Investor Presentation July 2014 Investment Summary Canadas largest - - PowerPoint PPT Presentation

Investor Presentation

July 2014

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Investment Summary  Canada’s largest pure-play office REIT  24.6 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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Our Platform & Expertise Strong Depth & Expertise, with a Proven Track Result of Delivering Results

Jane Gavan (1998) Chief Executive Officer Mario Barrafato (2001) SVP & Chief Financial Officer Ana Radic (1997) SVP & Chief Operating Officer

Our senior management team has worked together for many years - completing over $17 billion of commercial real estate transactions, and establishing a respected presence in major urban markets across the country.

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Kevin Hardy (2011) SVP, Eastern Canada Years of Experience in Commercial Real Estate: 15+ (Oxford Properties) Paul Skeans (2013) SVP, Western Canada Years of Experience in Commercial Real Estate: 16 (GWL Realty & CBRE) Victor Settino (2013) VP Commercial Development Years of Experience in Commercial Real Estate: 14 (First Gulf Corporation) Sharon Mitchell (2013) SVP, Operations Management Years of Experience in Commercial Real Estate: 25 (Oxford & BMO)

Our Platform & Expertise Strong Operational, Development & Leasing Team 90+ years of combined real estate experience amongst our internally-managed senior operational

• team. 20 Experienced leasing professionals located in over 20 Markets across Canada

Andrew Reial (2012) SVP, GTA & Western Canada Years of Experience in Commercial Real Estate: 15+ (Bentall) Samantha Farrell (2012) VP Leasing, Eastern Canada Years of Experience in Commercial Real Estate: 16 (Oxford Properties, CBRE, V&A Properties) John Shields (2013) VP Leasing, Eastern Canada Years of Experience in Commercial Real Estate: 20+ (CBRE) Irene Au (2006) VP Leasing, Western Canada Years of Experience in Commercial Real Estate: 20 (incl. Colliers & O&Y)

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Our Platform & Expertise 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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Proven Track Record of Growth & Performance Results of Our 5 Year Capital Allocation Strategy

December 2008 March 2014

Unit Price $12.60 (as at Dec 31, 2008) $29.59 (as at June 25, 2014) Market Capitalization $260 million $3.2 billion 1-Year Fwd Consensus AFFO Estimates $2.22 $2.43 AFFO Payout Ratio (on Consensus Estimates) 99% 92% AFFO Multiple 5.7x 12.2x Annual Distribution / Implied Yield $2.20 / 17.5% $2.24 / 7.6% Consensus NAV Estimate $25.90 $34.32 Total Assets $1.3 billion $7.6 billion NOI by Segment: 90% Office / 10% Industrial 100% Office CBD / Suburban / Other Exposure as a % of NOI 65% / 23% / 12% 70% / 30% / 0% Downtown Toronto / Calgary as a % of NOI 13% Toronto / 39% Calgary 28% Toronto / 17% Calgary Top 5 Assets (and % of NOI) Telus Tower (7%); AIR MILES Tower (7%); McFarlane Tower (6%); 840 7th Avenue (5%); Station Tower (5%) Scotia Plaza (10%); 700 De la Gauchètiere (4%); Adelaide Place (4%); IBM Corp. Park (3%); Telus Tower (2%); Geographic Distribution of NOI Calgary (47%); Toronto (13%); Vancouver (9%); NWT (6%); Regina (4%); Sask (3%); SW Ontario (1%); Industrial/Other (17%) GTA (42%); Calgary (19%); YK/Sask/Regina (8%); Edmonton (8%); BC (5%); Montreal (5%); SW Ont. (4%); Ottawa (4%); QC/Atl. Cda (2%); Other (3%) Reported Debt to GBV / Term / Wtd. Average Int. Rate 66% / 5.5 years / 5.83% 47.6% / 4.6 years / 4.22%

We have transformed our asset profile over the last five years, while delivering attractive annual returns of 19% to our unitholders. 19% 5-yr annual

• equiv. total

return 12% Annual

• equiv. total

return since inception

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66% 48%

40% 45% 50% 55% 60% 65% 70% Q4/08 Q1/14

Reported Debt/GBV $2.08 $2.43

$1.90 $2.00 $2.10 $2.20 $2.30 $2.40 $2.50 2008 2013

Reported AFFO per Unit

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

generated a total return of 229%. (CAGR of ~12%)

• Over the past five years, AFFO/unit has grown 17%.
• While the asset base has grown by $6.3 billion, our reported

debt/GBV has declined by almost 20%.

