Dream Office Real Estate Investment Trust (D.UN TSX) owns office buildings in Canada’s major cities and has been struggling with its properties in Alberta which represent 17% of the portfolio. The company has written down the value of its assets and cut its distributions to unit holders. What may be catching your interest on this bottom fishing expedition is the 9% yield on distributions. In a yield starved market 9% is tantalizing but capital preservation cannot be ignored.
An inspection of the charts will help determine of now is a good time to chase D.UN.
The three-year chart indicates that the stock topped out near $25.00 in April of 2015 and began a rapid descent to below $14.00 in January of 2016 . The units caught a bounce off the lows as the MACD and the RSI both generated buy signals ahead of the advance. The shares ran to $20.50 by April but that was as good as it got. Since then the shares have been operating under a downtrend line that has provided resistance to every effort to move higher over the last five months.
The six-month chart depicts the sell signals from the momentum indicators that preceded the gap down in August on the announcement of a write down in asset values. Make note of the base building that has occurred around $16.00. The stock has inched up from the base but I’m not convinced that its about to start a new leg up.
Until D.UN gets some relief from the issues hitting their business in Alberta it would be prudent to keep your powder dry.
Next time I will investigate the charts of DHX Media Ltd. (DHX.B TSX) for George.
Make it a profitable day and happy capitalism!