In Investor Pre resentation May 20 2015 1 1 In Investment Su - - PowerPoint PPT Presentation

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In Investor Pre resentation

May 20 2015

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In Investment Su Summary  Canada’s largest pure-play office REIT  24.1 million sf of valuable, hard to replicate central business district and suburban office properties  CBD properties generate ~70 % of NOI  Proven track record of value creation by senior management  Strong tenant roster  Significant unrealized value-add/repositioning opportunities  Well diversified by geography, asset & tenant mix  Strong occupancy with staggered lease maturities and rental rate growth  A conservative and flexible balance sheet; 47.6% Debt to GBV  Investment grade credit rating In our history, we’ve never had a better quality portfolio or a stronger balance sheet with embedded opportunities for growth and value creation.

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Kev evin Hardy (2011) SVP, Eastern Canada Years of Experience in Commercial Real Estate: 15+(Oxford Properties) Paul Skea eans (2013) SVP, Western Canada Years of Experience in Commercial Real Estate: 16 (GWL Realty & CBRE) Victor Sett ttino

• (2013)

VP Commercial Development Years of Experience in Commercial Real Estate: 14 (First Gulf Corporation) Sharon Mi Mitchel ell (2013) SVP, Operations Management Years of Experience in Commercial Real Estate: 25 (Oxford & BMO)

Ou Our r Pla Platfo form rm & & Expe xpert rtise Strong Operational, Development & Leasing Team 20 20 Expe xperienced leasing professionals located in over 20 20 Markets across Canada

Andrew ew Re Reial (2012) SVP, GTA & Western Canada Years of Experience in Commercial Real Estate: 15+ (Bentall) Sama manth tha Farrel ell (2012) VP Leasing, Eastern Canada Years of Experience in Commercial Real Estate: 16 (Oxford Properties, CBRE, V&A Properties) Joh

• hn Shiel

elds (2013) VP Leasing, Eastern Canada Years of Experience in Commercial Real Estate: 20+ (CBRE) Iren ene e Au (2006) VP Leasing, Western Canada Years of Experience in Commercial Real Estate: 20 (incl. Colliers & O&Y)

Jane ne Gavan (1998) Chief Executive Officer

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Ou Our r Pla Platfo form rm & & Expe xpert rtise Strong Support from Dream

Dream’s platform benefits D.un:

• Transaction & capital markets expertise
• Track record of development & value

creation

• Synergies realized across broad platform
• Asset management & development

capabilities

• 20 year history in real estate and

renewable power developer, manager and investor

• Completed ~$20 billion of real estate

and alternative investment transactions

• 178 dedicated professionals in all

disciplines

• Extensive network of global JV partners

and financial institution support Dream has…

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• On April 2nd we completed the reorganization of the management structure of

DREAM Office REIT.

• As a result of the reorganization, the annual management fee, acquisition fee and

capital expenditure fee payable to Dream Asset Management Corporation (“Dream”) have been eliminated. In consideration for the sale, Dream received 4.85 million exchangeable limited partnership units exchangeable for REIT units.

• Dream will continue to provide strategic oversight on a cost recovery basis.
• Dream Office continues to leverage the expertise of the acquisition and financing

teams at Dream.

• The transaction has resulted in an improved cost of capital and narrowing of the

price/NAV discount for Dream Office.

Reo eorg rganization of Man anagement St Stru ructure re

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Pro Proven Track Reco ecord of Growth & & Pe Perfo formance Results of Our 6 Year Capital Allocation Strategy

Unit Price $12.60 (as at Dec 31, 2008) $ 26.88 (as at May 15 , 2015) Market Capitalization $260 million $2.9 billion 1-Year Fwd Consensus AFFO Estimates $2.22 $2.40 AFFO Payout Ratio (on Consensus Estimates) 99% 93% AFFO Multiple (on Consensus Estimates) 5.7x 11.2x Annual Distribution / Implied Yield $2.20 / 17.5% $2.24 / 8.3% Consensus NAV Estimate $25.90 $30.72 Total Assets $1.3 billion $7.0 billion NOI by Segment: 90% Office / 10% Industrial 98% Office CBD / Suburban / Other Exposure as a % of NOI 65% / 23% / 12% 71% / 27% / 2% Downtown Toronto / Calgary as a % of NOI 13% Toronto / 39% Calgary 30% Toronto / 16% Calgary Top 5 Assets (and % of NOI) Telu lus Tower

• wer (7%); AIR

R MIL MILES Tower

• wer (7%);

Mc McFar arla lane Tower

• wer (6%); 840

0 7th

th Aven

enue (5%); Stat atio ion Towe

• wer (5%)

Scotia ia Plaz aza (10%); 700 00 De la Ga Gauchèt ètie iere (5%); Adel delaid ide Plac ace (4%); IBM M Corp

• rp.

