Stock price when the opinion was issued
He focuses on supply and demand, and then goes bottom-up looking for discounts. Fundamentals in industrials in Canada and Europe are far superior today to US multi-family, especially in the Sunbelt.
It's a new construction supply problem, and demand won't be able to keep up. DRR.UN owns an older portfolio in key Sunbelt markets. Wide discount to NAV. Low liquidity, so no premium.
DIR.UN has stellar internal growth prospects. Spread between in-place rents and market rents gives them an advantage. He'd choose this one. New construction will fall off 15% into next year, and empty space will be absorbed.
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%.
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.
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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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.
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.