Proven Track Record of Growth & Performance Our AFFO/Unit While De-levering Our Balance Sheet

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$1.50 $1.60 $1.70 $1.80 $1.90 $2.00 $2.10 $2.20 $2.30 $2.40 $2.50 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 $5,000 $5,500 $6,000 $6,500 $7,000 $7,500 $8,000 Dec-03 Dec-04 Dec-05 Dec-06 Aug-07 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Book Value

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 Deleveraging NCIB

Proven Track Record of Growth & Performance Value Creation Through Transformational Transactions

Whiterock Portfolio Realex Portfolio

We have an exceptional track record of growing our earnings, and the size and quality

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

acquisitions and the sale of non-core assets that no longer fit our strategy.

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% NOI CBD

70%

Q1 2014 - % NOI (excl. Reclassified Properties)

TOTAL OWNED SF

24.6 M Irreplaceable Portfolio Large Scale & Diversification

British Columbia 5% Calgary 19% Yellowknife 2% Edmonton 9% Saskatoon 3% Regina 3% GTA 42% SW Ontario 4% Ottawa 4% Montreal 5% Quebec City 1% Atlantic Canada 1% USA 2% CBD 1% CBD 5% CBD 17% CBD 2% CBD 3% CBD 3% CBD 4% CBD 28% CBD 4% CBD 1% CBD 2%

41%

84% of our portfolio NOI is derived from “core” markets (GTA, Calgary, Edmonton, Vancouver, Montreal, Ottawa)

57%

• AVG. TENANT SIZE

11,549 SF

• AVG. REMAINING

LEASE TERM

5 YEARS

PORTFOLIO OCCUPANCY

94.2%

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11,36 3

Scotia Plaza Toronto (10%) 700 De la Gauchetière Montreal (4%) Adelaide Place Toronto (4%) IBM Corporate Park Calgary (3%) Telus Tower Calgary (2%) State Street Financial Ctr. Toronto (2%) Enbridge Place Edmonton (2%) Barclay Centre I & II Calgary (3%) 5001 Yonge Street Toronto (2%) AIR MILES Tower Toronto (2%) 655 Bay Street Toronto (1%) HSBC Bank Place Edmonton (1%) 74 Victoria/137 Yonge St Toronto (1%) 840 7th Avenue SW Calgary (1%) Station Tower Surrey (1%)

Irreplaceable Portfolio Institutional Quality Assets Our top 15 properties produce 40% of NOI (6.0 year weighted average lease term / 98% committed occupancy / 22,000 sf avg. tenant size)

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Irreplaceable Portfolio Significant Strides to Increase CBD & GTA Exposure

BC, 7% Calgary, 53% Edmonton, 2% YK, Sask, Regina, 13% US, 1% GTA, 20% Ottawa, 4%

NOI Breakdown, Beginning of 2010

CBD, 63% Suburban Office, 24% Industrial / Other, 13%

NOI Breakdown, Q1/14

CBD, 67% Suburban Office, 28% Retail , 5% Total IFRS Asset Base = $1.4 Billion Total IFRS Asset Base = $7.6 Billion

BC, 5% Calgary, 19% Edmonton, 8% YK, Sask, Regina , 8% US, 2% SW Ont., 4% GTA, 43% Montreal, 5% Ottawa, 4% QC, Atl. Cda 2%

Downtown – 28% GTA West – 9% GTA East – 5% Downtown – 15% GTA West – 5%

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

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

Irreplaceable Portfolio 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%

Committed Occupancy

Central Business District

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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 7.26 17 4.04 10.3 AA 2 Government of Canada 6.02 30 6.59 2.8 AA+ 3 Government of Ontario 3.10 9 2.73 5.3 AA+ 4 Government of Quebec 1.88 5 2.84 12.4 A+ 5 Bell Canada 1.84 7 1.53 4.1 BBB+ 6 Telus 1.48 2 1.17 2.0 BBB+ 7 Enbridge Pipelines Inc. 1.47 1 1.01 4.9 A- 8 Government of Saskatchewan 1.37 7 1.53 2.7 AA+ 9 State Street Trust Company 1.36 2 1.00 8.0 AA- 10 Government of Alberta 1.18 12 1.27 3.7 AA+

Managing Risk Strong Relationships With Our Tenants Our top tenants have exceptional credit ratings, and are diversified across many properties, which reduces re-leasing risk.

