Opinions
Derek Warren
Dream Global REIT
DRG.UN-T
DON'T BUY
Jul 08, 2016
$9.330
Stock price when the opinion was issued
REAL ESTATE
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BUY
vs. D.UN-T D.UN isn't cheap at 19.2x. It's improved its asset base to higher quality, focusing on Toronto. Decent 6% growth. They've already had their big move though. DRG.UN has room to go, in contrast. It's a play on Germany and Holland. He see slightly growth, but a much cheaper valuation than D.UN AT 14.5x. Similar balance sheets. Safe payout ratio. He prefers D.UN.
REAL ESTATE
BUY
PAST TOP PICK
(A Top Pick May 30/19, Up 7%) A Euro play in Germany and Holland. Their Q2: the German office market remains strong. They can continue to tap the European markets where interest rates are negative, a competitive advantage to North America; trades at 22% discount to NAV that managers want to shrink. Yields 5.5%.
REAL ESTATE
Does BREXIT affect this? Yes. Temporarily you are no longer allowed to withdraw money from your real estate property fund in the UK, which is why you should own a REIT fund. This REIT offers exposure to the German market. There are a lot of moving pieces. You have to assume that a lot of businesses are going to leave London and going to go to Germany, probably Frankfurt. This has about 15% real estate in Frankfurt, but they are 95% occupied. Plus, there is going to be a 2-3 year lag. All this sounds good in theory, but you are planning for something that is 3 years out. This is overpaying on its distribution which is something he is not crazy about.