Stock price when the opinion was issued
Dark horse candidate. Former market darling. Trades at 0.4x book value. Office and retail in Toronto. 6M square feet of space in Montreal; 3M across Vancouver, Calgary, Ottawa and Kitchener. 17% compound growth rate total return since IPO, until their Covid fall. Yield is 10%, very sustainable.
(Analysts’ price target is $20.03)In his dividend growers mandate. Very high dividend yield, over 10%, and is sustainable (though may not grow in near term). Debt to capital ratio ~40%, selling non-core properties. Closing deals will add cash this year. Vacancy rates should stabilize. Private market value is significantly higher. Needs patience.
Thinks rates are heading higher, so REITs are going to come under pressure. If the S&P 500 real estate sector is down 2%, perhaps the Canadian sector won't be hit as hard, but it'll still head lower. If his call is correct about a bigger correction later on, it'll be a better opportunity.
Look to energy names instead for a strong dividend yield.
Continues to like it here. About 80-85% is office, rest is retail and parking. Occupancy around 85%, versus 96-97% pre-Covid. In his dividend growers mandate, though it may not for the foreseeable future. Shedding non-core assets. Trades ~40 cents on the dollar of book value, should attract a re-rating.
Recent results reflect a challenged operating environment. Q4 earnings below expectations. FFO was down 13% YOY. Interest rate headwinds, negative internal growth, earnings headwind. Goal of 90% occupancy by year's end is ambitious, especially with new supply in the key market of Toronto.
Payout ratio hovering around 100%; but when you adjust for non-cash revenues, distribution is not covered. Company's adamant in not cutting dividend, willing to borrow to cover it. That's not a formula for success. So don't buy it for the yield.