We are the 1st or 2nd Largest Landlord to: 5 properties 17 properties 2 properties

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• 500,000

1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 4,500,000 2014 2015 2016 2017 2018 2019 2020 2021 2022+ Total - uncommitted Total - committed

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

Managing 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

GLA

1.3 million SF uncommitted (6.0%) 2.2 million SF uncommitted (9.9%) 3.4 million SF uncommitted (15.4%)

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100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 2014 2015 2016 2017 2018 Downtown Calgary Downtown Toronto

Managing Risk Staggered Lease Expiries & Small Average Tenant Size Downtown Calgary and Downtown Toronto 31

Number of Tenants

Expiring GLA

6,000 SF 4,200 SF

36 37 78 60 121 52 97 45 77

7,400 SF 3,800 SF 13,000 SF 5,800 SF 6,300 SF 9,400 SF 8,000 SF 7,200 SF Average Tenant Size

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Managing Risk Tenant Size and MTM on Rents Downtown Calgary and Downtown Toronto

6,000 SF 4,200 SF 7,400 SF 3,800 SF 13,000 SF 5,800 SF 6,300 SF 9,400 SF 8,000 SF 7,200 SF Average Tenant Size

Calgary - Downtown Calgary - Suburban Toronto – Downtown Toronto - Suburban Total Total SF (% of Total Portfolio SF) 3,100,000 (12.6%) 800,000 (3.3%) 5,400,000 (22.0%) 4,200,000 (17.1%) 13,500,000 (55%) Occupancy 95.9% 86.1% 96.8% 92.4% 94.8% In Place Rents 21.92 16.32 23.35 14.42 19.75 Estimated Market Rents 25.58 17.98 25.71 14.90 21.71 Market vs. In Place Rents (%) 17% 10% 10% 3% 10%

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

Our Occupancy vs. National Average

700 bps 400 bps 300 bps 500 bps

Dream Office REIT National Office Average (CBRE)

400 bps Consistently above the national average. Managing Risk Track Record of Stable and Outperforming Occupancy

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High Leasing Volume

Downtown Calgary

441 5th Avenue Atrium II Life Plaza McFarlane Tower Northland Building

Physical occupancy in our downtown Calgary portfolio increased 60 bps in Q1/14 as a result of 22.4k sf of positive absorption. 22 new leases were completed during the quarter, totaling approximately 169k sf.

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Downtown Toronto

High Leasing Volume In Q1/14, our leasing team completed over 110k sf of transactions in downtown Toronto which included 39k sf of new leases and 72k sf of renewals. Average renewal rate of $28.29 and new leasing rate of $22.74 have met or exceeded our forecast rates.

Scotia Plaza Adelaide Place 36 Toronto Street 10 King Street E 80 Richmond St W

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BBB (Low) Credit Rating

DBRS

Q1/14 Total Assets $ 7,667 Equity $ 4,017 52.4% Secured Debt $ 3,115 40.6% Convertible Debt $ 52 0.7% Unsecured Debt $ 482 6.3% Debt to GBV 47.6% Undrawn Credit Facility $249.2 Borrowing Capacity on Unencumbered Assets $462.8 Potential Borrowing Capacity $712.0

Average Interest Rate 4.2% Average Term to Maturity 4.6 years

Capital Structure Composition of Existing Capital Conservative and Flexible Balance Sheet

Unencumbered Assets $771 million

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Capital Structure Building Strong and Lasting Relationships with Our Lenders Secured Mortgage Financing 2011 2012 2013 Total Amount $750 $844 $251 $1,915 Average Term (Years) 7.8 7.9 8.8 7.7 Average Rate 4.2% 3.6% 4.1% 3.9%

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$680 $1,105 $920 $1,825 $4,155 $3,275 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 2009 2010 2011 2012 2013 2014YTD Issuance (C$ millions) Other REIT Dream Office REIT

7%

4%

Capital Structure Active Issuer in the Unsecured Debt Space

Source: TD Securities

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100 200 300 400 500 600 700 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023+ Amount ($ millions) Total Debt Maturities ($ millions) Weighted Average Interest Rate 4.22% 4.6 year average term to maturity

Capital Structure Well Staggered Debt Maturity Profile Well staggered maturity profile with room for interest savings on upcoming mortgage maturities.

