The Artis Real Estate Investment Trust (TSX.AX.UN), which is a diversified REIT for commercial properties, has its net operating income (NOI) across industrial properties (24.1 per cent), retail properties (25.6 per cent), and office properties (50.3 per cent).
Primarily invested in Canada with some assets in the United States (representing approximately 28 per cent of its NOI), Artis REIT enjoys a 95 per cent portfolio occupancy rate and 255 leasable properties with a total space of 26.2 million square feet.
Artis REIT’s adjusted funds from operations (AFFO) per unit amount to $1.30 in 2015, with $1.33 AFFO per unit in 2016, making its 8.3 per cent distribution yield safe. Also, unitholders can re-invest Artis REIT distributions at a 4 per cent discount, permitting greater flexibility.
On the other hand, the NorthWest Health Prop Real Est Inv Trust (TSX:NWH.UN) covers rental income from 123 properties – in particular, hospitals and health care facilities across Canada, Australia, Brazil, Germany, and New Zealand. Hospitals contribute 33 per cent of its NOI, while other medical office buildings contribute 67 per cent.
NorthWest Healthcare Properties REIT boasts of a 95.8 per cent occupancy rate, with a similarly high AFFO payout ratio of 95.7 per cent. Its distribution is covered with a 9.5 per cent yield at $8.4 per unit, but the high payout ratio means that investors should take care to keep an eye on its occupancy rate.
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Real estate investment trusts (REITs) are mechanisms that allow the public to earn generous rental income by investing in commercial real estate. REITs pay out distributions that consist of capital gains, foreign non-business income, other income, and return of capital. Two types of REITs, in particular, offer 8 up to 10 per cent ROI.