10:07 AM EDT, 06/20/2022 (MT Newswires) -- Scotiabank has initiated coverage on Dream Residential REIT (DRR-U.TO), a multi-family real estate investment trust, with a Sector Outperform rating and a one-year target of $15.00.
The bank said its one-year target implies a total return of about 47%. The target is largely based on its NAV per unit estimate of $14.55, the bank said.
The bank noted that Dream Residential, which completed its IPO in May at $13 per unit and is now trading below $10 apiece, is attractively valued and is trading at a steeper discount to its NAV versus the REIT sector, the bank said.
Scotiabank said that the REIT, which is focused on the mid-market Sun Belt and Midwest regions of the U.S., has a "superior growth profile" but has "defensive attributes" that could prove to be recession-resistant in a weakening macro environment.
The bank also compared Dream Residential with BSR Real Estate Investment Trust (TSX: HOM.U, HOM.UN) on various parameters. It said that while BSR is a Class A strategy in the U.S. Sun Belt, Dream Residential is a Class B value-add strategy in the U.S. Sun Belt and U.S. Midwest markets.