01.12
Dundee REIT (D.UN) – $20.86 –Valuation Disconnect May Be Excessive; Rating Increased To “Outperform”
Outperform (prev. Sector Perform), Average Risk, Price Target: $24.00 (prev. $20.50)
RBC CM has revised its 2010/2011 estimates and increased its rating to “Outperform” based upon relative return expectations. In the last 2 months, Dundee has announced 6 acquisitions ($353MM for ~1.8MM sf), culminating with the Dec-09 announcement to buy Adelaide Place, a 655,000 sf Class “A” office property located in downtown Toronto. Pro-forma recent acquisitions, exposure to Calgary office has been reduced to ~38% of NOI (from 54%), while Ontario office assets climb to 32% of NOI (from 13%).Including completed/pending acquisitions and the recent equity raise (5.5MM units priced at $18.75/unit for $104MM gross), RBC CM has reduced its 2010/2011 FFO/unit estimates by -$0.14/-$0.12 to $2.82/$2.84. RBC CM has increased its price target to $24 From $20.50.
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