Hamburg Düsseldorf Cologne Frankfurt Stuttgart Munich *As at September 23, 201 5 2
Key metrics Occupancy 86.1% 85.3% Average in-place net rent per sf (1) 9.39 8.86 Average inplace rents 6% since Q4 2014 Market rents above in-place rents (1) 3.7% 2.9% FFO/Unit $0.39 $0.88 Distribution/Unit $0.40 $0.80 Weighted average interest rate 3.06% 3.23% Debt-to-gross book value 51% 51% 11.3% 2015 yearto-date total return 20% 35% Improving AFFO Quality Q2 201 5 AFFO Initial Properties New Acquisitions 201 4 AFFO 80% 65% 3
Dispositions of $100+ million 0.8 million square feet of leasing 69% tenant retention In-place rents 6% 4
Unemployment rate (in %) Germany is the Eurozone s largest economy and the world s 4 th largest economy; German unemployment at 4.6%, among lowest in EU; German government posted GDP growth of 1.6% in 2014, higher than the GDP growth throughout the European Union and increased 2015 GDP growth projection to 1.7%; Germany remains one of the most highly sought after real estate investment markets in Europe with the total investment volume for commercial real estate reaching 40 billion in 2014, the best result since 2007; First half of 2015 saw 24 billion in investment activity, up 42% over 2014; Mortgage rates in Germany are among the lowest in recent history, as increased competition in the German lending market has put pressure on credit spreads. For example, we recently locked in a 10-year mortgage at an interest rate of 1.71%. German Unemployment Rate 11 10 9 8 June 201 5 7 4.6% 6 5 4 Jan-07 2007 Jan-08 2008 Jan-09 2009 Jan-10 201 0 Jan-11 201 1 201 Jan-12 2 201 Jan-13 3 201Jan-14 4 201 5 Source: ILO labourmarket statistics, Destatis GDP Growth Rate 5% Germany Eurozone 4% 3% 2% 1% 0% -1 % -2% 201 0 201 1 201 2 201 3 201 4 Source: OECD Economic Outlook 201 4 5
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Rents Continue to Increase Record Cap Rate to Bond Rate Spread /sqm/month 40.00 Berlin Dusseldorf Frankfurt Hamburg Cologne Munich Stuttgart 6% 5% Spread Office Yields (Big 7 average) 10 yr Bund Rates 35.00 4% 30.00 3% 25.00 2% 20.00 15.00 10.00 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015* 1% 0% -1% Source: JLL Net Absorption in Big 7 Source: JLL Record Low Vacancy Rate Berlin Dusseldorf Frankfurt Hamburg Large office stock (more than twice the size of Canada s top 7 markets); Limited new construction (available space under development is less than 1% of the existing stock); Strong and diversified local economies..000 m² 1,400 1,200 1,000 800 600 400 200 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015* % 18 16 14 12 10 8 6 4 2 0 Cologne Munich Stuttgart 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015* Source: JLL Source: JLL 6
We entered into a strategic joint venture partnership with Public Official Benefits Association (POBA), a South Korean pension fund, to sell a 50% interest in eight of our properties for 247 million. This transaction allowed us to leverage our operating platform and redeploy the proceeds into highly accretive opportunities such as Cologne Tower and Millerntorplatz. This transaction will add approximately 3 4 cents in AFFO per unit annually We realized a significant cap rate compression from 6.3% as at acquisition to 5.4% on sale; The net proceeds were invested in assets of comparable or higher quality at an average cap rate of 5.9%; The REIT will be receiving asset management and leasing fee income of $ 1.3 million p.a. from POBA; The transaction provided us with the opportunity to refinance over $150 million of mortgages at 90 bps lower interest rates when reinvesting the proceeds, while increasing the term to maturity by over 4 years; The REIT realized a cash gain of approximately $100 million (100% of the assets) over our acquisition price, including the recovery of land transfer tax and financing costs. 7
