Dream Office REIT (D.UN.TO)

He has very little office exposure in his real estate portfolios. In the next 3-4 years you are going to see a lot of new supply come on to the market. Typically, what happens when you get these new buildings is they start really affecting rents. This one has a lot of suburban office which will be affected. It is decently valued here, but you have to be very, very patient and wait for the new supply to get absorbed into the market.

Has been under pressure simply because of the overbuilding in the office market that we have been seeing in Calgary and Toronto. They have been losing tenants and it has been a bit of a struggle, but they are able to continue to lease up. While he believes their cash flow will continue to be under strain, the dividend is sustainable and it is a generous yield.

He still doesn’t see sunshine through the clouds when it comes to the Calgary and Toronto office markets. There is still a lot of supply coming on. This company will continue to face those headwinds for some time.

Focuses on office, retail and a bit of industrial. They used to be focused only in Alberta, but have diversified out of that, but are still about 40%. He doesn’t like the story or their assets and thinks there is going to be real softening in their core businesses in Alberta. Also, doesn’t like the management agreement where they get paid on asset growth, not profitability. Company pays out about 90%, which is a little high, but distribution should be fine.

Not the most highly regarded trust out there. Decent exposure to Calgary office space. But everyone knows about these concerns. It has an 8% yield. The dividend is safe.

The office sector is not one he really loves. There will be an increase in supply. Thinks you will see pressure on rents and on occupancy, so avoid it. The dividend is sustainable.

Has a lot of Toronto, Calgary and Edmonton office exposure, and for that reason the stock has not done that well. He thinks the worse has probably been seen when it comes to this company. While there still is a big supply, he thinks they are doing a very good job of maintaining the stability of their properties, creating a positive leasing environment. Although he doesn’t see a lot of growth to the upside, your yield is very safe and you will see slow growth from now on.

Has western Canada exposure. Office leases are done normally with investment grade blue chip companies so there is really is little risk of the leases being broken. Their stock no longer trades at a premium. Acquisition growth is predominantly off the table. They have to prove to the market that they are good operators.

A good conservative company. Well-managed and a good dividend. Solid.

Had been solely focused on B category real estate out West. During the 2009-2010 crisis, they had subpar real estate and got hurt. They then focused on buying office in Ontario. It used to be 70% weighted to Alberta, but is now about 40% out West which is good. However, it missed its targets and had some small vacancy issues. He still has trouble with it owning office space in the towers in Toronto and the industrial and office space in Alberta. Has never liked this story. He would look to sell.

This really hasn’t been a name for him. Has sold off a lot and he has always had a tone of caution when talking about this, because of the big increase in office supply. This REIT gets negatively impacted by nice new shiny buildings popping up in major city centres like Toronto and Calgary which tends to depress vacancy on a short-term basis. Have had several tenants that have announced their intention to exit when their leases are up, so they have been busy trying to re-tenant some vacant space. Longer-term they should be fine with occupancy moving back to the low 90%s. Payout ratio is a little bit high in the mid-90%s. Biggest risk currently is in re-tenanting some of that vacant space and what they are paying for it. Currently this is exceptional value and very cheap. The only knock on it is that it is externally managed, but you are getting a good dividend. If you are long term oriented, it is a decent name. (See Top Picks.)

(A Top Pick Jan 2/14. Down 2.96%.) Still likes this stock. It is very, very cheap and has a superb yield.

Dividend is relatively safe and is attractive. Does not see good things happening in the office space because of all the building. Hold if dividend is your main focus.

Has had for 5 years. TD had it as a top pick. The dividend is 89-90% and is safe. They have a long history of sustainability. REITs have a very resilient track record. REITs have long term leases with their tenants. They are at about 95% occupancy.

Payout now exceeds earnings, so the payout might be in danger. You have a lot of new office buildings coming on, especially in 2017-2018 in the Toronto, Vancouver and Calgary markets. CAP rates have been at all-time lows and it basically doesn’t get any better for the REITs, and yet this one has been breaking down. He personally does not invest in companies with dividend yields that don’t get covered by earnings with a safe margin of coverage.