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Canaccord Analysts See Steady Growth For Retail REITS

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C anaccord Genuity sees continued growth for real estate investment trusts that own shopping centers housing big national retailers. "Based on anecdotes from retail executives and store growth plans for 2016 and beyond, we see leading tenants targeting growth averaging in the mid-single digits, providing support for higher portfolio occupancies and market rents in 2016, as well as generating selective opportunities for value-added redevelopments," said a report from the global financial firm.

Canaccord analysts based their conclusion on their proprietary Tenant Sentiment Index based on conversations with 55 leading shopping center tenants. It currently ranks 6.5 on a 1 to 10 scale, where 1 equates with liquidation bankruptcy and 10 representing the fastest, most visible growth.

The reports note that store closings, such as the liquidation of Radio Shack make news, but not growth in companies likeTJX ( TJX ),Starbucks ( SBUX ) andULTA Beauty ( ULTA ).

The report doesn't mention them by name but should be good news for two REITs in IBD's dividend growth screen,Realty Income Corp . ( O ) andRamco-Gershenson Properties Trust ( RPT ).

Realty Income has 235 tenants in 47 industries in 49 states and Puerto Rico, and 4,452 net-lease properties.

The company pays a monthly dividend, most recently 19.05 cents a share, which works out to an annualized yield of 4.9%. The five-year annualized growth rate is 7%.

Ramco-Gershenson owns and manages 78 multi-anchor shopping centers and one office building in major markets.

In July, it announced that it was buying out partners' interests in seven shopping centers and selling a 20% interest in a shopping center in Florida.

It pays a quarterly dividend of 21 cents a share, which computes to a 5.5% annualized yield.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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