Dream office reit 7.8% yield, monthly dividends, slight overvaluation – sure dividend sure dividend usd aud exchange rate


Real estate investment trusts (REITs, for short) give investors a hands-off method to participate in the economic upside of owning and operating real assets.

On side effect of the growing popularity of REITs is the emergence of specialized REITs, focusing on only one subsector of the real estate industry.

Dream Office REIT (DRETF) is one example of this trend. As the largest pure-play office REIT in the Canadian market, this trust has a dominant position in the office property space.

First, the company has a 7.8% dividend yield currency converter hkd to usd. This is more than four times as high as the average dividend yield in the S&P 500 and makes Dream one of the few companies with a 5%+ dividend yield.

The second reason why Dream is attractive is that its dividends are paid monthly. Monthly dividends are ideal for retirees and other investors that require stable, predictable income from their investment portfolio.

There are very few companies that pay monthly, rather than quarterly, dividends.

However, some due diligence reveals that the trust recently cut its dividend and it is undergoing a seismic shift to its fundamental business.

Dream Office REIT is Canada’s largest pure-play office REIT currency converter rs to usd. The trust has a market capitalization of $2.0 billion at current market prices currency converter rmb to usd. It is part of the Dream Unlimited family of real estate trusts, which also includes:

Dream Office REIT and Dream Global REIT share a Chief Executive Officer, P. Jane Gavan exchange rate us to canadian dollars. Dream Industrial REIT has a separate Chief Executive named Brent Chapman.

Dream Office REIT trades on the Toronto Stock Exchange under the ticker D.UN and is listed in U.S.-based stock databases under the ticker D.UN.TO or sometimes DRETF. Dream Office REIT’s Strategic Plan

At the beginning of 2016, Dream Office REIT announced a Strategic Plan that was expected to transform its business and return the trust to fundamental business growth.

The Plan’s announcement came at an opportune time, as the trust’s stock had languished for some time. The Strategic Plan’s announcement saw a noticeable stock price increase from below $16 to ~$20, circled in the diagram below.

The trust had held its dividend steady for roughly a decade before a minor dividend increase in 2013 us futures market live. The Strategic Plan saw a decrease in Dream’s monthly dividend payment from $0.18666 to $0.1250 per unit (shown below).

Dream Office REIT’s Strategic Plan also contained a large asset divestiture plan which categorized the trust’s existing properties into three buckets: Core, Private Market, and Value-Add.

These assets, located primarily in Alberta (the ‘Canadian Texas’) and Yellowknife (the remote capital city of Canada’s Northwest Territories), are characterized as “requiring active asset management or the passage of time prior to improving their demand profile and/or liquidity in the Private Market.”

The goal of the trust’s Strategic Plan was to systematically increase the quality of Dream’s real estate portfolio while divesting non-core assets in order to shore up its balance sheet historical exchange rates usd cad. More specifically:

“The Trust intends to advance the Strategic Plan until the Core Assets represent substantially all of the Trust’s portfolio, with the goal of stabilizing the business by 2019. The proeeds from dispositions will be targeted to making the balance sheet stronger, investing in our buildings and opportunistically repurchasing our units, until such time as we see more attractive investment opportunities in the marketplace to redeploy the capital.” – Dream Office REIT 2016 Annual Report, page 7

While Dream Office REIT’s Strategic Plan appears encouraging, many investors have found it hard to forgive the trust’s substantial dividend cut.

Certainly, there exist many other monthly dividend companies with superior track records of generating stable and growing dividend income. Realty Income (O) comes to mind.

The remainder of this article will discuss the trust’s growth prospects, competitive advantages, and valuation in more detail zloty to usd. Growth Prospects

For the foreseeable future, the single largest influence on Dream Office REIT’s growth and financial performance will be the execution of the trust’s Strategic Plan.

At the time of the announcement, Dream Office REIT owned 166 properties totaling 23 million square feet of property with a portfolio occupancy of roughly 90%.

Notice that the trust has divested from 36% of its properties (based on the number of properties owned) but only 33% of its total square footage usd aud exchange rate. While this difference is small, it is significant because it suggests that Dream is selling smaller, non-core properties (as planned).

In December of 2015 (the most recent financial reporting period at the time of the Strategic Plan’s announcement), the trust reported total assets of $7.3 billion and total debt of $3.5 billion with a weighted average interest rate of 4.1%.

As of March of 2017 (today’s most recent financial reporting period), Dream Office REIT has $5.1 billion of assets (a decrease of 30.1%) and total debt of $2.5 billion (a decrease of 28.5%).

Dream’s Strategic Plan calls for the divestiture of assets and the elimination of debt. While this might not be a significant contributor to growth in funds from operations (the REIT equivalent of earnings-per-share), it de-risks the trust’s business model and positions it for a future without additional dividend cuts usps shipping rates. Competitive Advantage & Recession Performance

As an office REIT, Dream Office REIT is likely somewhat isolated from the effects of recessions. The company’s real estate (office centers) are in demand through all but the worst recessions.

With that said, Dream Office may feel a slight negative effect from the increasing number of workers electing to participate in the remote workplace economy binary star masters of the universe. This is unlikely to have a meaningful effect on the REIT in the near-term. Valuation & Expected Total Returns

Dream Office REIT’s future shareholder returns will be composed of its current dividend yield, valuation changes, and growth in its per-share funds from operations.

The company’s current stock price of CAD$19.14 is trading at a dividend yield of 7.8%. Investors should keep in mind that since Dream’s dividend payments are delivered in Canadian dollars, they are prone to fluctuations in the USD-CAD exchange rate.

To assess a REIT’s valuation, the traditional price-to-earnings ratio cannot be used because these real estate investment vehicles incur significant amortization and depreciation charges that artificially impair GAAP earnings-per-share.

However, the most practical valuation metric for REITs is to compare their current dividend yield to their long-term historical dividend yields.

For high income investors, there are better alternatives in today’s market, although high-single-digit returns are possible based on Dream’s dividend yield alone.

However, some due diligence reveals that the trust recently experienced a dividend cut (which would trigger an automatic sell using The 8 Rules of Dividend Investing) and also is trading at a lower dividend yield than its historical average.