These REITs offer dependable distributions

Article Excerpt

DREAM OFFICE REIT $24 (Toronto symbol D.UN; Cyclical-Growth Dividend Payer Portfolio; Manufacturing sector; Units outstanding: 60.2 million; Market cap: $1.4 billion; Dividend yield: 4.2%; Dividend Sustainability Rating: Average; owns 38 office buildings, mainly in major Canadian cities. Altogether, they comprise 7.4 million square feet of leasable space. Toronto properties account for 54% of that space. 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 4.2%. In the latest quarter, distributions accounted for 62.5% of cash flow. The REIT cut its distribution as part of a strategic plan to sell $1.2 billion of its less-important properties. Dream Office used the cash to pay down its debt, from $2.65 billion at the end of 2016 to $1.6 billion as of June 30, 2018. That reduced amount equals a high, but manageable, 114% of the trust’s market cap. Due to the recent asset sales, Dream Office’s revenue in…

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