Canadian Net Real Estate Investment Trust Trust Units (NET.UN) AI Stock Analysis

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Canadian Net Real Estate Investment Trust Trust Units

(NET.UN)

74Outperform

Canadian Net Real Estate Investment Trust Trust Units show strong financial performance with robust cash flow and attractive valuation metrics. Key strengths include consistent revenue growth, strategic portfolio management, and a high dividend yield. However, attention is needed on increasing debt levels and recent declines in FFO and NOI. Overall, the stock provides a stable investment prospect with potential for operational improvements.

Canadian Net Real Estate Investment Trust Trust Units (NET.UN) vs. S&P 500 (SPY)

Market Cap

C$105.68M

Dividend Yield6.72%

Average Volume (3M)15.77K

Price to Earnings (P/E)14.9

Beta (1Y)0.33

Revenue Growth-1.61%

EPS Growth-60.98%

CountryCA

Employees3

SectorReal Estate

Sector Strength86

IndustryREIT - Diversified

Share Statistics

EPS (TTM)0.34

Shares Outstanding20,561,060

10 Day Avg. Volume27,864

30 Day Avg. Volume15,767

Financial Highlights & Ratios

PEG Ratio0.10

Price to Book (P/B)N/A

Price to Sales (P/S)4.19

Price to Cash Flow (P/CF)11.60

P/FCF Ratio7.40

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

Canadian Net Real Estate Investment Trust Trust Units Business Overview & Revenue Model

Company DescriptionCanadian Net Real Estate Investment Trust Trust Units (NET.UN) is a publicly traded real estate investment trust focused on acquiring, owning, and managing commercial properties across Canada. The trust primarily invests in retail, industrial, and office real estate sectors, providing investors with access to a diversified portfolio of income-generating real estate assets. Canadian Net REIT aims to deliver stable and growing cash distributions to its unitholders through strategic property acquisitions and effective property management.

How the Company Makes MoneyCanadian Net REIT generates revenue primarily through the rental income received from its portfolio of commercial properties. The trust leases its properties to a variety of tenants across different industries, ensuring a stable and diversified income stream. Additionally, the company may engage in strategic property acquisitions and disposals to enhance its portfolio value and capitalize on market opportunities. While Canadian Net REIT focuses on organic growth through property management and tenant services, partnerships with real estate developers and financial institutions may also play a role in financing acquisitions and expansion projects. The trust leverages its expertise in real estate management to optimize occupancy rates and rental yields, thereby maximizing returns for its investors.

Canadian Net Real Estate Investment Trust Trust Units Financial Statement Overview

Summary

Canadian Net Real Estate Investment Trust exhibits solid revenue growth and efficiency in cash flow management, despite high leverage. While profitability metrics are improving, the company must manage operational costs and leverage prudently. Overall, the financial position is stable, with potential risks in debt management.

Income Statement

Positive

The company shows consistent revenue growth over the past few years, with a notable increase in the TTM. Gross profit and net income have also improved, indicating solid operational efficiency. However, the decline in EBIT suggests potential operational cost challenges.

Balance Sheet

Neutral

The company's debt-to-equity ratio is relatively high, indicating significant leverage, which is common in the REIT industry but poses financial risk. The equity ratio shows a stable capital structure, though the return on equity is fluctuating, suggesting variable profitability.

Cash Flow

Positive

Operating cash flow remains strong, with a positive free cash flow trend. The operating cash flow to net income ratio is robust, highlighting efficient cash generation relative to earnings. However, variability in capital expenditures could impact future growth.

TTM	Dec 2023	Dec 2022	Dec 2021	Dec 2020	Dec 2019
Breakdown
Income Statement		Total Revenue
26.59M	26.55M	24.73M	18.95M	12.99M	9.39M
	Gross Profit
19.05M	19.43M	18.37M	14.32M	9.87M	7.14M
	EBIT
14.27M	20.95M	16.75M	16.81M	11.81M	6.23M
	EBITDA
18.26M	18.08M	16.75M	29.91M	12.88M	6.67M
	Net Income Common Stockholders
9.66M	18.22M	-6.49M	25.09M	9.62M	4.08M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
374.53K	987.72K	2.20M	1.78M	5.54M	2.31M
	Total Assets
99.88M	308.35M	303.06M	278.17M	209.71M	129.12M
	Total Debt
54.96M	174.71M	180.10M	144.71M	115.79M	73.85M
	Net Debt
54.78M	173.72M	179.90M	144.10M	111.33M	73.55M
	Total Liabilities
57.59M	178.86M	184.37M	148.35M	119.50M	77.78M
	Stockholders Equity
42.29M	129.49M	118.69M	129.81M	90.21M	51.34M
Cash Flow		Free Cash Flow
9.32M	11.25M	56.02M	9.26M	78.94M	3.62M
	Operating Cash Flow
10.71M	11.25M	11.33M	9.26M	6.19M	3.62M
	Investing Cash Flow
13.21M	2.71M	-41.56M	-55.79M	-73.82M	-28.22M
	Financing Cash Flow
-23.96M	-13.18M	29.83M	42.68M	71.79M	24.73M

