Dream Office REIT (D.UN.TO)

Had recommended this on April 1, and then sold it at $33.50 after it had fallen. Basically this fell through support. Still thinks it’s a great company. Has been way overdone on the downside.

Has exposure to offices in Calgary and thinks the market does not like that right now. Growth rate is only 2% from 2012 to 2014, which lags other office peers at about 10%. Cheap at about 12.5X 2013 earnings, but that is pretty well the only catalyst. If you want to accumulate this, he would probably do it at lower levels.

All of the REITs got creamed this summer. They are the ultimate interest sensitive sector, at least on the TSX. Thinks most of the REITs have been a little oversold. There may be a bounce and you might see it back to the low $30. That would be the most upside that he could see. Wouldn’t be a long-term investor on this. Just play to the short term.

7%+ dividend means it is not dead money. A very high quality REIT. The entire sector has come under pressure. People worry about how they can roll over mortgages over time. Smart management team. Being paid to wait. He would wait because over the long term it will probably be up.

A fairly well run REIT. Well managed. Have some history of proving that they have a good macro view. Check them out to make sure they are producing on a per unit basis, increases in earnings or cash flow before interest.

An extremely well managed company over the years. However, in order to expand, they have had to raise a fair amount of capital, which is how they have financed a lot of the growth that we have seen. Have a huge exposure to Scotia Plaza in downtown Toronto and will be looking for rate increases. He would rather be in the commercial space right now, as opposed to the retail space in REITs as it is a little bit more resilient if there is any softness in the economy.

(Market Call Minute) Has been trimming. There is additional office supply coming onto the market in their specific markets.

Owns properties in Alberta and have diversified into Ontario so it is a better balanced REIT in the last 3 years. Has never owned because of the quality of the properties, but more importantly, because of the management contracts which are based on asset growth while he prefers profitability.

Issued a lot of equity recently in order to make a lot of acquisitions. CEO did a capital raise earlier this year that he thought didn’t have a use of proceeds, but was well-timed. Feels this is being impacted currently by them having raised a lot of capital. Quality of the real estate they own has gone up dramatically.

Has been under a lot of pressure lately. Fantastic management team. Since the stock has come off, it has a very attractive yield of 7.3%. The challenge is not management, but the momentum in markets they are in. Have a lot of real estate offices in Calgary and Toronto. There is a view that with the amount of building there is in Calgary and Toronto that the assets they own could face pressures for tenants going forward. Perhaps as the yield starts to rise a little bit more, it becomes very attractive.

Owns offices right across the country. Have done a tremendous job of growing through acquisition. Expecting it to go sideways for the next 12 months. Trades at a pretty substantial discount to NAV but he has some concerns about national office supply increasing mid-single digits during the next few years. This would impair their ability to increase rents. 7.1% dividend yield.

One of the largest REITs in Canada and focused directly on the office sector. Have done a very good job of acquiring assets in the last 2-3 years which has allowed them to increase in size to the point where they are a big portion of the Canadian REIT index. Units have suffered over the last 6 weeks as they were caught in the downturn. Units are trading at almost a 15% discount to NAV. Have done very well in bringing down the payout ratio to a substantial level. Leverage is in check. It will probably give you a 15%-20% total return. 7.1% yield.

Attractive at these levels. A concern is that the office exposure is Toronto and Calgary. There is a lot of buildings going up in those cities and could pull some tenants out, but it is just too attractive at these levels.

Had a very big correction with bond yields pushing up. Has now come down into a value space. Trades at around 13X price to AFFO 2014, which he thinks is the low in the group. Really cleaned their portfolio up to a much higher level, and improved quality over the last year or two. Lowered their leverage. It depends on where bond yields gold and where the appetite for REITs goes. There is new supply coming on to the market which doesn’t help, but he thinks this is a name you could be buying at this level. 7% dividend yield is safe for now.

Not so much into apartments, but more in industrial, commercial and retail in Toronto. What do you think? This area has held in very well, including in the last market meltdown. Real estate REITs are wonderful when the market is going forward and when the economy is in good shape but, in a slowdown, they have real leverage on the downside. Right now, he likes this one. Nice yield.