Also have a $16.00 target which now seems to be the consensus. GLTA
DREAM INDUSTRIAL REIT Q4/23 First Look: In Line With Continued Growth Prospects
DIR reported Q4/23 FFO/unit of $0.24, in line with our estimate and
consensus. Q4 reflected strong fundamentals with 7.8% SPNOI growth (ex.
FX and expansions), leasing spreads of ~42% and a slight sequential
improvement in estimated market rents. There was a ~100bps downtick in
occupancy Q/Q (to 96.2%) on expected transitory vacancies, which DIR
expects to re-lease at higher rates.
CC: Wednesday, February 14 at 11:00 a.m. ET; 1-800-806-5484.
Organic Growth: Headline SPNOI on a constant currency basis was +9.6%,
or 7.8% excluding expansions. By region, Ontario was +14.1%, Quebec was
up 11.5% and Europe was +8.5%. Western Canada increased by 5.5%.
Leasing Update: DIR completed ~1.3MM sq. ft. of leasing at an average
spread of 41.6%. In Canada, the average rental lift was ~50%, while Europe
spreads were ~7%. Full-year 2023 leasing spreads were ~74% for ON,
~50% for QC and 6.8% for Western Canada. Average in-place rents
increased by 15.5% for ON, 15.9% for QC and 11.0% in Europe. In-place
and committed occupancy was 96.2%, down from 97.2% last quarter, on
anticipated and transitory vacancies.
Mark-to-market Estimates: Portfolio-wide, market rents exceed in-place
rents by ~34%. Total Canada mark-to-market was 46.1% (Ontario 59.7%,
Quebec 60.2%, Western Canada 2.9%) and Europe was 8.6%.
Investments: The Dream Summit JV acquired six income-producing GTA
assets encompassing ~900k sq. ft. The JV is also under contract or exclusive
negotiations to acquire a further ~2.5MM sq. ft. consisting of 10 assets.
Financing Activity: DIR did not utilize its ATM program during the quarter
(previously issued $107MM through its ATM). Subsequent to the quarter,
DIR completed a $200MM unsecured debenture issuance at a ~5.26% yield
to maturity. Proceeds will be utilized to reduce the amount outstanding on the
credit facility and to repay existing mortgages.
Q/Q Cap Rate Moves: Stabilized portfolio cap rate was 6.06%, up from
5.91% last quarter. We highlight a ~19bps increase in Europe to 5.84%,
along with the Canadian portfolio increasing ~14bps to 6.19%.