Investor Presentation February 2018
Investment Summary Strategic Plan Significantly Opportunities Drive Unitholder Substantially Transformed for Value Value for the Complete the Trust Creation Long Term • Sold $3.3 billion of • Portfolio of higher • In each of the last two • Intensification and assets since beginning quality assets calendar years, Dream redevelopment of 2016. focused in Toronto. opportunities for Office REIT delivered a select Toronto assets. total unitholder return • Strong balance sheet of ~20%. with ample liquidity • Repurchasing units at ( ~ $500 million) and a discount to book low leverage (<40%). value. 2
Dream Office REIT Snapshot Valuation Financial Data 4.7% $1.6 B Yield (1) Market Cap (1) Adelaide Place, Toronto Implied Value ~$350 $2.9 B Enterprise Value (1) PSF (1) 5001 Yonge St., North York $23.46 39.6% NAV per Unit (2) Leverage (2) 700 DLG St. W., Montréal (1) Based on D.UN unit price of $21.11 per unit as at February 23, 2018. 3 (2) As at December 31, 2017.
Completion of the Strategic Plan Q4 2015 Q4 2017 Repaying Net Total 48.3% 39.6% Debt Debt-to-GBV Reducing Unit Units 113 M 79 M Outstanding (1) Count Assets Under Investing 0 6 Development Consideration In Our Buildings (1) Completed current Normal Course Issuer Bid program in February 2018, resulting in approximately 75.3 million units outstanding. 4
Management Team Michael J. Cooper Rajeev Viswanathan Gordon Wadley Andrew Reial Chairman & CEO CFO SVP SVP Dream Office REIT Commercial Properties Portfolio Management Simone Campbell Heather LeBlanc Sharlene McKillop VP Property VP Property VP Property Management Management Management 5
Dispositions of Non-Core Assets Alberta Saskatchewan Other 445 Opus Industrial Boulevard, U.S. Yellow Pages Building, Calgary 1914 Hamilton Street, Regina Dream Office REIT has substantially completed its disposition program, resulting in a portfolio focused in downtown Toronto with an industry leading balance sheet. 340-450 3 rd Avenue North, Saskatoon Morgex Building, Edmonton 6
Q4 2013 Q4 2017 Transformation of Dream Office REIT (1) NUMBER OF PROPERTIES 42 186 NUMBER OF MARKETS 5 15 AVERAGE NET RENT PSF $17.83 $21.02 Calgary TOTAL OWNED SF 14% 8.2M 24.6M Ottawa/ Montr é al 12% Toronto Property Value Non-Core Downtown Markets (2) 7% 59% $2.9B $7.2B Mississauga/ North York 7 (1) Chart based on percentage of investment property fair value excluding properties held for sale, as at December 31, 2017. 8% (2) Non-Core Markets consist of 5% in Saskatchewan and 2% in the U.S., based on investment property fair value.
30 PROPERTIES Our Target Core Portfolio 6.3M TOTAL OWNED SF Calgary 16% 5.2 Saskatoon 1% YEARS AVG. REMAINING Ottawa/Montr é al LEASE TERM 11% GTA 72% Over 70% of our 2018 Core Ottawa 93.6% 1% Portfolio NOI will be from the GTA PORTFOLIO OCCUPANCY (in-place & committed) 8
Why Toronto Home to ~40% of Canada’s business headquarters Toronto Downtown Absorption and Vacancy Represents one-quarter of Lowest Vacancy Rate in North America (000’s SF) Canada’s population 3,000 10.0% 2,500 8.0% Most highly educated workforce in the OECD 2,000 6.0% 1,500 4.0% 1,000 One of the fastest growing cities in North America 2.0% 500 0 0.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 “Core properties in Canada’s major cities Absorption(LHS) New Supply as % of Total Inventory (RHS) Vacancy (RHS) remains sought after” - CBRE 9
Toronto Downtown Portfolio Historical Market Occupancy & Market Rents Properties 19 100.0% $35.00 98.0% $30.00 GLA (millions of sq. ft.) 3.4 96.0% $25.00 Per Sq. Ft. 94.0% $20.00 Q4 Comparative Properties NOI ($ millions) $20.2 92.0% $15.00 In-place / Committed Occupancy 89.1% / 96.8% 90.0% $10.00 88.0% $5.00 In-place & Committed / Market Rent (Per SF) $23.09 / $26.68 86.0% $0.00 Q2 09 Q2 11 Q2 13 Q2 15 Q2 17 Occupancy Market Rents Toronto Downtown Lease Maturity Profile 1,400 $26.00 1,200 $25.00 1,000 $24.00 (000’s SF) Per Sq. Ft. 800 $23.00 600 $22.00 400 $21.00 200 $20.00 0 $19.00 2018 2019 2020 2021 2022 2023+ Expiries Expiring Net Rents Adelaide Place 36 Toronto St. 10 30 Adelaide St. E.
Development Assets Queen’s Park Portfolio Assets TTC Yonge Line High concentration of well connected assets in Downtown Toronto Dundas 96.8% in-place and St. Patrick committed occupancy 5.2 years weighted average lease term Queen Close proximity to public transit Osgoode Intensification and redevelopment potential King 11 St. Andrews
Net Asset Value (“NAV”) December 31, 2017 Property Value NAV NAV Per Unit (in $ millions) Property value / NAV $2,919 $1,839 $23.30 Assets held for sale 52 0.65 Unsecured debentures (290) (3.68) Investment in Dream Industrial REIT 221 2.80 Other 30 0.39 NAV $1,852 $23.46 12
Strong Balance Sheet with Low Leverage, Ample Liquidity, and Staggered Debt Maturities Well staggered debt maturity profile 600 39.6% ~$494M Net Total Available Debt-to-GBV Liquidity $ Millions 400 200 3.90% ~$300M Unencumbered Face Rate of Assets Interest 0 2018 2019 2020 2021 2022 2023+ Mortgages Unsecured Debentures 13
Portfolio Leasing Momentum 2018 to 2019 2,000 1,315 75% 1,500 426 sf 000’s 1,000 38% 500 688 430 0 2018 2019 To date, we have leased or renewed 75% (1) of our 2018 lease maturities representing ~1.3 million sf and have secured 38% (1) of our 2019 lease maturities . In Toronto Downtown, we have addressed 126% of our 2018 lease maturities at over 5.2% positive renewal spreads . (1) Excludes 2200, 2202, 2206 Eglinton Ave. E. and 1020 Birchmount Rd., which are held for redevelopment. 14
Select Assets Identified with Potential Intensification or Redevelopment Opportunities 357 Bay St., Toronto 250 Dundas St. West, Toronto 212 King St. West, Toronto 2206 Eglinton Ave. East, Scarborough 30 Adelaide St. East, Toronto 438 University Ave., Toronto 15
Non-GAAP Measures and Forward Looking Information Forward looking information This investor presentation may contain forward-looking information within the meaning of applicable securities legislation, including statements regarding the future composition of our portfolio, our future intensification or redevelopment plans of certain assets, the terms of and duration of secured tenant renewals, and anticipated market rents. 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 investor presentation speaks as of the date of this investor presentation. 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. Non-GAAP Measures The Trust’s consolidated financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”). In this investor presentation, as a complement to results provided in accordance with IFRS, the Trust discloses and discusses certain non-GAAP financial measures, including market cap, enterprise value, leverage, yield, implied value, NAV, NAV per unit, net total debt-to-gross book value, as well as other measures discussed elsewhere in this presentation. 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 generated from (utilized in) operating activities, non-current debt, 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 and year ended December 31, 2017. 16
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