Over $1.8 billion in acquisitions since IPO with 31 properties added to portfolio 8
201 2 201 3 201 4 YTD 201 5 6 18 5 2 6.2% 1.70% 9.6 years 119
1010
11 11
(subject to final pricing) 1210 12
1 2 3 4 5 6 7 8 9 10 Sources: Bloomberg, Dream Asset Management, Standard & Poor s, Fitch 13
Diversification of the Tenant Base % of GRI generated by tenants other than Deutsche Post IPO 201 1 Q4 201 2 Q4 201 3 Q4 201 4 Q2 201 5 Total Dispositions In $ millions 1 40 1 20 1 00 80 60 40 20 0 201 2 201 3 201 4 201 5 YTD Closed and under contract 201 2 Terminations 201 4 Terminations Replaced 81 % of GRI Replaced 77%of GRI 14
Retained 84% of GRI 15
Square feet 600,000 500,000 400,000 Deutsche Post renewal Nearly 300,000 200,000 1 00,000 - Q3 201 3 Q4 201 3 Q1 201 4 Q2 201 4 Q3 201 4 Q4 201 4 Q1 201 5 Q2 201 5 New leases and renewals (sf) 16 16
1717
Debt Maturities (in $ millions) IPO Blanket Facility 500 Overall term to maturity extended by 0.2 years 400 300 200 1 00 0 201 5 201 6 201 7 201 8 201 9 2020 2021 2022 2023 2024 2025 Q2 201 4 Q2 201 5 As at June 30 th, 2015 1518
Asset Management & Advisory Services / Publicly listed funds Operating Businesses Dream Office REIT Dream Global REIT Dream Industrial REIT Dream Hard Asset Alternatives Trust Housing & Urban Development Land Development Renewable Power Largest Office REIT in Canada Largest Global REIT in Canada One of the Largest Dedicated Industrial REITs in Canada Fund for New Opportunities for Hard Asset Investments 19 19
Chief Executive Officer Jane Gavan Chief Executive Officer Industry Experience: 27 yrs Chief Financial Officer Acquisitions Portfolio Management Asset Management Germany Rene Gulliver Chief Financial Officer Industry Experience: 36 yrs Bruce Traversy Head of Investments Industry Experience: 26 yrs Alexander Sannikov Portfolio Manager Industry Experience: 9 yrs Anne Braun Head of Asset Management Industry Experience: 13 yrs Finance & Controlling Luxembourg Acquisitions Germany Leasing Germany Value Creation Germany Cengiz Coelhan Head of Finance & Controlling Industry Experience: 9 yrs Kim Andersson Investments Industry Experience: 11 yrs Michael Schwöbel Head of Leasing Industry Experience: 17 yrs Mark Göhring Strategic Assets Projects Industry Experience: 24 yrs 19 20
21
Comparison is based on August 31, 2015 closing prices 322
323
424
Acquisitions $400+ million Dispositions $130+ million 1 million square feet of leasing 69% tenant retention 5% increase in AFFO/unit 25
Appendix 1 Case Studies 26 26
Before After Atrium Entrance Interior Interior 27 27
Before After Entrance Lobby 28
Existing Retail New Retail Concept 29
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Appendix 2 Big 7 Markets 31
