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This Undervalued REIT Offers a 5.8% Yield

A real estate investment trust (REIT) allows an individual to invest in large-scale, income-producing real estate. REITs have been a terrific source of income and a solid growth vehicle in a robust Canadian real estate market. Today, I want to zero-in on a Canadian REIT that looks dirt-cheap in after-hours trading on May 24.

H&R REIT (TSX:HR.UN) is a Toronto-based REIT with total assets above $11 billion in 2023. This REIT is specialized in commercial real estate. Its shares have dropped 9.8% month-over-month as of close on Tuesday, May 23. This REIT has dropped 11% in the year-to-date period.

This REIT unveiled its first quarter fiscal 2023 earnings on May 12. H&R REIT reported net operating income (NOI) of $97.3 million in the first quarter of fiscal 2023 – up from $92.4 million in the first quarter of fiscal 2022. Meanwhile, adjusted funds from operations (AFFO) fell to $73.1 million compared to $77.1 million in the previous year. However, AFFO per basic unit rose to $0.260 over $0.255 in Q1 FY2022.

In Q1 2023, H&R REIT announced that it had two industrial properties under development in Canada. Meanwhile, it has started construction on two residential development properties in the United States.

Shares of this REIT last had an RSI of 19, which puts the stock well in technically oversold territory at the time of this writing. Moreover, this REIT currently offers a monthly dividend of $0.05 per share. That represents a very strong 5.8% yield.