. Park k (3%); Telu lus Towe

• wer (3%);

Geographic Distribution of NOI Calgary (47%); Toronto (13%); Vancouver (9%); NWT (6%); Regina (4%); Sask (3%); SW Ontario (1%); Industrial/Other (17%) GTA (44%); Calgary (19%); YK/Sask/Regina (8%); Edmonton (8%); BC (5%); Montreal (5%); SW Ont. (4%); Ottawa (4%); QC/Atl. Cda (2%); Other (1%) Reported Debt to GBV / Term / Wtd. Average Int. Rate 66% / 5.5 years / 5.8% 47.6% / 4.1 years / 4.2%

We have transformed our asset profile over the last six years, improving the stability of

• ur ca

cash flo low and the quali lity of our bala alance she heet. 10 10% annual

• equiv. total

return since inception

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• Since the inception of Dream Office REIT in 2003, we

generated a total return of over 21 0%. (CAGR of ~1 0%)

• Over the past six years, AFFO/unit has grown 21 %.
• While the asset base has grown by $6.3 billion, our reported

debt/GBV has declined by almost 20%.

Pro Proven Trac ack Reco ecord rd of Growth & & Pe Perfo form rmance Our AFFO/Unit While De-levering Our Balance Sheet

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Book Value of Total Assets ($millions) AFFO Per Unit

54 acquisition transactions with Western Canada focus Sale of Eastern Portfolio $125M convertible debenture Adelaide Place Slate Portfolio Sale of Industrial Scotia Plaza $150 Million NCIB Announcement

Pro Proven Trac ack Reco ecord rd of Growth & & Pe Perfo form rmance Value Creation Through Transformational Transactions

Whiterock Portfolio Realex Portfolio

We have an exceptional track record of gr growing our earn earnings, and the size and and quali lity of our

• portfolio. We actively manage our portfolio through our pursuit of accretive acquis

isitions and the sale of non-core assets.

Deleveraging

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% NOI CBD

70% 70%

TOTAL OWNED SF

24. 4.1 M

British Columbia 5% Calgary 19% Yellowknife 2% Edmonton 8% Saskatoon 3% Regina 3% GTA 44% SW Ontario 4% Ottawa 4% Montreal 5% Quebec City 1% Atlantic Canada 1% USA 2% CBD 1% CBD 5% CBD 16% CBD 2% CBD 2% CBD 2% CBD 4% CBD 30% CBD 5% CBD 1% CBD 2%

40% 40%

85% of our portfolio NOI is derived from “core” Canadian markets (GTA, Calgary, Edmonton, Vancouver, Montreal, Ottawa)

59 59%

• AVG. TENANT SIZE

11,600 SF SF

• AVG. REMAINING

LEASE TERM

5 5 YE YEAR ARS

PORTFOLIO OCCUPANCY

92.8 92.8%

Irre replaceable Por Portfo folio in n Core re Canadian Mar arkets Large Scale & Diversification

Q1 2015 - % NOI (excl. Reclassified Properties)

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11 11,3 ,363

Scotia Plaza Toronto (10%) 700 De la Gauchetière Montreal (5%) Adelaide Place Toronto (4%) IBM Corporate Park Calgary (3%) Telus House Calgary (3%) State Street Financial Ctr. Toronto (2%) Enbridge Place Edmonton (2%) Barclay Centre I & II Calgary (2%) 5001 Yonge Street Toronto (2%) AIR MILES Tower Toronto (2%) 655 Bay Street Toronto (1%) HSBC Bank Place Edmonton (2%) Station Tower Surrey (1%)

Irre replaceable Por Portfo folio Institutional Quality Assets Our top 15 properties produce ~40% of NOI (5.4 5.4 year weighted average lease term / 98% 8% committed occupancy / ~24,0 ,000 sf avg. tenant size)

36 Toronto Street Toronto (1%) 720 Bay Street Toronto (1%)

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1 2 3 4 5 6 7 25 25 16 16 18 18 8 26 26 13 13 20 20 9 12 12 10 10 17 17 14 14 22 22 24 24 11 11 21 21 23 23 19 19 15 15

Our scale & concentration in downtown Toronto affords us great opportunities. We are the largest landlord in the GTA.

