TSX:DIR.UN - Post by User
Comment by
SargeXon Dec 16, 2020 5:35pm
202 Views
Post# 32124413
RE:TD Upgrade
RE:TD UpgradeHey Retired
I figured it was time once again for a big thank you. I sure do appreciate all your posts. We hold a lot of the same stocks so I get a lot of benefit from your posts.
I was a little skeptical of DIR.UN's debt back a while ago but they sure have gotten it under control.
This has been a very unusual year for me & my wife in terms of a ton of portfolio maintenance. One of the many is adding 50% more DIR units (very significant given we were quite steady as she goes since we first bought in Sept 2013 at $8.60)
Take her easy
Sarge
retiredcf wrote: They raised their target by a buck to $14.50. GLTA
Dream Industrial REIT
(DIR.UN-T) C$13.13
DIR Locks-in 0.49% Rate on Inaugural Unsecured Debenture Event
Dream Industrial REIT announced that it will issue $250mm of five-year, Series A Unsecured Debentures with a historically low coupon of just 1.662%. DIR has further reduced the effective interest rate to just 0.489% through the use of a cross-currency interest rate swap. Closing is scheduled for December 22.
Impact: SLIGHTLY POSITIVE
-
Estimates Raised on Reduced Debt Costs: The 0.489% effective rate on the new $250mm debenture enables DIR to reduce overall interest costs while pre- funding the debt capital required to complete acquisitions and reach its targeted leverage ratio in the +/-35%-range. We forecast $180mm of acquisitions in 2021 and $40mm in 2022. We also expect a portion of the proceeds to be used to retire 2021 mortgage maturities totalling $133mm that currently carry a significantly higher average interest rate of 3.9%. The net effect is a 3-4% rise in our 2021-2022 FFO and AFFO estimates. Our new 2022E AFFO estimate implies a 14% two-year CAGR.
-
Enhanced Liquidity: We estimate that Q4/20 pro forma cash (net of completed acquisitions) will exceed $300mm, and the ~$320mm (US$250mm) credit facility will be completely undrawn.
Acquisitions Update: DIR has completed €31mm (C$48mm) of acquisitions since Q3/20 at an average 6.0% going-in cap rate (see page 2), and has an additional $300mm in advanced negotiations.
TD Investment Conclusion
Leasing and investment activity continue to accelerate across DIR's markets, buffered by increased demand emanating from the various impacts of COVID-19 (e- commerce penetration and changes in inventory/supply chain management). DIR is uniquely positioned with high relative exposure to urban in-fill logistics properties (~40% of FV) that increasingly cater to last-mile distribution and benefit from the lack of new competing supply.
2020 has been a transformational year for DIR by meeting its leverage-reduction goals, expanding into The Netherlands & Germany, completing nearly $600mm of acquisitions, issuing its inaugural unsecured debenture, and sharply reducing overall debt costs. Despite this, DIR is one of relatively few industrial REITs not to see its trading valuation recover to pre-pandemic levels. Our increased target price reflects a combination of higher estimates and increased cash-flow visibility.