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May 10, 2019 5:11 AM ET

Dream Office REIT Reports Q1 2019 Results

Dream Office REIT Reports Q1 2019 Results

iCrowd Newswire - May 10, 2019

TORONTO,– DREAM OFFICE REAL ESTATE INVESTMENT TRUST (D.UN-TSX) or (“Dream Office REIT”, the “Trust” or “we”) today announced its financial results for the three months ended March 31, 2019.


(unaudited)   March 31,     December 31,       March 31,  
(In thousands of dollars except per unit amounts) 2019       2018       2018  
Operating results                
Net income $ 9,934     $ 58,489     $ 32,521  
Funds from operations (“FFO”)(1)   28,300       25,736       35,460  
Net rental income   36,907       35,692       44,586  
Comparative properties net operating income (“NOI”)(1)   38,333       36,240       35,634  
Per unit amounts                
FFO (diluted)(1)(2) $ 0.43     $ 0.39     $ 0.46  
Distribution rate   0.25       0.25       0.25  
Net asset value (“NAV”)(1)   25.10       24.97       23.81  

Footnotes: please refer to definitions at end.

(unaudited)   March 31,   December 31,     March 31,  
    2019     2018     2018  
REIT A Units (in thousands)   59,042     59,369     70,124  
LP B Units (in thousands)   5,234     5,234     5,234  
Total units (in thousands)(3)   64,276     64,603     75,358  
Total portfolio information(4)            
Number of properties   34     34     41  
Number of properties under development   2     2      
Number of properties held for future redevelopment   1     1     1  
Gross leasable area (“GLA”) (in millions of sq. ft.)   7.3     7.3     8.3  
Investment properties value (in billions) $ 2.8   $ 2.8   $ 2.9  

Footnotes: please refer to definitions at end.

“We are pleased with the REIT’s operating performance in the first quarter of 2019 and our ongoing efforts to reposition the portfolio and related capital to downtown Toronto,” said Jay Jiang, Chief Financial Officer of Dream Office REIT. “The REIT generated a 7.6% year-over-year increase in comparative properties NOI in Q1 driven by a strong 19% increase in downtown Toronto, the year-to-date results have been a confirmation of our portfolio and capital allocation strategy.”


(unaudited)             As at  
  March 31,
    December 31,
    March 31,
Weighted average face rate of interest on debt (period-end)(5) 3.99
%    4.06   3.92
Interest coverage ratio (times)(1)(6) 2.7     2.8     3.1  
Net total debt-to-adjusted EBITDAFV (years)(1) 8.6     9.0     7.6  
Level of debt (net total debt-to-net total assets)(1) 45.1
%    45.0   40.7
Average term to maturity on debt (years) 4.4     3.8     4.2  
Available liquidity and unencumbered assets                
Available liquidity (in millions)(1) $ 192.1     $ 163.9     $ 474.7  
Unencumbered assets (in millions)(1) 143.0     140.0     188.0  

Footnotes: please refer to definitions at end.


(unaudited) As at  
  March 31,
  December 31,
    March 31,
Comparative portfolio(7)              
Occupancy rate – including committed (period-end) 93.2 93.0 %   94.6 %
Occupancy rate – in-place (period-end) 91.8
%  91.5 %   88.8 %
Average in-place and committed net rent per square foot (period-end) $ 21.06   $ 20.97     $ 21.00  
Weighted average lease term (years) 5.3   5.2     4.9  

Footnotes: please refer to definitions at end.

“The New Shared Services Agreement will allow Dream and Dream Office REIT to focus on developing and providing best-in-class development and property management expertise,” said Michael J. Cooper, Chief Executive Officer. “The elimination of the incentive fee structure at no cost to Dream Office REIT unitholders will improve value and transparency.”


Senior management will host its Annual General Meeting of Unitholders on May 16, 2019 at 12:30 p.m. (ET), located at the Hockey Hall of Fame, TSN Theatre (concourse level), Brookfield Place, 30 Yonge Street, Toronto, Ontario. At the meeting, senior management will provide an update on its operations, capital allocation strategy and development projects.


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 owns well-located, high-quality central business district office properties in major urban centres across Canada, with a focus on downtown Toronto. For more information, please visit our website at www.dreamofficereit.ca.


(1) FFO, comparative properties NOI, diluted FFO per unit, NAV per unit, interest coverage ratio, net total debt-to-adjusted EBITDAFV, level of debt (net total debt-to-net total assets), available liquidity, and unencumbered assets 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) A description of the determination of diluted amounts per unit can be found in section “Our Equity” under the heading “Weighted average number of units” of the MD&A.
(3) Total units include 5.2 million LP B Units which are classified as a liability under IFRS.
(4) Excludes properties held for sale at the end of each period.
(5) Weighted average face rate of interest on debt is calculated as the weighted average face rate of all interest-bearing debt on balance.
(6) Interest coverage ratio has been restated in the comparative periods to conform to current period presentation. For further details, please refer to the “Non-GAAP Measures and Other Disclosures” section under the heading “Interest coverage ratio” in Dream Office REIT’s MD&A for the three months ended March 31, 2019.
(7) Comparative portfolio excludes properties sold, held for future redevelopment and properties under development as at March 31, 2019.


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, including comparative properties NOI, FFO, diluted FFO per unit, NAV per unit, interest coverage ratio, net total debt-to-adjusted EBITDAFV, level of debt (net total debt-to-net total assets), available liquidity, unencumbered assets, 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, net rental income, cash flows generated from (utilized in) operating activities, cash and cash equivalents, total assets, non-current debt, total equity, 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 months ended March 31, 2019.


This press release may contain forward-looking information within the meaning of applicable securities legislation, including statements regarding our objectives and strategies to achieve those objectives, future asset sales and use of proceeds from asset sales, our expected future operating cash flows, the future composition of our portfolio, future development plans, our expected cost to complete development activities, our expected income and yield from properties under development, our expected liquidity and leverage, the terms of and duration of secured tenant renewals, anticipated market rents, the volatility of our operating performance through 2019, our capital allocation strategy, and the future strength of our balance sheet. 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

Contact Information:

Michael J. Cooper
Jay Jiang
Chairman and Chief Executive Officer
Chief Financial Officer
(416) 365-5145
[email protected]
(416) 365-6638
[email protected]

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