Dream Industrial REIT (DIR.UN.TO)

Industrial markets are really hot. There is a lot of growth in rents and a lot of demand from tenants. A lot of this is coming from a push of the e-commerce world, where they need more logistics, more FedExes, etc. It will also start affecting smaller centres such as this company has, as people try to have same day delivery. The yield is very sustainable and the balance sheet is okay. Over the next couple of quarters, he is looking to see a little bit more of the transition improving economics of the revenue and rent lines. A good name. Dividend yield of 8.3%.

Retail is doing worse than some of the other subsectors. He thinks industrial is a great way to hedge. He owns REI.UN-T. Most of their properties are anchored by grocery stories and so on. It is not an enclosed mall. The worry is if tenants will remain in malls. As Ecommerce increases there will be more demand for warehouse space.

He prefers the industrial name just because he likes the industrial market. Because there is a bit of taint against the Dream Empire, this has traded as a discount. However, the properties themselves are performing alright. Because of the Amazon phenomenon, some of the smaller industrial plots closer to downtown cores are being utilized more often by delivery companies to create faster deliveries.

7 analysts have a cash flow estimate of $.93, compared to last years of $.91. Dividend yield of 8.2% is at risk, because there is a payout of 93% of 4^th quarter trailing cash flow. Earnings year-over-year was down 1% and sales were down 2%. ROE of 9% is reasonable. It ranks 558, in the bottom 3^rd of his database. Prefers others. Dividend yield of 8%+.

If you are a yield focused investor, of the 3 Dream properties this is his preferred name, because he likes the state of the industrial markets. You are getting a healthy yield. It is very interesting that this one has underperformed while others in the industrial sector have been doing quite well. If you are willing to hold through all of that, he thinks this is good. Valuation is attractive. 8.6% yield.

He is a little wary of REITs right now. Valuations are excessive. You are paying 15 to 16 times cash flow. There is a lot of risk if interest rates ever start to move higher. The Calgary real estate market is not turning around in a hurry.

(Market Call Minute) He likes it. He thinks it will continue to move higher because industrial space is still very much in demand.

(Market Call Minute.) Of the Dreams, this is his favourite. He likes the industrial market. There are rumours they are putting themselves up for sale, but he doesn’t believe that. Still a good company to hold.

A 9% yield is high so pay attention to why it is so high. Lots of Alberta exposure. They want to reduce leverage. There are a number of issues that cause him to look elsewhere.

Likes the REIT sector, and is an area which is going to benefit as rates continue to compress in Canada. His pecking order is multifamily #1, industrial #2 and office and retail #3. He is expecting to see growth in the industrial part. Prefers Granite (GRT.UN-T) which has some upside going forward.

(Market Call Minute.) He likes this. It is externally managed, so there is some justification for a discount. He would buy as a long-term hold.

Has owned this in the past. Well-managed and is definitely one that he would have in a portfolio. There are some question marks with what is going to happen to the Canadian economy, especially with the dollar and other issues with regards to oil. He would prefer buying some outside of the country. His company has this as a sector perform with a $9 target. If you are just starting to add, he would look at something else.

They are diversified to the industrial side such as FedEx and low intense industries. The only issue is Alberta, but Ontario and BC have lower vacancy rates. Kind of a desirable asset class globally with mergers and acquisitions. Industrials tend to be really defensive on a recession basis. Has always shied away from this because of their management contracts.

A balanced portfolio of industrial properties which tend to be smaller properties. Very attractive yield of almost 10%. There have been concerns when it comes to the Dream family of companies, regarding governance and ownership between different entities. That has put some pressure on the stock. Thinks the fundamentals of the industrial market are fine. He is watching this as it is definitely cheap.

The yield is around 10%. It has been lumped in with other dream entities. It is the whole REIT sector that has come under pressure and especially those with exposure to Alberta.