Dream Office REIT (D.UN.TO)

On Q3, they substantially completed most of their asset sales for $1.6 billion. The balance sheet is in much better shape. Has material exposure to the Toronto market which is very hot. Payout ratio is fine on 2018, but will be better in 2019. Through the asset sales their funds from operations dropped 8% 2017-2019. It’s a much better quality name now than it was. Really pricey trading at about 20X. This is one he would be selling Calls on.

It has struggled. They had quite a large portfolio in Alberta. It recovered over the last 6 months. He has never really liked this REIT. It still does not have the greatest assets. They cut their distribution and that caused the fall. The yield is sustainable now, however.

A bit of a work in progress. They are tethered to Alberta to a large extent. Their NAV keeps falling. Thinks they are going to cut their distribution. Expects they are going to turn themselves around to a much more pristine asset. Transitioning into a higher quality, especially in the GTA. 4.75% dividend yield. Feels it is a turn around play and you get paid to wait.

Not a name for a yield investor even though it has an attractive yield, as it is going through a lot of transitions. He has warned about owning stocks through transition periods. A great company with great management, however when you start churning the amount of assets they have, they are selling billions of dollars of assets with a hope to redeploy them. Feels the dividend could be cut again. Dividend yield of 7.5%.

He avoided it for years. It got crushed in Alberta. The biggest issue is the quality of their assets. Management has a contract that is based on growth and is excessive. Avoid it.

Focused on the office sector, and has a large Calgary and Edmonton portfolio. Recently sold $200 million of Calgary office but still have the Edmonton exposure. Also, sold their Kitchener/Waterloo exposure. They will continue to sell assets and focus on their Class A office, especially in the Toronto area. REITs in transition are always challenging. If you have held this for some time, there is no point in selling now. It has actually done quite well recently. If they cut the dividend, that will actually be very interesting, as you have a higher quality REIT with a more reasonable payout. Dividend yield of 7.6%.

He has seen significant restructuring going on, but there are better places to go if you want this space. He does not have anything in this space.

The chart looks like it is basically locked in a trading range. In this environment when everybody is looking for yield, this stock should have some support, and looks fairly safe. Slightly bullish, not outrageously bullish. He would not hold this for too long, because it is underperforming its peer group. Maybe a 6-9 or 18-month Hold is okay, but wouldn’t let the dividend lure you into holding it for too long.

Not a big fan, just because of the noise in the Calgary market. However, we are at the $16 range where it has bottomed, and he would be loath to take a hit here. There are a number of things that could be happening between now and the end of the year that could create some kind of a pickup in the stock, and he would wait for that before making any decision.

(Market Call Minute.) This is a REIT that has exposure to Alberta, and she feels they had to write down some of their properties there. There are better REITs to be in.

He is a little wary of REITs right now. Valuations are excessive. You are paying 15 to 16 times cash flow. There is a lot of risk if interest rates ever start to move higher. The Calgary real estate market is not turning around in a hurry.

A Canadian office REIT with a lot of Calgary exposure. Recently announced that they are doing a transition in the company, and immediately want to sell one 3^rd of their portfolio, doing a CapX and then selling another 3^rd, and only maintaining a 3^rd of their properties. That is a lot of moving pieces and he doesn’t know what the value of their properties actually is.

Struggling because a reasonably large percentage of their assets is in Western Canada. However, it is tough to bet against Michael Cooper, a sharp guy in the real estate space. It should be fine and he doesn’t think the dividend will get cut again. He owns the parent, Dream Unlimited (DRM-T), which is what he prefers.

There is a lot of pressure on their portfolio. They have exposure to Calgary, and that market is weak, not only because of oil, but also there was a lot of new supply coming in. When new supply is coming onto the market on the office side, they tend to lease very well because it is brand-new and looks good, so older buildings tend to perform poorly. That has been impacting this company. There is a lot of value in the name. It is trading at a huge discount to NAV. For a long-term investor who thinks things are going to recover, this could be a good buy, but he sees a lot of risks. Dividend is greater than 7%, but he thinks they will try to hang onto it.

This is a REIT that is in office space. You want to look at where they are located and where they’ve got their projects. This has a very good distribution, and it really comes down to occupancy rates.