Sunday, August 21, 2016

Recent Buy -- Changes

Image result for DREAM REIT

      On my dividend update posts I write something on the bottom about a REIT that I own in my margin account and that I do not account for the distribution as income.  The REIT is Dream Office REIT, which is an office REIT in Canada.

      Prior to Friday the adjusted cost base was near $32 per unit. This does not take into account the adjusted cost base will be lower from the Return of Capital.  As I owned this REIT for a few years, the Return of Capital , as part of the distributions, reduces the cost basis. I have owned this for awhile and collected about $2000 in distributions.  It has been difficult to find opportunities on the Toronto Stock Exchange as the telecoms, banks, and railroads are trading at or near their 52 week highs.  I do not see this rally in the price of oil as being substainable for the long term.  So Dream Office REIT, whose ticker symbol is D.UN, was trading near $16 per unit.  Why is the price so low?  D.UN has office space in Alberta and Alberta is going through a major depression due to the low oil prices.  The problems with less demand in office space in Alberta and a few other factors, have meant a distribution decrease in the past year of approximately 33%. 

     On Aug 19, 2016 , I purchased 300 units at $16.14 per unit for a total price of $4849 including commissions.  The annual distribution currently is 1.50 per unit. This purchase has $450 to my annual dividend income.

     So what is the change?  So previously I viewed the 300 units that I already owned as a trade and never accounted for the distributions as dividend income.   So, I decided to change the reason why I was holding the REIT in the margin account, and will now account for the distributions from these 300 units as dividend income.  This type of change is not something that should be done, as you enter into a position for a specific reason and it is best to stick with that reason.  This will be reflected in my distribution reports going forward starting with the dividend income report for the month of September.
    With 600 units of Dream Office REIT paying a monthly distribution of $75, my annual dividend income will increase by $900 a year.

Note:  I own 140 units of Dream Office REIT inside my TFSA also

I will update my investment tab spreadsheet in early September to reflect in increase of 300 units.

Disclosure:   Long D.UN

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I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.

Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.

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