DREAM OFFICE REIT $19.08 (Toronto symbol D.UN; TSINetwork Rating: Extra Risk) (416-365-3535; www.dream.ca/office; Units outstanding: 107.5 million; Market cap: $2.2 billion; Dividend yield: 7.9%) owns and manages 160 properties comprising 22.3 million square feet of office space in major Canadian cities.
Earlier this year, Dream Office launched a threeyear strategic plan to push up its unit price. Its strategy includes selling non-essential properties worth $1.2 billion to realize their full market value. Those buildings represent about 17% of its holdings. The trust has sold $212.2 million in properties so far. It has agreements in place for another $288 million.
In the three months ended March 31, 2016, Dream’s revenue fell 3.3%, to $195.7 million from $201.7 million a year earlier. The company had 160 properties at the end of the latest quarter, down from 174 a year ago. Cash flow per share fell 2.8%, to $0.69 from $0.71.
Under its three-year plan, the trust also cut its annualized distribution by 33.0%, to $1.50 from $2.24. This will lower its payout ratio to 67% of its forecast 2016 cash flow. The units now yield 7.9%.
Dream plans to use the proceeds from its property sales and from its lower distributions to pay down its high-interest debt, and possibly to buy back units.
Dream Office REIT is still a buy.
