More MoffsSecond stock in the clip. He thinks their latest transaction is a bit of a game changer. Disclosure: I own both this and D.UN. GLTA
https://www.bnnbloomberg.ca/video/andrew-moffs-top-picks~2212728
Dream Industrial REIT (DIR-U TSX)
Dream Industrial REIT is a pure-play industrial REIT focused on owning primarily distribution and logistics assets across Canada (51 per cent of investment property value), Europe (37 per cent) and the United States (12 per cent), pro forma it’s pending acquisition in Europe.
Dream’s focus on “last-mile” urban logistics space is well-suited to meet the growing needs of e-commerce distribution as consumers increasingly shift towards online shopping. The REIT also owns concentrated positions in many of Canada’s key industrial distribution parks, providing significant pricing power and market control. As a result of the pandemic, the structural landscape for industrial real estate has been positively impacted, with factors including greater e-commerce adoption, a need for investment in the supply chain for industries that previously had low e-commerce penetration and an increase in inventory levels to protect against potential shortages.
Dream Industrial’s two largest markets in Canada of the GTA (20 per cent of gross leasable area) and the Greater Montreal Area (“GMA,” 17 per cent) have benefited from limited supply and robust demand, with availability rates of 1.6 per cent and 1.9 per cent, respectively, which are at or near their historical lows, according to CBRE. As a result, market net rental rates in these regions have increased over 2020 rates by 19 per cent and 17 per cent, respectively. Furthermore, CBRE is currently projecting robust rental growth of 12 per cent for the GTA and 10 per cent for the GMA in 2021. Such increases in rents should contribute to a growing spread between market rents and in-place rents in the leases at the REIT’s properties, which, at the end of Q1 2021, stood at 26.3 per cent for Ontario and 11.5 per cent for Quebec. This will be a substantial benefit to growing the REIT’s NOI as these leases are renewed.
With these factors, Vision believes Dream Industrial’s units are attractively valued, particularly as they trade at an eight per cent discount to NAV and a 5.4 per cent implied cap rate whereas its U.S.-listed peers trade at an average 20 per cent premium and a 3.8 per cent implied cap rate.