Canadian Net Real Estate Investment Trust Trust Units Technical Analysis

Technical Analysis Sentiment

Negative

Last Price5.13

Price Trends

50DMA

5.27

Negative

100DMA

5.21

Negative

200DMA

5.22

Negative

Market Momentum

MACD

0.03

Positive

RSI

51.42

Neutral

STOCH

19.19

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:NET.UN, the sentiment is Negative. The current price of 5.13 is below the 20-day moving average (MA) of 5.39, below the 50-day MA of 5.27, and below the 200-day MA of 5.22, indicating a bearish trend. The MACD of 0.03 indicates Positive momentum. The RSI at 51.42 is Neutral, neither overbought nor oversold. The STOCH value of 19.19 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:NET.UN.

Canadian Net Real Estate Investment Trust Trust Units Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NXR.UN	78 Outperform	C$627.56M	6.85	8.82%	10.64%	9.64%	-45.71%
SRU.UN	76 Outperform	C$4.12B	18.21	4.50%	7.74%	9.46%	-42.77%
NET.UN	74 Outperform	C$105.68M	14.87	5.49%	6.72%	-1.61%	-60.98%
CAR.UN	72 Outperform	C$6.38B	22.62	3.20%	3.80%	4.45%	―
MRT.UN	65 Neutral	C$356.00M	―	-6.38%	4.48%	1.61%	21.02%
TNT.UN	63 Neutral	C$120.26M	―	-4.82%	0.67%	-4.01%	41.98%
Sector *	61 Neutral	$4.31B	16.14	-3.60%	11.88%	6.17%	-20.99%

* Real Estate Sector Average

Performance Comparison

TSE:NET.UN

Canadian Net Real Estate Investment Trust Trust Units

5.22

0.63

13.73%

TSE:NXR.UN

Nexus Real Estate Investment

6.64

-0.06

-0.90%

TSE:SRU.UN

SmartCentres Real Estate Investment Trust

24.64

3.53

16.72%

TSE:MRT.UN

Morguard Real Estate ate

5.50

0.46

9.13%

TSE:CAR.UN

Canadian Apartment

40.28

-2.39

-5.60%

TSE:TNT.UN

True NthCommercial

9.23

-0.03

-0.32%

Canadian Net Real Estate Investment Trust Trust Units Earnings Call Summary

Earnings Call Date: Mar 18, 2025 | % Change Since: -9.68% | Next Earnings Date: May 21, 2025

Earnings Call Sentiment Neutral

The earnings call presented a balanced view with strategic portfolio enhancements and resilience in necessity-based retail as notable positives. However, this was offset by declines in key financial metrics and increased administrative expenses, leading to a cautious outlook.

Highlights

Strategic Portfolio Enhancements

Executed key sales and acquisitions, including the sale of 5 gas station properties for $12.8 million and acquisitions of properties in Nova Scotia and Quebec for $21 million in total.

Resilience in Necessity-Based Retail

Continued focus on necessity-based retail tenants, with recent acquisitions reinforcing this strategy and positioning the REIT to benefit from ongoing market resilience.

Successful Lease Renewals

Renewed 3 out of 6 leases set to expire in 2025 with a 4% average rental increase, representing 76% of expiring rents.

Strong Occupancy and Lease Term

Maintained a 100% occupancy rate with a weighted average lease term of 6 years.

Decreased Interest Expenses

Reduced interest expenses on credit facilities and debentures due to ongoing repayments and benefited from declining interest rates.

Lowlights

Decline in FFO and NOI

FFO decreased by 3.8% and NOI decreased by 3% for the 12-month period ended December 31, 2024, largely due to higher interest charges and property dispositions.

Increased Administrative Expenses

Administrative expenses increased to $1.2 million from $1 million, mainly due to a one-time sales tax expense and higher legal and professional fees.

Decreased Property Rental Income

Property rental income decreased by 2% compared to the previous year, impacted by property dispositions and adjustments.

Company Guidance

In the Canadian Net REIT's 2024 fourth quarter earnings call, the company highlighted several financial metrics and strategic actions taken over the year. The REIT completed the sale of five gas station properties, yielding approximately $12.8 million, and reinvested in a Sobeys property for $9 million, along with a $12 million investment in three single-tenant properties with capitalization rates of 7% and 8% and mortgage rates of 4.5% and 4.8%. The REIT's FFO for the 3-month period ended December 31, 2024, decreased by 2.5% to $3.25 million, while the normalized FFO per unit for the year was $0.611, down 3.8% from 2023. The REIT's debt to gross asset ratio was approximately 56%, and the normalized FFO payout ratio increased slightly to 56%. The call also noted a 100% occupancy rate, a weighted average lease term of six years, and planned focus on refinancing to repay a $6 million convertible debenture.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.