Irre replaceable Por Portfo folio 5.4 Million Owned SF in Downtown Toronto

1. Scotia Plaza 2. Adelaide Place 3. 30 Adelaide Street East 4. 438 University Ave 5. 655 Bay Street 6. 74 Victoria Street / 137 Yonge Street 7. 720 Bay Street 8. 100 Yonge Street 9. 18 King Street East

• 10. 36 Toronto Street

11. 330 Bay Street

• 12. 20 Toronto Street / 33 Victoria Street
• 13. 8 King Street East
• 14. Victory Building – 80 Richmond St W
• 15. 49 Ontario Street
• 16. 212 King Street West
• 17. 357 Bay Street
• 18. 10 Lower Spadina Avenue
• 19. 360 Bay Street
• 20. 10 King Street East
• 21. 350 Bay Street
• 22. 67 Richmond Street
• 23. 366 Bay Street
• 24. 56 Temperance Street
• 25. 250 Dundas Street West
• 26. 83 Yonge Street

97. 97.3%

Committed Occupancy

Central Business District

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Irre replaceable Por Portfo folio Potential Benefits from Transit Proposals

Scar arbo borough

Population: >600,000

*Source: StatsCan 2011 Consensus

Nor North Yo York

Population: >650,000

Mi Miss ssiss issauga

Population: >700,000

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Man anaging Risk Geographic and Tenant Diversification

NOI Breakdown, Q1/15

Total Assets = $7.0 Billion

BC, 5% Calgary, 19%

Edmonton, 8%

YK, Sask, Regina , 8% US, 2% SW Ont., 4% GTA, 44% Montreal, 5% Ottawa, 4% QC, Atl. Cda 2%

Downtown – 30% GTA West – 8% GTA East – 2% GTA North - 4%

# of Tenants

2,200

GLA (sf in millions)

24.1

Average Tenant Size

11,600 sf

# of Cities

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Significant improvements in asset quality and tenant diversification have resulted in stable, high quality cash flows from our portfolio.

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Man anaging Risk Tenant Diversification

Almost 60% of our revenue comes from Triple A Government tenants, the finance and insurance sector and the Science and Technology industries.

Finance & Insurance Government Scientific & Technical Services

Resources Info.& Cultural Real Estate Admin & Support Retail Manufacturing Other

22% 18% 17%

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Tenant Gross Rental Revenue (%) # of Properties Owned Area (%)

• Wtd. Avg.

Remaining Lease Term (Years) Credit Rating 1 Bank of Nova Scotia 7.3 16 4.1 9.4 A+ 2 Government of Canada 6.2 28 5.9 3.2 AAA 3 Government of Ontario 3.4 9 2.8 4.4 AA- 4 Bell Canada 1.9 6 1.6 3.2 A-1 5 Government of Quebec 1.7 5 2.8 12.0 A+ 6 Telus 1.5 2 1.2 2.4 BBB+ 7 Enbridge Pipelines Inc. 1.5 1 1.0 3.9 A- 8 State Street Trust Company 1.4 2 1.0 7.1 AA- 9 Government of Saskatchewan 1.3 7 1.4 2.3 AAA 10 Government of Alberta 1.1 11 1.3 2.8 AAA

Man anaging Risk Strong Relationships With Our Tenants Our top tenants have ex exce ceptional cr credit rat atings, and are div divers rsifi fied across many properties, which reduces re-leasing risk.

We are the 1st or 2nd Largest Landlord to: 5 properties 16 properties 2 properties

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• 2,000,000

4,000,000 6,000,000 8,000,000 1 0,000,000 1 2,000,000 2015 2016 2017 2018 2019 2020+

Expiries of tenants > 1 00k sf Expiries of tenants < 1 00k sf

*Market rents are estimates only and are based on current market rents with no allowance for increases in future years. Subject to changes in market conditions.

Man anaging Risk Staggered Lease Maturities Embedded Rental Rate Growth

• Our rental rates remain below market, which, when coupled with our well-staggered lease

maturities positions us to consistently capture gains with new leasing.

• Over the next 5 years, larger tenants (>100k sf) represent roughly 22% of expiries which helps to

preserve the stability of our cash flows.

