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Dream Office REIT Reports Third Quarter Results and Substantial Completion of Disposition Program

Dream Office REIT Reports Third Quarter Results and Substantial Completion of Disposition Program

TORONTO, Nov. 09, 2017 (GLOBE NEWSWIRE) -- DREAM OFFICE REAL ESTATE INVESTMENT TRUST (TSX:D.UN) or (?Dream Office REIT?, the ?Trust? or ?we?) today announced its financial results for the three and nine months ended September 30, 2017 and substantial completion of its disposition program. Management will host a conference call to discuss the results on November 10, 2017 at 8:00 a.m. (ET).


SELECTED FINANCIAL INFORMATION Three months ended   Nine months ended
(unaudited) September 30,   June 30,   September 30,   September 30,   September 30, 
($000's except per unit amounts) 2017   2017   2016   2017   2016 
Operating results                   
Net income (loss)$(637) $34,556  $28,580  $34,055  $(779,034)
Net operating income (?NOI?)(1) 43,201   44,384   44,431   135,130   137,558 
Comparative properties NOI(1) 44,883   45,201   47,409   135,819   144,526 
Funds from Operations (?FFO?)(1) 44,653   55,686   71,359   165,822   223,732 
EBITDFV 64,524   76,881   99,888   227,772   319,571 
Total distributions(5)$22,249  $39,175  $42,739  $102,495  $135,398 
Per unit amounts(6)                   
Distribution rate(5)$0.25  $0.38  $0.38  $1.00  $1.19 
FFO (basic)(1) 0.48   0.53   0.62   1.61   1.96 
FFO (diluted)(1) 0.48   0.53   0.62   1.61   1.95 
Net asset value (?NAV?)(1)
 22.40   22.25   23.46   22.40   23.46 
Footnotes: please refer to definitions on page 7.


(unaudited)      As at 
 September 30,
 June 30,
 December 31,
 September 30,
Weighted average face interest rate (period-end)(7)3.93% 3.82% 3.84% 3.89% 
Interest coverage ratio (times)(1)(8)3.1 3.2 3.1 3.1 
Net debt-to-adjusted EBITDFV (years)(1)6.5 7.6 7.7 7.3 
Net debt-to-gross book value(1)39.5% 47.5% 52.3% 50.4% 
Net secured debt-to-gross book value(1)29.9% 40.7% 44.2% 42.6% 
Debt ? average term to maturity (years)4.7 3.8 3.8 3.8 
Capital (period-end)        
Total number of REIT A Units and LP B Units (in millions)81.1 103.4 110.0 114.0 
Footnotes: please refer to definitions on page 7.


(unaudited)As at 
 September 30,

 June 30,
 September 30,
Total Portfolio(2)      
Number of properties46 51 148 
Gross leasable area (?GLA?) (in 000's of sq. ft.)8,544 9,035 20,787 
Investment properties value (in $000's)(3)$2,837,363 $2,900,793 $5,426,359 
Comparative Portfolio(4)      
Occupancy rate - including committed (period-end) 90.3%  91.1%  91.6% 
Occupancy rate - in-place (period-end) 87.4%  88.4%  89.1% 
Average in-place and committed net rent per square foot (period-end)$20.64 $20.61 $21.06 
Weighted average lease term (years)4.7 4.8 5.0 
Footnotes: please refer to definitions on page 7.


In February 2016, we announced our strategic plan to improve the long-term NAV of the Trust, by selectively disposing of assets while forgoing short-term cash flows and yield. We had originally set out to sell $1.2 billion of non-core assets over three years; however, as we progressed through our disposition program, we found the private markets had a stronger than expected appetite for our assets.  Further, we reviewed our portfolio at the beginning of 2017 and expanded upon our disposition goals to include some of our assets that did not have opportunities to increase their value through redevelopment and intensification.  We have substantially completed our disposition program, having sold just over $3.2 billion of assets since the beginning of last year, leaving a portfolio of higher-quality assets with a focus in downtown Toronto.

The following table summarizes the major components of our NAV per unit:

(in $ millions)
 Per unit
(in millions
of sq. ft.)
 Occupancy -
in-place and
committed (%)
Investment properties     
Calgary$432  $5.32 1.9 77.7% 4.7 
Toronto Downtown1,498 18.47 3.4 97.7% 5.2 
Mississauga and North York218 2.69 0.6 93.6% 3.2 
Ottawa and Montréal357 4.40 1.1 92.0% 5.8 
Non-core markets332 4.09 1.5 86.6% 3.4 
Total Investment properties2,837 34.97 8.5 90.3% 4.7 
Investment properties net of mortgages1,681 20.72    
Redevelopment properties and assets classified as held for sale, net of related debt138 1.70    
Investment in Dream Industrial REIT193 2.38    
Other debt(10)(316)(3.90)   
Cash and other items121 1.50    
NAV(1)$1,817  $22.40    
Footnotes: please refer to definitions on page 7.      

Consistent with our strategy, we have used our repatriated capital from dispositions to repurchase our units, positioning the Trust for future NAV increases to have a more dramatic effect on a per unit basis.  Accordingly, since the announcement of our strategic plan, we have purchased approximately 33.9 million REIT A units for a total cost of approximately $693.1 million or $20.46 per unit.  In conjunction with the disposition program and unit buybacks, we reduced our distribution from $2.24 per unit prior to the announcement of our strategic plan to $1.00 per unit this past July.  The reduction in our distribution was done to maintain a conservative payout ratio, retain appropriate maintenance capital and generate investment capital to be used to improve the value of our portfolio. 

