When the real estate investment trust launched a US$160-million IPO in Canada in early April, stock markets were already on edge because of expected interest-rate hikes, and because Russia’s invasion ofwas still fresh. Despite the uncertainty, Dream Residential, run by chief executive officer Jane Gavan, found a way to raise the money needed to acquire its initial portfolio.
Dream Residential, which starts trading Friday, resembles what Mr. Cooper and his long-time business partner Ms. Gavan did in 2011 when they launched Dream Global REIT to capitalize on cheaper property values in Europe after the 2008 global financial crisis. At the time, they raised money to acquire a portfolio of Deutsche Post properties in Germany, and then added to it with subsequent acquisitions over time.
Dream Residential, meanwhile, starts trading as REITs are struggling because interest rates are rising. It will also have to grow by acquiring properties at likely premium prices. The U.S. real estate market is currently soaring, akin to Canada’s during the first two years of the pandemic.“In hindsight, it looks obvious,” she said, but when Dream Global launched, “we felt like we were running into a burning building.
However, Dream Residential faces competition from a few rivals who are already listed in Canada and operate similar businesses, albeit sometimes in different locations, including Toronto-based Tricon and Arkansas-based BSR REIT, which went public on the Toronto Stock Exchange in 2018.
Eat the rich and take their houses