Rents Net Absorption /sqm/month Achieved Maximum Rent Prime Rent Weighted Average Rent 50 45 40 35 30 25 20 15 10 5 0 Q2 10 Q2 11 Q2 12 Q2 13 Q2 14 Q2 15 380,000 330,000 280,000 230,000 180,000 130,000 80,000 30,000-20,000-70,000 336,600 267,900 276,100 251,000 44,700 34,900 2009 2010 2011 2012 2013 2014 Tenant Mix by Business Sector Q2 201 5 Office Vacancy Key Trends: Munich Dream Global (1 ) 11% 5% 6% 6% 6% 6% 6% 8% 18% 12% 17% Manufacturing Business Services IT Media, Publishing Social and personal Services Construction, Real Estate Education, Health, Social Public Administration Trade Banking, Finance Others, unknown,000 sqm Vacancy incl. sub-lettings (in 000s % sqm) 2,500 Vacancy Rate (in %) 12.0 2,000 1,500 1,000 500 0 2010 2011 2012 2013 2014 Q2 15 9.0 6.0 3.0 0.0 Prime Rents 33.50 1 2.95 Average Vacancy Rate 6.5% 2.7% (1 ) Metrics pertaining to Dream Global REIT s Acquisition Properties in Munich 2014 Total Investment Volume 5 bln Prime Yield 3.9% Source: JLL 32
Rents Net Absorption /sqm/month 35 30 25 20 15 10 5 Achieved Maximum Rent Prime Rent Weighted Average Rent 0 Q2 10 Q2 11 Q2 12 Q2 13 Q2 14 Q2 15 380,000 330,000 280,000 230,000 180,000 130,000 80,000 30,000-20,000-70,000 208,400 126,200 52,400 87,600 66,700-50,100 2009 2010 2011 2012 2013 2014* Tenant Mix by Business Sector Q2 201 5 Office Vacancy Key Trends: Berlin Dream Global (1 ) 26% 5% 6% 6% Source: JLL 6% 6% 11% 7% 10% 8% 9% Banking, Finance Trade Business Services Manufacturing New Media Education, Health, Social Media, Publishing Construction, Real Estate Social and personal Services IT Others, unknown 1,750 1,500 1,250 1,000 750 500 250,000 sqm Vacancy incl. sub-lettings (in 000s sqm) 0 2010 2011 2012 2013 2014 Q2 15 % 10.0 8.0 6.0 4.0 2.0 0.0 Prime Rents 23.00 9.77 Average Vacancy Rate 6.9% 1.7% (1 ) Metrics pertaining to Dream Global REIT s Acquisition Properties in Berlin Transaction volume of at least 4.4 bln 40% international investors in 2014 Prime Yield 4.3% 33
Rents Net Absorption /sqm/month 35 30 25 20 15 10 5 Achieved Maximum Rent Prime Rent Weighted Average Rent 0 Q2 10 Q2 11 Q2 12 Q2 13 Q2 14 Q2 15 380,000 330,000 280,000 230,000 180,000 130,000 80,000 30,000-20,000-70,000 222,500 192,800 158,600 72,000-18,400 10,000 2009 2010 2011 2012 2013 2014 Tenant Mix by Business Sector Q1 201 5 Office Vacancy Key Trends: Hamburg Dream Global (1 ) 12% Public Administration 4% 4% 5% 5% 7% 24% 13% Business Services Media, Publishing Trade Manufacturing Construction, Real Estate Education, Health, Social Social and personal Services IT 7% Transport, Storage 9% 10% Others, unknown,000 sqm Vacancy incl. sub-lettings (in 000s sqm) Vacancy Rate (in %) 1,500 1,250 1,000 750 500 250 0 2010 2011 2012 2013 2014 Q2 15 % 10.0 8.0 6.0 4.0 2.0 0.0 Prime Rents 24.50 1 5.20 Average Vacancy Rate 6.7% 4.6% (1 ) Metrics pertaining to Dream Global REIT s Acquisition Properties in Hamburg 2014 Total Investment Volume 3.5 bln Prime Yield 4.3% Source: JLL 34
Rents Net Absorption 60 55 50 45 40 35 30 25 20 15 10 5 0 /sqm/month Achieved Maximum Rent Prime Rent Weighted Average Rent Q2 10 Q2 11 Q2 12 Q2 13 Q2 14 Q2 15 380,000 330,000 280,000 230,000 180,000 130,000 80,000 30,000-20,000-70,000 223,300 153,800 96,600 104,700 34,200-67,600 2009 2010 2011 2012 2013 2014 Tenant Mix by Business Sector Q2 201 5 Office Vacancy Key Trends: Frankfurt Dream Global (1 ) 6% 6% 5% 6% 4% 2% 3% 5% 7% 25% 31% Banking, Finance Business Services Public Administration Education, Health, Social Social and personal Services IT Manufacturing Media, Publishing Construction, Real Estate New Media Others, unknown,000 sqm Vacancy incl. sub-lettings (in 000s sqm) % 2,000 Vacancy Rate (in %) 15.0 1,750 1,500 12.0 1,250 9.0 1,000 750 6.0 500 3.0 250 0 0.0 2010 2011 2012 2013 2014 Q2 15 Prime Rents 35.50 23.82 Average Vacancy Rate 1 0.0% 2.2% (1 ) Metrics pertaining to Dream Global REIT s Acquisition Properties in Frankfurt 2014 Total Investment Volume 5.5 bln Prime Yield 4.4% Source: JLL 35
