Dream Industrial Real Estate Investment Trust T.DIR.UN

From TD this morning

[savyinvestor333]

Dream Industrial REIT (DIR.UN-T) C$13.90 Q1/22 First Look: DIR Posts Record-High +10% SPNOI Growth Sam Damiani, CFA Jaz Cumberbatch, CFA (Associate) Event Q1/22 Results. Conference call is at 11:00 a.m. (1-866-455-3403, passcode: 29629219#).

Impact: SLIGHTLY POSITIVE

DIR reported Q1/22 diluted FFO/unit of $0.22 (+16% y/y, +3% q/q), which was slightly ahead of our $0.214 estimate and in-line with consensus. AFFO/unit (our calculation) was +17% y/y and largely in-line with our forecast. In-place occupancy decreased a slight 10bps q/q to 97.6% (versus bottoming at 94.1% in Q3/20) while committed occupancy was +50bps q/q to 98.7% (+20bps q/q). SPNOI growth of +10% y/y (constant currency basis) represented another all-time high.

SPNOI growth was +11% in Canada (+18.2% in Ontario, +13.6% in Quebec) and +5.5% in Europe. Each of DIR's regions experienced increases in average rental rate while all but Western Canada (flat y/y) saw increases to average occupancy.

Canadian Portfolio: Market rents reached $10.30 (+5% q/q) and are +24% above in-place rents. Rental rate spreads averaged 25% since January 2021. Leases have embedded contractual rent growth of over 2.5%.

European Portfolio: Market rents reached €5.09 (+1% q/q) and are +6.0% above in-place rents. Rental rate spreads averaged 16% since January 2021. Within DIR's European portfolio, 90% of GLA is subject to leases that are indexed to CPI 

Developments Progressing Well: DIR has 0.7mm sf underway with a $122mm total cost and 6.3% average targeted unlevered yield. Another 1.9mm sf of projects are in final planning stages with an average targeted unlevered yield of 5.7%.

Acquisitions in Canada and Europe completed in Q1 totaled $116.4mm and a further $110.2mm has been completed post-Q1. Additional acquisitions under contract or in exclusive negotiations currently total $500mm – consistent with their recent announcement (link).

Balance Sheet and Fair Values: DIR reported a 25.8% net-debt-to-assets ratio (vs 31.4% in Q4). Fair value gains of $361mm were largely due to a continuation of strong fundamentals in Ontario and Quebec. The overall portfolio cap rate edged 10bps lower to 4.92%. IFRS NAV/unit increased 9% q/q and 29% y/y to $16.48. Including Series E debentures issued post-Q1 and the GTA and GGHA joint venture announced last week [link], DIR today has over $900mm of available liquidity.