With our strategic plan announced in February 2016 now substantially complete, we can now look to the next phase of our strategy, to become a nimble, value-add real estate operator positioned to unlock the value in our downtown Toronto assets through redevelopment and intensification.

Effective November 3, 2017, Johann Koss resigned as a Board of Trustee in order to focus on other business opportunities.


Management will host a conference call to discuss the results tomorrow, November 10, 2017 at 8:00 a.m. (ET). To access the conference call, please dial 1-888-465-5079 in Canada and the United States or 416-216-4169 elsewhere and use passcode 5098 584#. To access the conference call via webcast, please go to Dream Office REIT's website at www.dreamofficereit.ca and click on the link for News & Events, then click on Calendar of Events. A taped replay of the conference call and the webcast will be archived for 90 days.


Information appearing in this news release is a select summary of results. The condensed consolidated financial statements and Management's Discussion and Analysis (?MD&A?) of the Trust are available at www.dreamofficereit.ca and on www.sedar.com

Dream Office REIT is an unincorporated, open-ended real estate investment trust. Dream Office REIT is focused on owning, acquiring, leasing and managing well-located, high-quality central business district and suburban office properties. Its portfolio currently comprises approximately 8.5 million square feet of gross leasable area(9) in major urban centres across Canada. Dream Office REIT's portfolio is well diversified by geographic location and tenant mix. For more information, please visit our website at www.dreamofficereit.ca

(1) NOI, comparative properties NOI, FFO, FFO per unit, diluted FFO per unit, NAV, NAV per unit, interest coverage ratio, net debt-to-adjusted EBITDFV, net debt-to-gross book value, and net secured debt-to-gross book value are non-GAAP measures used by Management in evaluating operating and financial performance. Please refer to the cautionary statements under the heading ?Non-GAAP Measures? in this press release.
(2) Total portfolio includes investment in joint ventures and excludes properties held for sale and redevelopment at the end of each period.
(3) Investment properties excludes properties held for sale and redevelopment at the end of each period.
(4) Comparative portfolio includes investment in joint ventures and excludes properties sold, properties held for sale and redevelopment at the end of Q3 2017.
(5) Effective with the February 2016 distribution, the Trust revised its monthly distribution to $0.125 per unit or $1.50 per unit on an annualized basis and a further reduction to $0.08333 per unit, or $1.00 on an annualized basis, effective for the July 2017 distribution.
(6) A description of the determination of basic and diluted amounts per unit can be found in section "Our Equity" under the heading ?Weighted average number of units? of the MD&A.
(7) Weighted average face interest rate is calculated as the weighted average face rate of all interest bearing debt on balance, including investment in joint ventures that are equity accounted.
(8) Interest coverage ratio has been restated in the comparative periods to conform to current period presentation.
(9) Excludes properties held for sale and redevelopment.
(10) Other debt consists of unsecured debentures net of financing costs related to demand revolving credit facilities.

Non-GAAP Measures

The Trust's condensed consolidated financial statements are prepared in accordance with International Financial Reporting Standards (?IFRS?). In this press release, as a complement to results provided in accordance with IFRS, the Trust discloses and discusses certain non-GAAP financial measures, diluted FFO per unit, FFO per unit, FFO, NAV, NAV per unit, NOI, comparative properties NOI, interest coverage ratio, net debt-to-adjusted EBITDFV, net total debt-to-gross book value, net secured debt-to-gross book value, as well as other measures discussed elsewhere in this release.  These non-GAAP measures are not defined by IFRS, do not have a standardized meaning and may not be comparable with similar measures presented by other income trusts. The Trust has presented such non-GAAP measures as Management believes they are relevant measures of the Trust's underlying operating performance and debt management. Non-GAAP measures should not be considered as alternatives to net income, cash generated from (utilized in) operating activities or comparable metrics determined in accordance with IFRS as indicators of the Trust's performance, liquidity, cash flow, and profitability. For a full description of these measures and, where applicable, a reconciliation to the most directly comparable measure calculated in accordance with IFRS, please refer to the ?Non-GAAP Measures and Other Disclosures? in Dream Office REIT's MD&A for the three and nine months ended September 30, 2017.

Forward looking information

This press release may contain forward-looking information within the meaning of applicable securities legislation, including statements regarding our plans, objectives and strategies; the future composition of our portfolio; our intensification and redevelopment plans. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond Dream Office REIT's control, which could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking information. These risks and uncertainties include, but are not limited to, general and local economic and business conditions; the financial condition of tenants; our ability to refinance maturing debt; leasing risks, including those associated with the ability to lease vacant space; and interest and currency rate fluctuations. Our objectives and forward-looking statements are based on certain assumptions, including that the general economy remains stable, interest rates remain stable, conditions within the real estate market remain consistent, competition for acquisitions remains consistent with the current climate and that the capital markets continue to provide ready access to equity and/or debt. All forward-looking information in this press release speaks as of the date of this press release. Dream Office REIT does not undertake to update any such forward-looking information whether as a result of new information, future events or otherwise except as required by law. Additional information about these assumptions and risks and uncertainties is contained in Dream Office REIT's filings with securities regulators, including its latest annual information form and MD&A. These filings are also available at Dream Office REIT's website at www.dreamofficereit.ca

For further information, please contact:

Michael J. CooperP. Jane GavanRajeev Viswanathan
ChairmanChief Executive OfficerChief Financial Officer
(416) 365-5145
(416) 365-6572
(416) 365-8959

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