Investor Presentation September 201 4 Investment Summary Canadas - - PowerPoint PPT Presentation

Investor Presentation

September 201 4

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Investment Summary  Canada’s largest pure-play office REIT  24.5 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; 47.3% 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

Unit Price $12.60 (as at Dec 31, 2008) $29.07 (as at Aug 29, 2014) Market Capitalization $260 million $3.1 billion 1-Year Fwd Consensus AFFO Estimates $2.22 $2.43 AFFO Payout Ratio (on Consensus Estimates) 99% 92% AFFO Multiple 5.7x 12.1x Annual Distribution / Implied Yield $2.20 / 17.5% $2.24 / 7.7% Consensus NAV Estimate $25.90 $33.96 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 29% 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 (2%); 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 (43%); Calgary (19%); YK/Sask/Regina (8%); Edmonton (8%); BC (5%); Montreal (5%); SW Ont. (4%); Ottawa (4%); QC/Atl. Cda (2%); Other (2%) Reported Debt to GBV / Term / Wtd. Average Int. Rate 66% / 5.5 years / 5.8% 47.3% / 4.4 years / 4.2%

We have transformed our asset profile over the last five years, while delivering attractive annual returns of 21% to our unitholders. 21% 5-yr annual

• equiv. total

return 12% annual

• equiv. total

return since inception

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66% 47%

40% 45% 50% 55% 60% 65% 70% Q4/08 Q2/14

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 over 230%. (CAGR of ~1 2%)

• Over the past five years, AFFO/unit has grown 1 7%.
• 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%

Q2 2014 - % NOI (excl. Reclassified Properties)

TOTAL OWNED SF

24.5 M Irreplaceable Portfolio Large Scale & Diversification

British Columbia 5% Calgary 19% Yellowknife 2% Edmonton 8% Saskatoon 3% Regina 3% GTA 43% 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 29% CBD 4% CBD 1% CBD 2%

40%

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

58%

• AVG. TENANT SIZE

11,603 SF

• AVG. REMAINING

LEASE TERM

5 YEARS

PORTFOLIO OCCUPANCY

94.1%

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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 (2%) Telus Tower Calgary (2%) 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 (1%) 74 Victoria/137 Yonge St Toronto (2%) 840 7th Avenue SW Calgary (1%) Station Tower Surrey (1%)

Irreplaceable Portfolio Institutional Quality Assets Our top 15 properties produce ~40% of NOI (5.3 year weighted average lease term / 98% committed occupancy / ~22,000 sf avg. tenant size)

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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

97.3%

Committed Occupancy

Central Business District

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Irreplaceable Portfolio Potential Benefits from Transit Proposals

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Managing Risk Geographic and Tenant Diversification

NOI Breakdown, Q2/14

Total Assets = $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 – 29% GTA West – 8% GTA East – 6%

# of Tenants

2,250

GLA (sf in millions)

24.5

Average Tenant Size

10,000 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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Tenant Gross Rental Revenue (%) # of Properties Owned Area (%)

• Wtd. Avg.

Remaining Lease Term (Years) Credit Rating 1 Bank of Nova Scotia 7.2 17 4.0 10.1 A+ 2 Government of Canada 7.1 29 6.5 2.6 AAA 3 Government of Ontario 3.3 10 2.7 5.1 AA- 4 Government of Quebec 1.9 5 2.8 12.2 A+ 5 Bell Canada 1.9 7 1.6 3.7 BBB+ 6 Telus 1.5 2 1.2 1.8 BBB+ 7 Enbridge Pipelines Inc. 1.5 1 1.5 4.6 A- 8 State Street Trust Company 1.4 2 1.4 7.8 AA- 9 Government of Saskatchewan 1.3 7 1.3 2.6 AAA 10 Government of British Columbia 1.2 7 1.2 4.9 AAA

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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• 1 ,000,000

2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 2014 2015 2016 2017 2018 2019 2020 2021 2022+ Expiries of tenants > 1 00k sf Expiries of tenants < 1 00k sf

*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.

• Over the next 5 years, larger tenants (>100k sf) represent less than 20% of expiries which helps

to preserve the stability of our cash flows.

GLA

At Q2/14, 1.1 million SF of

• ur 2014 expiries were

already committed

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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 95.7% 86.3% 97.3% 91.8% 94.6% In Place Rents 22.00 16.77 23.70 14.51 20.03 Estimated Market Rents 25.60 18.30 25.68 14.91 21.87 Market vs. In Place Rents (%) 16% 9% 8% 3% 9%

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Managing Risk Office Market Environment Summary

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

Q2-2013 Q1-2014 Q2-2014 Q2-2013 Q1-2014 Q2-2014

Calgary

92.2 89.1 89.4 94.3 94.1 94.0

Edmonton

89.9 89.5 88.8 91.0 90.9 91.0

Toronto -Downtown

95.1 93.5 93.9 97.0 96.8 97.3

Toronto -Suburban

87.6 86.7 86.3 93.8 92.4 91.8

Canadian National Office Average

91.3 89.7 89.6 94.9 94.2 94.1

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High Leasing Volume

Downtown Calgary

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

In-place occupancy in our downtown Calgary portfolio increased ~250 bps in Q2/14 as a result of 77k sf of positive absorption. 24 new leases were completed during the quarter, totaling approximately 125k sf.

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Downtown Toronto

High Leasing Volume In Q2/14, our leasing team completed over 200k sf of transactions in downtown Toronto which included 87k sf of new leases and 116k sf of renewals. We continue to consistently meet or exceed our market rent targets both on new transactions and renewals.

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

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BBB (Low) Credit Rating

DBRS

(Incl. share of invest. in JV)

Q2/14 Total Assets $ 7,612 Secured Debt $ 3,071 40.3% Convertible Debt $ 52 0.7% Unsecured Debt $ 482 6.3% Debt to GBV 47.3% Undrawn Credit Facility $265.3 Borrowing Capacity on Unencumbered Assets $475.6 Potential Borrowing Capacity $740.9

Average Interest Rate 4.2% Average Term to Maturity 4.4 years

Capital Structure Composition of Existing Capital Conservative and Flexible Balance Sheet

Unencumbered Assets $793 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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4.1% 4.4% 4.4% 3.9% 3.3% 4.3% 5.2% 4.2% 4.4% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 100 200 300 400 500 600 700 2014 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% 4.4 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: $3.6 billion

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Comparatives Attractive Valuation Relative to Our Peers

Priced as at Aug 29, 2014

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

Allied Properties

$35.70 $2,493 3.9% 19.7x 17.3x $32.39 10.2% 6.2% 35%

Brookfield Canada

$28.64 $2,672 4.3% 21.4x 20.6x $32.14

• 10.9%

5.3% 41% Diversified Artis $15.92 $2,098 6.8% 12.9x 12.3x $16.52

• 3.6%

6.5% 49% Cominar $19.31 $2,489 7.6% 12.2x 11.8x $20.11

• 4.0%

6.8% 54% CREIT $48.37 $3,353 3.6% 18.5x 17.8x $45.15 7.1% 6.0% 39% H&R $23.13 $6,718 5.8% 14.5x 14.1x $24.49

• 5.6%

6.1% 51% Dream Office $29.07 $3,143 7.7% 12.1x 12.1x $33.96

• 14.4%

6.5% 47%

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

Dream Office currently trades at a 12.1x 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 7.7% 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 47.3%  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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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 August 29, 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

Jane Gavan CEO (416) 365-6572 jgavin@dream.ca Mario Barrafato CFO (416) 365-4132 mbarrafato@dream.ca Ana Radic COO (416) 365-4136 aradic@dream.ca