Dream Office REIT has cut its distribution in the past year of so from $2.24 per unit per year to $1.50 per unit per year. That decrease alone represented a decrease of 33.03%. The share price dropped considered over the last 5 years as evident by the chart below.
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Below is a 1 year chart and the units of struggled to trade over $20.00 per unit.
On June 22, Dream Office REIT (ticker symbol : D.UN) announced a sale of $1.7 Billion of properties with $1.4B sale to KingSett , including interest in one of there signature properties Scoita Plaza. Scotia Plaza is in Toronto. The trust announced they will be reducing their annual distribution from $1.50 down to $1.00 per unit per year starting with the July 2017 distribution to be paid Aug 15, 2017. You can read more about this here.
The REIT seems to be poorly managed. D.UN has office properties in Canada. I think the REIT management should concentrate on paying down the debt even with interests being so low. They currently have 106 properties with 15.4 million square feet of gross leasable area. They have a portfolio occupancy of 86.5%. They have properties in Alberta that have been in trouble due to the low oil prices. Due to the recession in Alberta the past 3 years, Calgary has 33% vacancy with regards to office properties. They have a high concentration of properties in the Greater Toronto Area.
I currently own 795 units of D.UN. So, this distribution cut to $1.00 per unit per year will reduce my dividend income by $397.50.
As the leases are coming up for renewal, they have companies not renewing or doing so at lower prices due to the climate of the economies of Canada and the United States. Companies are hesistant about being bullish on the Canadian economy as we are in odd situation. The odd situation is interest rates being so low, the price of oil being low and the stock market at all time highs.
If my adjusted cost basis on my positions were below $20.00 per unit, I would definitely look to selling my positions if the price went over $20.00. The price went up on Friday, but I believed it will be short lived. I believed the REIT will trade between $17 and $19 for the next several quarters.
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.