GLA

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Man anaging Risk Tenant Size and MTM on Rents Calgary and Toronto

6,000 SF SF 4,200 SF SF 7,400 SF SF 3,800 SF SF 13,000 SF SF 5, 5,800 SF SF 6,300 SF SF 9,400 SF SF 7,200 SF SF Average Tenant Size

Calgary - Downtown Calgary - Suburban Toronto – Downtown Toronto - Suburban Total/Weighted Average Total SF (% of Total Portfolio SF) 3,146,000 (13%) 757,000 (3%) 5,401,000 (23%) 4,219,000 (17%) 13,523,000 (56%) Occupancy 89.7% 89.4% 97.3% 89.6% 92.7% In Place Rents (per sf) $21.35 $17.14 $24.02 $14.49 $20.04 Estimated Market Rents (per sf) $24.05 $17.78 $26.37 $15.01 $21.81 Market vs. In Place Rents (%) 12.6% 3.7% 9.8% 3.6% 8.2%

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86% 88% 90% 92% 94% 96% 98% 100% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Q1/15

Man anaging Risk Office Market Environment Summary

Net Absorption 1.4 M M sq. ft. Development Pipeline 22.3 2.3 M M sq. . ft. CBRE Occupancy (%) Dream Office Occupancy (%)

Q1-2014 Q4-2014 Q1 Q1-2015 Q1-2014 Q4-2014 Q1 Q1-2015

Calgary – Downtown*

90.9 90.2 88.2 .2 95.9 89.5 89.7 9.7

Calgary - Suburban

86.0 86.9 84. 4.6 86.1 89.2 89.4 9.4

Toronto -Downtown

93.5 94.4 94 94.3 .3 96.8 97.3 97 97.3 .3

Toronto -Suburban

86.7 86.2 85.8 .8 92.4 89.5 89.6 9.6

Canadian National Office Average

89.7 89.3 9.3 88.9 .9 94 94.2 .2 93 93.0 .0 92 92.8 .8

Our Occupancy vs. National Average

700 bps 390 bps 300 bps 500 bps

Dr Dream Offic Office REI EIT

400 bps

National Office Average (CBRE)

*The decrease in Calgary – Downtown occupancy was largely due to the previously known departure of National Energy Board at 444 7th Ave.

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BBB (Low) Cre redi dit Rati ating

DBRS

(Incl. share of invest. in JV)

Q1/ Q1/15 Tota

• tal

l Assets $ $ 7, 7,570 Secured Debt $ 3,066 40.5% Convertible Debt $ 51 0.7% Unsecured Debt $ 483 6.4% De Debt t to

• GBV

47.6 .6% Undrawn Credit Facility $234.3 Borrowing Capacity on Unencumbered Assets 492.0 Po Pote tentia ial l Borrowin ing Capacit ity $726 $726.3

Weighted Average Interest Rate 4.2% .2% Average Term to Maturity 4. 4.1 year years

Cap apital St Stru ructure re Composition of Existing Capital Conservative and Flexible Balance Sheet

Unencumbered Assets $820 $820 mi milli llion

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Cap apital St Stru ructure re Building Strong and Lasting Relationships with Our Lenders Secured Mortgage Financing 2011 2012 2013 2014 Total Amount $750 $844 $251 $232 $2,077 Average Term (Years) 7.8 7.9 8.8 9.7 8.2 Average Rate 4.2% 3.6% 4.1% 3.6% 3.9%

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4.0% 4.4% 4.5% 3.9% 3.3% 4.3% 5.2% 4.2% 4.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 100 200 300 400 500 600 700 2015 2016 2017 2018 2019 2020 2021 2022 2023+ Unsecured Secured Weighted Average Face Rate Total Debt Maturities ($ millions) Weighted Average Interest Rate 4.2% 4.1 year average term to maturity

Cap apital St Stru ructure re Well Staggered Debt Maturity Profile Well staggered maturity profile with room for interest savings on upcoming mortgage maturities.

Tota

• tal

l Debt bt: : $3.2 bill llio ion

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Compara ratives Attractive Valuation Relative to Our Peers Dream Office currently trades at a 11.2x P/AFFO and 13% discount to NAV. At our current valuation, we co compare fav avoura rably across many metrics versus our peers.

