Andrew Moffs, senior vice president and portfolio manager at Vision Capital, discusses his top picks: Dream Industrial REIT, First Industrial Realty Trust, and Chartwell Retirement Residences.
Dream Industrial REIT (DIR.UN TSX)
Dream Industrial REIT is a pure-play industrial REIT focused on owning primarily distribution and logistics assets across Canada (66 per cent of investment property value, excluding assets held for sale) and Europe (34 per cent). It also owns a 25 per cent interest in a private open-ended U.S. industrial fund, in which the REIT earns fees for property and construction management as well as leasing services.
The REIT recently formed a joint venture with Singapore Sovereign Wealth Fund to acquire Summit Industrial Income REIT for $5.9 billion. In addition to participating as a 10 per cent equity owner, the REIT will earn management fees from this new platform allowing the deal to be immediately accretive to earnings. The REIT’s portfolio is concentrated in low-vacancy, high-barrier-to-entry industrial hubs across North America and Europe, which over the last several years has experienced sizeable market rent growth.
Specifically, the REIT has 33 per cent of its portfolio in Greater Toronto and Montreal, which experienced market rent growth of over 45 per cent and 55 per cent respectively in the past two years. Despite a slowdown of leasing activity due to macro conditions, availability rates in its core markets remain amongst the lowest in North America at three per cent, as new supply in these markets is de minimis. As a result, above inflationary market rent growth should continue in its markets for the next few years, which in turn should further improve the REIT’s already strong earnings growth profile. The REIT achieved 11 per cent same-property NOI (net operating income) growth and 10 per cent FFO (funds from operations) growth in 2023, placing it amongst the fastest-growing industrial REITs in North America. Furthermore, the REIT is achieving this growth with a conservative balance sheet at 36 per cent debt to assets. Despite this, units of the REIT continue to trade at a compelling 27 per cent discount to its underlying net asset value.
TOP PICK
REAL ESTATE 
$13.040
Owned