Derek WarrenSlate Grocery REIT SGR.UN.TOWEAK BUYMay 26, 2025

In the US sunbelt, they own shopping centres in secondary markets. Likes the sunbelt because people are moving to low-tax states. However, their dividend is not covered by earnings, so unsustainable. Also, they have high debt.

Dividend is quite high, which is typically a red flag that it can't sustain dividend from cashflow. And that's the case here. AFFO (payout ratio) is above 100%, not good. Seeing vacancies, so cashflow's gone negative. Elevated debt.

Canadian company that is focused on USA properties. Could be a good option if tariffs hit Canada. Grocery style tenets are very safe. Balance sheet is getting stronger, and dividend looks safe. Would recommend holding for income purposes. 

Trades on the TSX, but owns retail exclusively in the US. Grocery-anchored is quite defensive. In southern US and secondary markets. Not seeing the same growth as peers. Occupancy down. Look elsewhere.

Issue is overpayment of distribution, not sure it's sustainable, interest costs really cutting into bottom line. Top line muted, only 0.5% growth this past quarter. Buying stock rather than paying down debt. Look elsewhere, try FCR.

Stable distribution. Canadian REIT that invests in US grocery assets. Decent portfolio, even if it is in secondary markets (which may not be bad for grocery markets). Attractive valuation. Pretty steady earnings grower. 

Listed in Canada, owns properties across the US. Likes the sector of grocery-anchored shopping centres. Low growth, but steady. Only 1% growth expected this year, so no distribution increase anticipated. Above-average leverage.

SGR's small size adds some risk, but it is priced well enough and cash flow is stable. 
3% to 5% growth is expected. 
We would prefer DIR.UN but if industrial sector exposure is not needed we would be fine with SGR. 
Our January 23 comments still apply, but the valuation is better today.  
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Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Momentum is solid and growth is decent. Continues to make acquisitions. Dividend is fine, but payout ratio is high at almost 100% of cash flow. Debt has improved and grocery real estate gives stability. $500M in market cap, so relatively small. Unlock Premium - Try 5i Free