Source: SNL Financial (Consensus data used for AFFO, NAV, NAV Cap estimates), BMO Capital Markets

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Curr rrent Cap apital Ini nitiatives Creating Value for our Unitholders

Active NCIB: We have repurchased $58 million of REIT units (or 2.2 million units) to date and we pl plan to to repurchase approxim ximately $150 millio

• lion. We

expect the program to be AFF AFFO ac accretive on a steady-state basis Proactively investing in in our

• ur buildings: For 2015, we plan to invest $75

75 mill illion in in bui building ing im improvements, our largest annual investment in our history Active Disposition Pi Pipeline: We are targeting $300 millio lion in in non-core property dispositions for the year, including a $150 million portfolio in Eastern Canada, which we have recently brought to market. Net proceeds will be used to fund our NCIB program

We will co conti tinue to

• seek cr

creati tive methods to cl close the va value gap ap between the trading value of our units and their fair value.

1 2 3

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At current valuation, with our current portfolio, management team and strategy, we believe we are a very compelling investment. The he Curre rent Op Opport rtunity

 Dream Office REIT is currently generating a 8.3% cash yield and an 8%+ AFFO yield (on consensus estimates)  We are conservatively financed in our view with our current debt to gross book value ratio of approximately 47.6%  We own a collection of assets that are hard to replicate, with our portfolio quality at its best in our history  We believe that our ability to meet tenants’ needs in our portfolio, our relationships and our contracts with tenants will help us outperform whatever benchmarks may be applicable  Furthermore, we believe that with our scale and dedicated management team, we

we will co continue to to ge generate inc increased an and ne new sou

• urc

rces of

• f inc

income

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Appendix: Valu lue Creation

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High Leasing Vo Volu lume Modern, High Quality Improvements

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Our 1 million SF of retail space generates $24.5 million of NOI or 5.5% of our total

• NOI. As retail tenants seek more urban

exposure, this presents an opportunity to:

• Grow existing rents
• Re-lease existing retail to best uses
• Re-purpose office and storage space to

retail in CBD

• Add retail pads to suburban sites

Va Valu lue Creation Retail Successes & Opportunities

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Va Valu lue Creation Retail Successes

10 year lease transaction with Drake One Fifty at Adelaide Place Net rents achieved are 25% higher than previous in place rents

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10 year lease transactions with SpeakEasy 21 and Starbucks at Scotia Plaza 4,000 sf of vacant space leased at rents in excess of $50.00 psf 1,000 sf leased at 185% higher rents

Va Valu lue Creation Retail Successes

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Opportunities to Re-Purpose CBD

• ffice and storage space

Sco cotia tia Plaz aza Creation on 3,000 to 5,000 sf of new high value retail premises 8 8 King ng Eas ast Ground Floor and Lower Level Retail 35 357 Bay ay Stre treet Ground & 2nd Floor Retail 700 De la Ga Gauchetiè tière Pursuing new fitness centre in 10,000 sf of lower level storage

Va Valu lue Creation CBD Retail Opportunities

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Ability to intensify on suburban sites.

• 5,600 sf pad site opportunity in Toronto’s

west end

• Retail rents generated will exceed office

rents by 115%

Va Valu lue Creation Suburban Retail Opportunities

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East Vancouver Site

• 1.7 acre site
• Potential to develop 200,000 sf,

eight storey building

• Steps from the Skytrain and bus

transit options

• New, highly efficient LEED Gold

Core and Shell building

Va Valu lue Creation Commercial Development Opportunities

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Downtown Kitchener Site

• Infill development site
• Potential to develop 110,000 sf, 6

storey office building

• Immediate access to highways,

public transit as well as Kitchener’s future iON LRT system

• New, highly efficient LEED Gold Core

and Shell building

Va Valu lue Creation Commercial Development Opportunities

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Va Valu lue Creation Urban Intensification Opportunity

East Toronto Site

• Located in Toronto, Ontario
• 15 acres
• 300,000 sf of existing office space
• Potential for residential uses
• Potential for retail uses

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Fo Forw rward Looking Info nform rmation

This slide presentation contains forward looking information within the meaning of applicable securities legislation. 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, that 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. All forward looking information in this presentation speaks as of January 20, 2015. Dream Office REIT does not undertake to update any such forward looking information whether as a result of new information, future events or otherwise. Additional information about these assumptions and risks and uncertainties is disclosed in filings with securities regulators filed on SEDAR (www.sedar.com).

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Thank you

Jan Jane Gavan CEO (416) 365-6572 jgavan@dream.ca