DIR.UN is exposed to rollover risk of its leases, as well as declining real estate conditions in Canada or Europe. Its cash flows can be negatively impacted by changes in interest rates, or demand for industrial properties. The company's P/E was low in early 2022 as its EPS spiked to $1.74 in Q1 2022, however, it has since declined to $0.30 in the latest quarter. In Q1 2022, it realized a large increase in the fair value of its properties due to cap rate compression and higher market rents. The change in P/E is therefore more of an accounting issue than a true reflection of its operations.
Its NAV is roughly $17. Its mortgages have a weighted average face interest rate of 1.22%, its unsecured term loan has a fixed rate of 4.848%, its unsecured revolving credit facility has a rate of Canadian prime rate plus spread on Canadian dollar draws, and its debentures have rates of 5.383%, 1.662%, 2.057%, 2.539%, and 3.968%.
The main concerns with DIR.UN right now are centered around high interest rates and the possibility of a 'higher-for-longer' scenario. We continue to like the name and feel that the industrial REIT space will be attractive over the long-term.