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 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.

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Dream Industrial Real Estate Investment Trust

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Post by retiredcfon Feb 14, 2024 9:41am

115 Views

Post# 35879493

RBC

February 13, 2024

Dream Industrial REIT
Q4 in line; occupancy slipped, but still posting solid organic NOI growth

TSX: DIR.UN | CAD 13.15 | Outperform | Price Target CAD 16.00

Sentiment: Neutral

Our view: DIR reported Q4/23 FFOPU of $0.24, in line with RBC/Street at $0.24E/$0.24E and up 4% from $0.23 last year. Overall, an in-line quarter, albeit with a larger-than-forecast drop in occupancy. We believe 2024 guidance (typically provided on the call) will likely dictate the unit price reaction (RBC/Street 2024E FFOPU = $1.02/$1.03 vs. 2023A of $0.98). Despite the occupancy slippage, SP NOI growth remains strong supported by robust leasing spreads, with a still sizeable mark-to-market opportunity ahead. The balance sheet is in good form, while the IFRS NAV was fairly stable. CC Feb-14 @ 11 am ET (1-800-806-5484, ID 1104570).

Highlights:

Excluding expansions, SP NOI rose a strong 7.8% YoY (+9.2% YTD), mainly from higher rents. Including expansions, SP NOI was +9.6% YoY (+11.3% YTD), led by Canada (+11.1% YoY), then Europe (+8.5%) and the US (+2.2%). In Canada, ON led (+14.1%), followed by QC (+11.5%) and Western Canada (+5.5%).
Committed occupancy declined to 96.2% (-100 bps QoQ, -270 bps YoY), with Canada at 96.1% (-50 bps QoQ), Europe at 96.3% (-170 bps QoQ), US at 95.6% (flat QoQ), and Summit JV at 97.7% (-40 bps QoQ). The declines were driven by vacancies in the GTA, Montreal, Spain, and France, where re-leasing discussions are in progress. In-place fell to 96% (-90 bps QoQ, -190 bps YoY).
Leasing spreads remain robust. Since Oct-2023, DIR has leased 1.3MM sf at blended new/renewal spreads of +42%, including +50% in Canada and +7% in Europe (Dream Summit JV spreads at +90%). Market rents for the portfolio are ~34% above in-place.
IFRS NAVPU down slightly to $16.61 (-1% QoQ, -2% YoY). IFRS cap rate increased to 6.06% (+15 bps QoQ, +45 bps YoY) vs. the current 6.3% implied cap. In Q4, DIR booked a $44MM ($0.15/unit) portfolio fair value loss, mainly on the European portfolio.
Active project pipeline sizeable at $352MM across 1.7MM sf, with target unlevered yield of 6.4%. Notably, DIR recently signed a 10-year conditional lease on 60% of the space at a 209K sf GTA project at a starting rent of >$20/sf (plus ~4% annual steps).
Summit JV investments were active, with six income properties acquired in the GTA comprising 0.9MM sf, with a further 10 properties (2.5MM sf) in progress.
Debt/GBV at 36% (+90 bps QoQ, +430 bps YoY), debt/EBITDA at 7.7x (-0.5x QoQ, -0.6x YoY). Available liquidity totals $492MM from cash ($50MM) and undrawn lines ($442MM).