Recent Sale

         I have owned Dream Office REIT since 2013 inside my margin account. Dream Office REIT was formerly Dundee REIT. The REIT recently reported earnings during the last week.

• Net income  for Q2 2018 was $25.386 million compared to $32.521 million for Q1 2018, which represents a decrease of 21.9%.
• Net income of Q2 2017 was $34.556 million. The 2018 Q2 net income represents a decrease of 26.5% from same 3 month period of 2017.
• The diluted funds from operaton (FFO) was 0.40 for Q2 2018 compared to 0.46 for Q1 2018, which represents a decrease of 13.0%. 
• Diluted FFO of Q2 2017 was 0.53.  Therefore Q2 2018 FFO of 0.40 represents a decrease of 24.5% for the same 3 month period. 

      The distribution has been decreased a few times over the past couple of years. The distribution on Feb 2016 was $2.23992 per unit annually and then was  decreased 33% to $1.50 per unit annually starting March 2016.  The distribution was again decreased to $1.00 per unit annually on Aug 15 2017 payment date.  The second distribution represents another decrease of 33.3%.  Overall, the distribution was decreased by 55.4%.

        As shown above, the REIT has a couple of tough years.  With interest rates rising over the last year and the recession in Alberta started in late 2014 effected their bottom line. In fact, during the recession the office vacancy rate in Calgary, Alberta was around 33%.  That was like entire floors of office buildings were vacant.  Although Dream Office REIT did not have a large portfolio of Alberta properties, it did affect them. The REIT did sell some Alberta properties over the last couple of years. 

    On Aug 9, I sold all 631 units of Dream Office REIT inside my margin account. When you own units of a REIT, some of the distribution payments are in the form of Return of Capital. The return of capital is substracted from adjusted cost base and therefore gives you a bigger capital gain or smaller capital loss when you sell.  My capital gain is $2113.76 which included the ROC up to end 2017.  So the ROC on distributions received in 2018 will not be known until a tax slip is generated the end of March 2019.  So the capital gain will be even higher that the current $2113.76.

   This sale also pays off my margin loan of approximately $9600 at 7.2% interest rate.  That interest rate is not a typo.

    This sale decreased my annual dividend income by $631.00.  

Disclosure:  Own 168 units of Dream Office REIT inside TFSA

DISCLAIMER

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.

Portfolio Update : June 2017

        The month of June 2017 is now behind us. The markets have seen some major news during the month.  Amazon announced they are purchasing Whole Foods for around $13.7 Billion dollars. Warren Buffett's Berkshire Hathaway has made a deal to help out Home Capital Group. 

        Home Capital Group is a Canadian public company that writes mortgages to people at a higher interest rates than at a bank. I have lost some money with Home Capital Group. So,  Home Capital Group has been in the news the last couple of months with Ontario Security Commissions investigation over the last year or so.  Savers who had the high interest savings accounts offered by Home Trust, part of Home Capital Group, pulled most of their money out of these accounts.  Banks depend on deposits by savers to be able to make mortgages and loans to their customers.

        Home Capital Group received a $2 billion line of credit from HOOPP, which is Healthcare of Ontario Pension Plan.  The interest on the LOC was quite high, and the company decided to try to find a replacement source of cash to keep them solvent.

       They were in discussions with several financial organizations, which included some Canadian Banks, but the felt Bershire Hathaway was the best source to help them out.  Warren Buffett, CEO of Berkshire Hathaway, offered a line of credit and equity ownership in the company. 

Under the agreement, Berkshire will make an initial investment of $153.2 million for 16 million Home Capital shares at a price of $9.55, representing a 19.99 per cent stake in the company, subject to approval by the TSX.  

Berkshire Hathaway has also agreed to make a second investment of $246.7 million for nearly 24 million shares at a price of $10.30, which would take its stake in Home Capital to 38.4 per cent, subject to shareholder approval. (Source www.ctvnews.ca)

        Another major topic in the markets is the price of a barrel of crude oil.  The price per barrel of WTI crude oil had fallen to below $43.00 US per barrel, but rallied towards the end of the month close at $46.33 US per barrel. 

         British Columbia, Canada had a provincial election recently in which the Liberals retained power.  The won 2 seats more than the NDP and the Green Party won 3 seats.  So NDP and the Green Party came to a agreement that would mean these 2 parties will work together.  Last week, the liberals lost a non-confidence vote in the legislature.  Their premier and Liberal party leader accepted the results of the vote and visited the Lt. Governor. The Lt. Governor has given the NDP the right to form the government.

          So, now we will have NDP governments in both Alberta and British Columbia who are at "war" with each other.  Oil and gas plays a huge part in the economy of Alberta.  The federal government gave their OK for Kinder Morgan to build their pipeline from Alberta to the British Columbia coast.  The cost of this pipeline is $7.4 billion.  The NDP government and Green Party of British Columbia, along with environment activists and indigenous people.

        I made a purchase in my margin account in a stock that does not pay a dividend.  Titanium Transportation Group Inc. is a transportation and logistics company based out of Bolton, Ontario.  This company was created in 2002 and went public in April 2015 with the ticker symbol of TTR.  TTR trades on the Venture Exchange in Canada.

