Opinions

Joshua Varghese Dream Global REIT DRG.UN-T BUY Aug 16, 2018

It's doing well in European markets that are still catching up to North America. European office markets' fundamentals have lagged ours. You'll be fine with this. But management may consider an equity raise. He really likes the office space in France and Spain.

Joshua Varghese

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$14.540

Stock price when the opinion was issued

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PAST TOP PICK

(A Top Pick Aug 14/18, Down 5%) One of his income plays. It’s in Europe, so cash generation outside of Canada will be beneficial. Most assets are in Germany, which gives cash flow safety. Yield is 5.9%.

TOP PICK

Relative strength is strong. It remains one of the top performing REITs. It is more defensive. (Analysts’ price target is $15.51)

PAST TOP PICK

(A Top Pick Oct 31/18, Down 12%) Has underperformed. Pretty strong support where we are right now.

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.

DON'T BUY

He met them last week. A good company. Its dividend pays 5.9% which is safe. But he's apprehensive about Dream because this REIT is based in Europe with lots of regulatory hurdles across many countries. That's tricky.

TOP PICK

Office and industrials in Germany and the Netherlands. Advantage over Canadian peers because of negative interest rates in Germany. Yield is 5.9%. (Analysts’ price target is $16.08)

BUY

An office focused REIT with assets in Germany and the Netherlands. He is not a fan of the parent organization, but is not a huge concern. Vacancy rates in Germany are less than 4%. He sees good office rental growth opportunity, which is averaging 7% per year. There is still room to run.

PARTIAL SELL

If you have profits, take some off the table, and put them into another industrial like WPT that offers better value.

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%.

DON'T BUY

Really likes it. Agreed to be acquired by Blackstone. Wouldn't recommend it at this point. Doesn't see a higher bidder. Great opportunity to look at other Canadian REITs with global assets. Look at Granite REIT instead.

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Joshua Varghese Dream Global REIT DRG.UN-T BUY Aug 16, 2018

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