Rents Net Absorption /sqm/month 35 30 25 20 15 10 5 Achieved Maximum Rent Prime Rent Weighted Average Rent 0 Q2 10 Q2 11 Q2 12 Q2 13 Q2 14 Q2 15 380,000 330,000 280,000 230,000 180,000 130,000 80,000 30,000-20,000-70,000 153,800 161,000 99,100 73,800-7,400-22,300 2009 2010 2011 2012 2013 2014 Tenant Mix by Business Sector Q2 201 5 Office Vacancy Key Trends: Dream Global (1 ) 16% 17% Trade Business Services 3% Manufacturing Transport, Storage 5% Construction, Real Estate 15% IT 5% Telecommunication 6% Education, Health, Social Media, Publishing 7% 11% Social and personal Services 7% 8% Others, unknown Source: JLL,000 sqm Vacancy incl. sub-lettings (in 000s sqm) % 1,250 Vacancy Rate (in %) 15.0 1,000 12.0 750 9.0 500 6.0 250 3.0 0 0.0 2010 2011 2012 2013 2014 Q2 15 Prime Rents 26.00 1 5.64 Average Vacancy Rate 9.8% 1.3% (1 ) Metrics pertaining to Dream Global REIT s Acquisition Properties in Düsseldorf 2014 Total Investment Volume 2.0 bln Prime Yield 4.4% 36
Rents Net Absorption 30 25 20 15 10 /sqm/month 5 Achieved Maximum Rent Prime Rent Weighted Average Rent 0 Q2 10 Q2 11 Q2 12 Q2 13 Q2 14 Q2 15 380,000 330,000 280,000 230,000 180,000 130,000 80,000 30,000-20,000-70,000 127,300 69,500 80,100 70,300-13,100-38,700 2009 2010 2011 2012 2013 2014 Tenant Mix by Business Sector Q2 201 5 Office Vacancy Key Trends: Stuttgart Dream Global (1 ) 1% 1% 9% Manufacturing 46% Business Services 2% 1% Trade 5% IT 5% Education, Health, Social Public Administration 7% Banking, Finance Media, Publishing Social and personal Services 10% Insurance Others, unknown 13% Source: JLL,000 sqm Vacancy incl. sub-lettings (in 000s sqm) % 600 Vacancy Rate (in %) 8.0 500 6.0 400 300 4.0 200 2.0 100 0 0.0 2010 2011 2012 2013 2014 Q2 15 Prime Rents 1 9.50 1 2.00 Average Vacancy Rate 5.0% 4.6% (1 ) Metrics pertaining to Dream Global REIT s Acquisition Properties in Stuttgart 2014 Total Investment Volume 1.2 bln Prime Yield 4.6% 37
Rents Net Absorption 25 20 15 10 /sqm/month 5 Achieved Maximum Rent Prime Rent Weighted Average Rent 0 Q2 10 Q2 11 Q2 12 Q2 13 Q2 14 Q2 15 380,000 330,000 280,000 230,000 180,000 130,000 80,000 30,000-20,000-70,000 223,300 153,800 96,600 34,200 27,700-67,600 2009 2010 2011 2012 2013 2014 Tenant Mix by Business Sector Q2 201 5 Office Vacancy Key Trends: Cologne Dream Global (1 ) 10% Public Administration 3% 21% Business Services 3% Education, Health, Social 5% IT 5% 6% 7% Source: JLL 11% 11% 18% Trade Media, Publishing Social and personal Services Construction, Real Estate Banking, Finance Manufacturing Others, unknown,000 sqm Vacancy incl. sub-lettings (in 000s sqm) % 800 Vacancy Rate (in %) 10.0 600 8.0 6.0 400 4.0 200 2.0 0 0.0 2010 2011 2012 2013 2014 Q2 15 Prime Rents 22.00 1 7.41 Average Vacancy Rate 6.1 % 0.3% (1 ) Metrics pertaining to Dream Global REIT s Acquisition Properties in Cologne 2014 Total Investment Volume 1.3 bln Prime Yield 4.4% 38
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Jane Gavan CEO (416) 365-6572 jgavan@dream.ca Rene Gulliver CFO (416) 365-5447 rgulliver@dream.ca Alexander Sannikov Portfolio Manager (416) 365-4106 asannikov@dream.ca