       I sold 2 put options in the month of June. I previously, had a put option expire on June 2.  The 2 short put options were 1 contract of $RY.TO with a strike price of $92.00.  The first short put option expired on June 16.  Few days after this expired I sold another put option for June 30 expiration.  I collected $24.05 and $35.05 in net premiums on the 2 short puts for a net profit of $59.10.

       I made two small purchasing in my TFSA to add to my units of HNY.TO.  This is Horizon's Natural Gas Yield ETF. I purchased these units with small commissions (i.e. ECN fees) has my brokerage offers commission free ETFs.

•  June 13  ->  4 units at $12.98 with $0.01 ECN fees
•  June 19  ->   2 units at $12.72 with $0.01 ECN fees

Shares Acquired Through DRIP

4 Unit of D.UN.TO @ $19.32137  for a total cost of $77.29 (Margin Account)

1 units  of CUF.UN @ $13.03499 for a total cost of $13.03 (TFSA)

1 unit of D.UN @ $19.32137 for a total cost of $19.32 (TFSA)

0.192 shares of ENB.TO @ $51.3021 for a total cost of $9.85 (Transfer Agent)           

Please note, that the DRIPs inside my margin account and TFSA are synthetic drips which indicate the distribution or dividend must be enough to purchase whole shares. 

I recently wrote about Dream Office REIT after they made an announcement. They are once again, cutting their annual distribution by around 33% starting with July's distribution which will be paid on August 15.  There annual distribution will be cut from $1.50 per unit to $1.00.  So, my annual dividend income will be cut by approximately $400.00.


As of July 1,  the value of the portfolio is $103266.23. This is a 1.485%  decrease over last month's total.  The spreadsheet in the investment tab above has been updated.

Note:  I do not have any option contracts currently in my portfolio as of July 1.

Disclosure:  Long D.UN, ENB, CUF.UN, TTR.V, HNY.TO

Please Note:  All stocks are from the Toronto Stock Exchange except TTR which trades on the Venture Exchange.
.

DISCLAIMER

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.

REITs - Part 2

This is a continuation from my previous post on REITs.

Some Advantages:

• A small funded investor can get expose to the real estate market
• The yields are high as the distrutions are high as REITs must payout 90% or more of their profits to shareholder.
• Don't have to deal with tenants directly and all the problems that comes with it.
• Managed by experts.
• Some tax advantages depending on the break up of the distribution payments.

Some Disadvantages

• you don't get all the tax breaks if you own rental real estate directly.
• you don't have control over the investment

As you travel around a city and see large commercial buildings, they are, more than likely, owned by a REIT. The tenants of the buildings or section of a buildings sign long term leases with the REIT.  The earnings from rent and sales of income producing real estate are passed on to the investors as REITs are required to payout 90% or more of their profits to investors. By doing this they are not required to pay corporate tax.

My first REIT I purchased was Whiterock REIT. My yield on cost was 9.1%. The entire distribution was 100% return of capital so there was no tax on the distributions.  The REIT was acquired by Dundee REIT. I decided to redeem my shares at this point. The return of capital that I received was subtracted from my adjusted cost base, there by lowering my ACB. This mean my capital gain was higher as I sold the units had a higher price than what I paid for them.  I transferred the proceeds of this sale to my tax free account and initiated a position in Dundee REIT.

Note: Not all REITs have distributions that are 100% Return of capital. So you will have to pay taxes on things like interest. In Canada, the distributions ARE NOT eligible for the dividend tax credit as the REIT doesn't pay corporate tax.

                                                            Telus Tower (Calgary Alberta)
                                                               owned by Dundee REIT

Being an unit holder of Dundee REIT I own a very small piece of this building and many others.

Disclosure : long  Dundee REIT

DISCLAIMER:

     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

REITS - Real Estate Investment Trusts - Part 1

This is a continuation from my previous post on REITs.

Some Advantages:

• A small funded investor can get expose to the real estate market
• The yields are high as the distrutions are high as REITs must payout 90% or more of their profits to shareholder.
• Don't have to deal with tenants directly and all the problems that comes with it.
• Managed by experts.
• Some tax advantages depending on the break up of the distribution payments.

Some Disadvantages

• you don't get all the tax breaks if you own rental real estate directly.
• you don't have control over the investment

As you travel around a city and see large commercial buildings, they are, more than likely, owned by a REIT. The tenants of the buildings or section of a buildings sign long term leases with the REIT.  The earnings from rent and sales of income producing real estate are passed on to the investors as REITs are required to payout 90% or more of their profits to investors. By doing this they are not required to pay corporate tax.

My first REIT I purchased was Whiterock REIT. My yield on cost was 9.1%. The entire distribution was 100% return of capital so there was no tax on the distributions.  The REIT was acquired by Dundee REIT. I decided to redeem my shares at this point. The return of capital that I received was subtracted from my adjusted cost base, there by lowering my ACB. This mean my capital gain was higher as I sold the units had a higher price than what I paid for them.  I transferred the proceeds of this sale to my tax free account and initiated a position in Dundee REIT.

Note: Not all REITs have distributions that are 100% Return of capital. So you will have to pay taxes on things like interest. In Canada, the distributions ARE NOT eligible for the dividend tax credit as the REIT doesn't pay corporate tax.

                                                            Telus Tower (Calgary Alberta)
                                                               owned by Dundee REIT

Being an unit holder of Dundee REIT I own a very small piece of this building and many others.

Disclosure : long  Dundee REIT

DISCLAIMER:

     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