Dream Industrial Real Estate Investment Trust T.DIR.UN

Alternate Symbol(s): DREUF

Dream Industrial Real Estate Investment Trust is a Canada-based open-ended real estate investment trust. The Company owns, manages and operates a portfolio of 322 assets totaling approximately 70.6 million square feet of gross leasable area in key markets across Canada, Europe and the United States. The Company owns and operates a diversified portfolio of distribution, urban logistics and light industrial properties across key markets in Canada, Europe and the United States. Across its regions, its portfolio consists of distribution, urban logistics and light industrial buildings: distribution buildings, urban logistics buildings and light industrial buildings. The Company’s properties include Quayside, FORMA, Zibi, 212 King West, First Purpose Built Indigenous Hub, Brightwater, Alpine Park, Canary Landing, Canary District, The Distillery District, The Broadview Hotel, Brighton, Arapahoe Basin, Brighton Village Rentals and others.

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Dream Industrial Real Estate Investment Trust

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Post by retiredcfon May 03, 2023 8:32am

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Post# 35427014

RBC

May 2, 2023

Dream Industrial REIT
Q1 modestly ahead; organic growth off to impressive start

TSX: DIR.UN | CAD 14.63 | Outperform | Price Target CAD 17.00

Sentiment: Positive

Our view: DIR reported Q1/23 FFOPU of $0.25, ahead of RBC/Street at $0.24E/$0.24E, and up from $0.22 last year (+13% YoY). Overall, a good start to the year, with continued strength in leasing spreads and double-digit organic growth (ahead of prior +8-10% 2023 guidance). The +$0.01/unit variance to our call was mainly driven by stronger results from JVs (Summit, US Fund), lease termination fees ($1.1MM; <$0.005/unit), and lower G&A. Developments are progressing well, while the IFRS NAV was relatively stable sequentially. Conference call May 3 at 1 pm ET (click here to register).

Highlights:

Constant currency SP NOI rose a solid 13% YoY (+10.6% excl. expansions), from higher rents and occupancy, led by Canada (+14.3% YoY), then Europe (+12.2%) and US (+2.7%). In Canada, ON led (+22.3%), followed by W. Canada (+9.6%), and QC (+7.3%).
Committed occupancy slipped to 98.6% (-30 bps QoQ, -10 bps YoY), with Canada at 98% (-50 bps QoQ), Europe at 99.3% (flat), US at 98.2% (-180 bps QoQ), and Summit JV at 99.2%. In-place occupancy increased to 98.1% (+20 bps QoQ, +50 bps YoY).
Leasing spreads remain robust. Since the start of 2023, DIR has leased 0.9MM sf at average blended new/renewal spreads of +41%, including +49% in Canada and +13% in Europe. The Dream Summit JV finalized leases at average blended spreads of +150% since deal closing (Feb-17). Market rents for the portfolio are ~37% above in-place.
IFRS NAVPU fairly flat QoQ at $17.03 (+3% YoY). IFRS cap rate edged up to 5.72% (+11 bps QoQ, +80 bps YoY) vs. the current 5.2% implied cap. In Q1, DIR booked a nominal $9MM portfolio fair value gain, mainly for a QC expansion.
Progress on developments. In Q1, DIR completed a 120K sf expansion in Montreal at an 8.4% unlevered yield. Estimated costs of active projects in Canada total $199MM at a 6.4% unlevered yield, with completion in N12-18M. A further 1.8MM sf of projects are underway in the Dream Summit JV.
Alexander Sannikov promoted to President & COO, with Brian Pauls continuing as CEO. Mr. Sannikov has served as COO for over three years.
Debt/GBV: 36% (+430 bps QoQ, +1,020 bps YoY), debt/EBITDA at 9.3x (+1x QoQ, +2.4x YoY). Available liquidity totals $431MM from cash ($78MM) and undrawn lines ($353MM).