Dream Industrial Real Estate Investment Trust DREUF

Primary Symbol: T.DIR.UN

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 339 assets totaling approximately 71.9 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 Trillium Industrial Business Park, West Mall Cluster, Kennedy/Coopers Avenue Cluster, Terrebonne Cluster, Boucherville Cluster, Sunridge Park, Chestermere Industrial Park, Zac de Satolas Green, 310 Hoffer Drive (McDonald Business Centre), among others.

TSX:DIR.UN - Post by User

Dream Industrial Real Estate Investment Trust

<< Previous

Bullboard Posts

Next >>

Post by retiredcfon Aug 02, 2023 9:24am

107 Views

Post# 35568614

RBC

August 1, 2023

Dream Industrial REIT
Q2 results a bit ahead; fundamentals sound

TSX: DIR.UN | CAD 14.20 | Outperform | Price Target CAD 17.00

Sentiment: Neutral

Our view: DIR reported Q2/23 FFOPU of $0.25, slightly above RBC/Street at $0.24E/$0.24E and up from $0.22 last year (+14% YoY). On balance, results were largely in line with our call, with the +$0.005/unit spread driven by lower G&A and interest costs. Operationally, a strong quarter with robust leasing spreads and solid organic growth, despite some occupancy slippage. Still, we are a bit surprised by the resumption of the ATM use, with the units still trading well below IFRS NAV (proceeds used to pay down higher-cost debt). More colour expected on the call, along with an update to 2023 guidance. Conference call on Wednesday, August 2, at 1PM ET (1-800-319-4610).

Highlights:

Excluding expansions, SP NOI rose a strong 9.2% (+10% YTD), mainly from higher rents. Including expansions, SP NOI was +11.4% YoY (+12.3% YTD), led by Canada (+12.1% YoY), then Europe (+11.4%) and the US (+2.4%). In Canada, ON led (+19.4%), followed by QC (+8.5%) and W. Canada (+4.9%).
Committed occupancy fell to 98% (-60 bps QoQ, -110 bps YoY), with Canada at 97% (-100 bps QoQ), Europe at 99.3% (flat), US at 95.6% (-260 bps QoQ), and Summit JV at 99.5% (+30 bps QoQ). In-place declined to 97.6% (-50 bps QoQ, -100 bps YoY).
Solid leasing spreads. Since Apr-2023, DIR has leased 1.4MM sf at blended new/renewal spreads of 47%, including +61% in Canada and +4% in Europe (Summit JV spread at +125%). Market rents for the portfolio are ~37% above in-place.
IFRS NAVPU was flat QoQ at $16.97 (+2% YoY). IFRS cap rate edged up to 5.82% (+10 bps QoQ, +75 bps YoY) vs. the current 5.6% implied cap. In Q2, DIR booked a net $2MM portfolio fair value gain.
Putting capital to work in Summit JV. Including post-Q2 activity, the JV acquired three GTA properties, including two land sites (47 acres) and a 150K sf income property. With talks in progress to buy another 0.9MM sf, DIR expects its equity investment to total $25MM at a going-in yield on equity of 7.5% (including fee income) on income properties, with upside as market rents are ~40% above in-place.
Progress on developments. In Q2, DIR completed a 154K sf project in Caledon, ON at a target ~7% unlevered yield. Active projects in Canada total $359MM at a 6.4% unlevered yield, with a further 1.8MM sf of projects in the Summit JV.
Debt/GBV at 36% (+20 bps QoQ, +650 bps YoY), debt/EBITDA at 9x (-0.3x QoQ, +1.2x YoY). Liquidity totals $243MM from cash and undrawn lines. However, post-Q2, DIR resumed use of its ATM, issuing $53MM of equity (3.7MM units at $14.28/unit; ~5.6% implied cap rate). With proceeds used to pay down its lines (at 7% interest rate), D/GBV drops ~70 bps.