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Opinions Derek Warren
Dream Global REITDRG.UN.TOCOMMENTNov 13, 2014
Derek WarrenStock price when the opinion was issued
As of Dec 11, 2019. Market Open.
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Jaime CarrascoHis favourite REIT, because most of the cash flow is coming from Europe, and he wants to generate more cash outside Canada. (Analysts' price target: $15.54)
Jaime CarrascoInovalis (INO.UN-T) or Dream Global (DRG.UN-T)? There is probably too much duplication to own both. Management has done a very, very good job since the IPO. They’ve grown through acquisition and have diversified. They own an institutional quality portfolio, and thinks they have an opportunity to grow in continental Europe. Their assets are primarily in Germany. Instead of buying Canadian names that have exposure to Europe, he is actually going directly into Europe and buying some names.
It is a decent name if you own it. It is tough to switch out of it. He has preferred names including a top pick today. Management promised to diversify the portfolio and they did a good job of that. The payout ratio is high so this is why he is cautious on it. There are risks in the devaluation of the Euro. He does not think they will have to cut the dividend.
Dream Office (D.UN-T) or Dream Global (DRG.UN-T). Which would you Sell? This is offices that are mostly in Germany and in Europe. You have to balance out where you feel the growth is going to be. If you
believe that Germany is going to keep progressing, that would be the one he would keep. Europe now is anyone's game. They have found a large partner in the South Korean Pension Fund that is buying portions of their office buildings, giving them the cash that way, so they are still able to buy accretively. The debt they are getting is 2%-2.5%, which enables the accretion even more. The dividend is safe. If you are looking for growth, he would stick
with this one.