Dream Office REIT (D.UN.TO)

You can put REITs in with the utility sector. Cap rates went to all-time lows. You can do okay in the REITs going forward but they are not going to be leaders and they are not going to be winners in your portfolio.

(A Top Pick June 7/12. Down 2.1%.)

A lot more diversified than it was a couple of years ago. Recently bought Scotia plaza, which has done really well. Management contracts are based on revenue growth rather than profit growth. He shies away from this and thinks the valuation is quite high.

Quality office holdings. Well located. 6% yield. Have been making good acquisitions. He likes office REITs more than any other kind of REITs.

At these levels it is probably a Hold, leaning towards a Buy. He thinks it’s worth $39-$40. Below $36, he would be buying materially.

5.9%. They have transformed themselves. Sold off industrial assets. Pure play office REIT. Less on the acquisition side and more focus on the portfolio. You can expect the cash flow stability to continue. Distribution increase is in the cards. 12-14% total return expected.

With this and most of the REITs, there has been a slide over the last month or so. There is no specific news around this company that would suggest a material reason for the slide. It could be that REITs have been in a 3.5 year bull market and people were taking profits.

(A Top Pick Dec 5/11. Up 14.57%.) Largest pure play office REIT in Canada. Great management team. Spun out their industrial portion but they still own 44%. Dirt cheap. Has a tremendous cash flow growth potential going forward. He expects to get a 20% total return from this level.

Feels they are vulnerable out West. Diversified quite a bit by buying Scotia Plaza and diversified with office and industrial. Was not located in the hub of Calgary but on the outside, which he felt was weak but they have diversified out of that. Feels that management gets paid an exorbitant amount of money. He would not buy it until the structure was changed.

Prefers GRT because of better dividend growth.

Just had an in-line quarter. Office vacancies very reasonable at 95%. In-place rents still remain about 12% below expiries. Believes they just got assigned a higher credit rating by EBRS (?) which should help them for cost of capital. Growing in line with the group now at about 6%.

(Top Pick Oct 18/11, Up 22.99%) They have been very active. Recently just split their industrial side out into an industrial REIT. There's a lot happening. They are very good at taking things over and managing them.

(Market Call Minute.) Likes the office asset class in real estate. There is a lot of room for rents to move higher. Rents in place are about 5%-10% below market. Almost fully occupied in major markets like downtown Toronto.

Has done very well. Very acquisitive and has added to its growth. Trying to focus on top office buildings both in major urban areas and suburban areas. Have spun off their industrial properties recently. As they focus and put that money back to work, they should get a multiple re-rating. It is still a good time for the REITs. You might possibly get a better entry point for this one.

More focused on office but spinning out industrial. Likes it. Management has done a good job of growing through acquisitions.