Real estate investment trusts: Dundee REIT reports higher revenue and cash flow

DUNDEE REIT, symbol D.UN on Toronto, owns and manages 14.7 million square feet of office, industrial and retail space, including 88 office buildings and 49 industrial properties. The real estate investment trust’s occupancy rate is 96.1%. In the three months ended March 31, 2011, Dundee’s revenue rose 57.4%, to $91.0 million from $57.8 million a year earlier. Most of the rise came from properties the trust recently purchased. The best way to look at a real estate investment trust’s operating performance is to look at its cash flow, and Dundee’s cash flow rose 72.9% in the latest quarter, to $28.8 million from $16.6 million. Cash flow per unit rose just 1.9%, to $0.55 from $0.54, due to more units outstanding. (The trust issued new units to pay for the acquired properties.) Dundee is steadily diversifying its holdings outside western Canada by purchasing more properties in eastern Canada. The company bought $475.0 million of new properties in the latest quarter, mostly in Ontario. Dundee pays a monthly distribution of $0.183, for a 6.6% annual yield. Because it’s a REIT, Dundee is exempt from Ottawa’s tax on income-trust distributions, which came into effect on January 1, 2011. We updated our advice on Dundee REIT in our May 20, 2011 Stock Pickers Digest hotline, which you can immediately view when you take a 1-month free trial to Stock Pickers Digest. Click here to get started right away. (Note: If you are a current Stock Pickers Digest subscriber, please click here to view Pat’s recommendation. Be sure to log in first.)

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Jim Bates

Jim is an associate editor at TSI Network. He is the lead reporter and analyst for The Successful Investor and Wall Street Stock Forecaster and a member of the Investment Planning Committee. Jim has held the Chartered Financial Analyst designation since 1992 and spent more than a decade at the Financial Post DataGroup before joining TSI Network. He has a Bachelor of Commerce degree from the University of Toronto.

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