Bullboard - Stock Discussion Forum Dream Global Real Estate Investment Trust Tr Unit DUNDF

Real Estate REIT - Diversified

Dream Global Real Estate Investment Trust is a real estate investment trust primarily engaged in the acquisition, ownership, and operation of properties in Europe. The company's portfolio is mainly composed of office and mixed-use spaces. Dream Global REIT's German office properties represent the majority of its holdings in terms of total square footage. The firm derives nearly all of its... see more

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GREY:DUNDF - Post Discussion

Dream Global Real Estate Investment Trust Tr Unit > RBC

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Post by retiredcf on May 10, 2019 8:51am

RBC

Again have a relatively modest target but their upside scenario is $21.00. GLTA

May 9, 2019

Dream Global REIT
Solid, yet in-line Q1; disclosure disappointment

Our view: Dream Global REIT's ("DRG") Q1/19 FFO/unit was in-line with expectations and underpinned by solid organic growth. Irrespective of the move to cease disclosing AFFO, real estate operating conditions remain favourable across the portfolio and Management continues to "work the asset base" via tuck-in acquisitions, non-core dispositions and value-add / value-surfacing endeavors. We reiterate our Outperform rating and $15 Price Target on DRG’s units.

Key points:

FFO/unit: $0.262, flat YoY from Q1/18’s $0.265 and in-line with our $0.258E.
EPRA NAVPU: €10.91,+6% QoQ (€10.28) and +29% YoY (€8.44). Notably, Q1/19’s EPRA NAVPU in $CAD was $16.36, +2% QoQ ($16.05) due to a 4% strengthening of $CAD/€ in Q1/19.
SPNOI (cash basis): +4.9% YoY, driven by higher rents on new leases and increased occupancy in DRG's Core/Core+ and Value-Add assets.
Occupancy (proportionate basis; ex-HFS): 91.7% in Q1, +20 bps QoQ (91.5%) and +230 bps YoY (89.4%).
In-place rents: €10.38/sf at Q1/19, +2% from €10.18/sf at Q4/18 and +4% from €9.94/sf at Q1/18. Estimated Q1/19 portfolio market rents stand at 8% above in-place rents, up from a 5% rent spread a year ago.
D/GBV (proportionate): 42%, -2 pp from 44% in Q4/18 and -7 pp from 49% a year prior.

Tucks-in OH5 – On April 30, DRG acquired “OH5”, a light manufacturing/ industrial consisting of five buildings with ~25,400 square metres (~273,000 sf) of aggregate GLA. The property is currently 95% occupied by 11 tenants, with a 7 year WALT. The property is located in Kassel, a city of ~200,000 located in central Germany along the Fulda River. The buildings are situated on a site of ~25 acres, which affords DRG long-term intensification potential for up to 29,000 square metres. (~312,000 sf) of additional density. The purchase price of €18MM ($28MM) equated to ~ $101/sf and a 7% going-in cap rate.

Disclosure disappointment; AFFO derivation now fully DIY – DRG has ceased disclosing AFFO and AFFO/unit. As commented herein, DRG provides its rationale, including a focus on “total return” and the fact that its business model is such that leasing and capital improvement costs are “highly variable” from period to period. It also states that it does not see AFFO as “relevant in assessing recurring economic earnings or its ability to pay distributions” and that its public disclosures provide the information for “unitholders to make their own estimates”. While we see the latter part of the statement as accurate, we also see DRG's move as a step backwards relative to our, and we believe, the market’s expectations for continuous improvement in disclosures and transparency.

$15 price target and Outperform rating reiterated.