Property sales help support their dividends

Article Excerpt

DREAM OFFICE REIT $25 (Toronto symbol D.UN; Cyclical-Growth Dividend Payer Portfolio; Manufacturing sector; Units outstanding: 75.4 million; Market cap: $1.9 billion; Dividend yield: 4.0%; Dividend Sustainability Rating: Average; www.dream.ca) owns 41 office buildings, mainly in major Canadian cities. Together, they comprise over 8.6 million square feet of leasable space. Toronto properties, in particular, account for 44% of that leasable space and 60% of the portfolio’s value. With the July 2017 payment, Dream Office lowered its monthly distribution by 50.6%, to $0.0833 a unit from $0.125. The new annual rate of $1.00 still yields a high 4.0%. In the latest quarter, distributions accounted for 54.3% of cash flow. Dream Office cut its distribution as part of a strategic plan to sell $1.2 billion of its less-important properties. The REIT used the cash to pay down its debt, from $2.65 billion at the end of 2016 to $1.3 billion as of March 31, 2018. That’s now a manageable, though still high, 68% of its market cap. The trust…

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