Total Debt: $3.7 billion

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Comparatives Attractive Valuation Relative to Our Peers

Priced as at June 25, 2014

Office Price Mkt Cap Yield 2014 P/AFFO 2015 P/AFFO Historical P/AFFO Consensus NAV NAV Prem/Disc NAV Cap Implied Cap Debt/ Assets

Allied Properties

$35.35 $2,461 4.0%

19.0x 16.9x

14.8x $32.40

9.1%

6.2% 6.0% 35%

Brookfield Canada

$26.80 $2,500 4.6%

19.7x 19.4x

17.3x $32.17

• 16.7%

5.3% 6.1% 42% Diversified Artis $15.83 $2,137 6.8%

12.7x 12.1x

13.9x $16.54

• 4.3%

6.6% 6.7% 49% Cominar $18.92 $2,431 7.6%

12.1x 11.7x

13.9x $20.12

• 6.0%

6.8% 7.0% 54% CREIT $46.08 $3,190 3.8%

17.6x 17.0x

15.2x $44.57

3.4%

6.1% 5.9% 39% H&R $22.90 $6,627 5.9%

14.2x 14.0x

13.5x $24.48

• 6.5%

6.1% 6.3% 51% Dream Office $29.59 $3,175 7.6% 12.2x 12.1x 13.8x $34.32

• 13.8%

6.5% 7.0% 48%

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

Dream Office currently trades at a 12.2x 2014 P/AFFO and 14% discount to NAV. At our current valuation, we compare favourably across many metrics versus our peers

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At current valuation, with our current portfolio, management team and strategy, we believe we are a very compelling investment.

The Current Opportunity

 Dream Office REIT is currently generating a 7.6% 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 around 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

will continue to generate increased and new sources of income

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Appendix: Value Creation

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Value Creation Case Studies – Assets Purchased in 2010/2011

Adelaide Place TORONTO

Total (owned) GLA: 655,728 sq. ft. Description: 22-storey and 20-storey Class A downtown

• ffice towers

Year built / renovated: 1982 / 2001 Occupancy: 96% Year purchased: 2010 Purchase price: $212 million (7.2% cap rate) Q1/14 IFRS Value $308 million Value Increase Since Acquisition $96 million (45%)

HSBC Bank Place EDMONTON

Total (owned) GLA: 298,660 sq. ft. Description: 19-storey, Class A downtown

• ffice building

Year built / renovated: 1981 Occupancy: 93% Year purchased: 2010 Purchase price: $83 million (<7% cap rate) Q1/14 IFRS Value $103 million Value Increase Since Acquisition $20 million (24%)

Enbridge Place EDMONTON

Total (owned) GLA: 262,553 sq. ft. Description: 22-storey, Class A downtown

• ffice building

Year built / renovated: 1981 Occupancy: 100% Year purchased: 2010 Purchase price: $91 million (7.5% cap rate) Q1/14 IFRS Value $109 million Value Increase Since Acquisition $18 million (20%)

Saskatoon Square SASKATOON

Total (owned) GLA: 228,780 sq. ft. Description: 17-storey downtown Class A office building Year built / renovated: 1980 Occupancy: 94% Year purchased: 2011 Purchase price: $50 million (<7% cap rate) Q1/14 IFRS Value $75 million Value Increase Since Acquisition $25 million (50%)

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High Leasing Volume 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

Value Creation Retail Successes & Opportunities

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Value 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

Value Creation Retail Successes

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Opportunities to Re-Purpose CBD

• ffice and storage space

8 King East Ground Floor and Lower Level Retail 357 Bay Street Ground & 2nd Floor Retail 700 De la Gauchetière Pursuing new retail in 10,000 sf of lower level storage space with exterior access

Value 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%

Value 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

Value 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

Value Creation Commercial Development Opportunities

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Value 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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Forward Looking Information

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 June 26, 2014. 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