Paul Gardner, CFADream Industrial REITDIR.UN.TODON'T BUYNov 09, 2023

High quality, compelling growth. Trades at wide discount to NAV. Industrial markets are recovering nicely, positive momentum in Canada in last quarter. Portfolio split between Canada and Europe. 

Generates 16% rental increases in Canada, closer to mid-singles in Europe. Trades at 6.2% implied cap rate. Just sold 11 properties to CPP at low-mid 4% cap rate, so he's taking advantage of this arbitrage. Yield is 5.07%.

Thinks rates are going to be in a choppy, sideways trading range. This should remove a headwind for REITs, which have been big underperformers. His firm's REIT analyst is bullish on the space. Javed likes the space too. No one's interested in REITs or talking about them.

Ultimately, thinks we're heading into an era where inflation is going to be more persistent. REITs actually do pretty well in terms of protecting your portfolio in terms of inflation. He's cautious on bonds longer term, so REITs are an area to put $$ to work for dividend income.

Likes the setup here. Seeing a lot of US and Canadian REITs turn up. Timely, and should continue to work into 2027.

They hold quality properties, not the large, overbuilt distribution centres, but the smaller ones in key gateway markets (last-mile delivery for Amazon packages). Trades at a wide discount to NAV and pays a 5.7% dividend. Is worth $16. Has a long way to go. Good fundamentals.

Recent action is pretty positive. Down YOY. Whole real estate market's been choppy, bifurcated. Once we get through any corrective phase, this name will probably be well bid. You could even buy today.

Yield of 5.6% is attractive. Huge build of industrial REITs during pandemic caused stocks to soar. Trajectory will slow going forward, so the space will be more competitive. Low barriers to entry.

Focuses on the small- and mid-bay sector of 20-100k square feet. 2/3 of portfolio in Canada, 1/3 in Europe (mainly in Netherlands and Germany). Great value, lots of growth built in, limited downside. Very wide discount of 27% to NAV. 

Sector's had concerns on tariff impact; but those are mainly on manufacturing and export, neither of which DIR.UN does. Many concerns have dissipated on economic growth going forward. Rental growth rates have come down, but this name has wide spread between leases in place and market rates. Sees north of 17% upside just in rents alone. Yield is 5.70%.

Value 9/10, fundamentals 8/10. Looks like strong momentum since April bottom. REITs have been hit; hopefully seeing a turnaround as rates come down. In NA and Europe. Below 50- and 200-day MAs. 

Portfolio is half in Canada, half in Europe. Europe doesn't have a lot of population growth, but the real estate is in dense cities and hard to replace. Fundamentals for industrial real estate in Canada are terrific, as there's still lots of room to grow in adoption of e-commerce. As well, Canada's population grows faster than most other developed countries. 

Industrial REITs have sold off over the last 6 months, as they're more economically sensitive. Might be a good buying opportunity.

More of a GTA focus, plus some European assets. So we're relying on the economy once again. There was that huge boom in industrial during Covid, rents peaked, supply came on, and rents dropped. Likes it here, as it's still growing very well; lots of leases turning over in next couple of years at double current rates. He's hoping for no recession in Canada; but if he's wrong, industrials will feel more pain.

Cash flow per unit was 26c, matching estimates. Revenue $121.4M, slightly better than estimates. EBITDA of $91.5M, 7% ahead of estimates. Cash flow per unit increased 5.8% year over year. NOI rose 3.1%. Net rental income increased 6.8%. Total assets were stable at $8.1B. Payout ratio dropped four points to 69%. Occupancy dipped marginally to 94.5%. We would consider the results fairly solid in light of industry conditions. The stock remains very cheap at 9X cash flow.
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Industrials have a question mark over them, but if this ETF gets cheap enough, it's a strong long-term buy. It pays a lot of income. Industrial REITs 6-8 months ago were unattractive and expensive, but now should be on the minds of income investors. This could fall to $9. Good managers.

Was on path to close the gap to NAV, which is around $16-17. Hit by concern over tariffs, but he thinks it's well insulated by demand of "last mile" e-commerce. Rents are far below market, so still has internal growth in rent earnings. Attractive development pipeline. Risk/reward is really to the upside.

Great opportunity to add.

Very good company with industrial properties in Canada and Europe. Recent pullback in share price has created buying opportunity. Owns shares in portfolio. Nature of short term leases agreements not a huge factor on revenues - expected to remain strong. 

Industrial, but small- and mid-bay segment. In other words, urban distribution warehouses which are somewhat immune to new supply. 2/3 of the portfolio is in Canada, 1/3 in Europe. In partnership with government of Singapore. 

Wide 28% discount to his estimated value in the range of $16.50. Yield is 5.9%.

Attractive valuation, about 25-30% undervalued. Last-mile distribution. Europe is seeing positive fundamentals, especially in the Netherlands and Germany. Add on weakness, sell on strength.