is the largest commercial property owner in Quebec.  While Cominar does own a few properties in the maritime provinces, and Ottawa, Ontario, the vast majority of their holdings are located in La Belle Province.  They have about 270 properties under management at this time, with 55 each in office and retail, and around 160 industrial and mixed-use buildings.  Together, the properties total roughly 21 million square feed of real-estate space.  Cominar (CUF) was founded in 1965 by Mr. Jules Dallaire, who was a Quebec City entrepreneur.  He got his start building residential apartment buildings in Quebec City.  Between 1965 and 1998 Cominar came to dominate the real estate scene in Quebec City, with 3.1 million square feet of leasable space spread out amongst office, retail, and industrial properties.  In 1998 Cominar (CUF) became one of the first companies to switch over the Real Estate Investment Trust tax structure.  Their familiarity with large scale real estate investments and acquisitions was an immediate asset and has aided their expansion.

 

Likely the most important business transaction the Cominar REIT has been involved in, was the complete buyout of the Alexis Nihon Real Estate Investment Trust on June 1, 2007.  The purchase netted Cominar (CUF) 28 industrial properties, and 19 office properties.  Alexis’ portfolio added 6.1 million square feet of leasable space to Cominar’s holdings, at a price tag of about $575 million.

 

So far in 2011, Cominar REIT (CUF) has had three major acquisitions.  The first is an industrial property located in Moncton, New Brunswick.  It is 11,000 square feet, and was purchased for $1.2 million.  Its occupancy is at 100%.  The second addition was an office property in Saint John, New Brunswick.  It is a relatively large property at 41,000 square feet, and was purchased for $6.5 million.  The final acquisition for Cominar was a commercial property in Halifax Nova Scotia.  Its occupancy rate is 100%, and this property cost about $5.5 million.  Together these purchases obviously prove that Cominar (CUF) is committed to expanding their foothold in Atlantic Canada, and growing outside of their Quebec base.

 

Cominar is an interesting option for investors looking to get exposure to Eastern Canadian real estate.  I think whether or not you would like to invest in the REIT ultimately comes down to what you think the prospects are for Quebec industry, and the greater Atlantic area.  Personally, there are other parts of Canada I would rather be invested in, and there are many Canadian Real Estate Investment Trusts that will give investors a much broader and well-diversified portfolio of properties.  Cominar does offer a nice 5% discount to unit holders through their Distribution Reinvestment Plan.  Cominar (CUF) is currently trading at around $21.50.  They have a fairly large market capitalization at $1.4 billion, and their annual dividend of $1.44 gives the REIT a yield of 6.7%.  While this is a fine revenue stream for investors, there are much more appealing income-producing REIT options currently on the market.