Q: Hi, I'm interested in Dream Unlimited Corp as a long term investment, and would appreciate your thoughts on this company. Also, held as the entity DRM:CA (vs DIR:UN:T, for example), would this be eligible for the dividend tax credit and thus best held in a non-registered account? Thank you
5i Research Answer:
DRM dividends are eligible dividends, so do get the tax credit. It is probably best in a non-reg account for most investors. As a real estate developer and manager, its business is different than a REIT. Shares are very tightly held, with the CEO at 46% and another 11% held by four parties. Debt is quite high, but it has been historically profitable. But operating cash flow has turned negative in the past 18 months. It is highly sensitive to the real estate market and interest rates. We would not give it a huge endorsement right now. With its small size, negative momentum, leveage and with investors fretting about a slowdown, we think DRM buyers have a fair bit of time here.