Investor Presentation June 2015 1 1 Investment Summary Canadas - - PowerPoint PPT Presentation

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Investor Presentation

June 2015

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Investment 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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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

We have put together a platform of skilled professional to achiev eve our mission of keeping the buildings full – leasing and tenant retention.

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)

Jane Gavan (1998) Chief Executive Officer

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

Reorganization of Management Structure

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Proven Track Record of Growth & Performance Results of Our 6 Year Capital Allocation Strategy

Unit Price $12.60 (as at Dec 31, 2008) $ 25.52 (as at June 3 , 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 10.6x Annual Distribution / Implied Yield $2.20 / 17.5% $2.24 / 8.8% 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) Telus Tower (7%); AIR MILES Tower (7%); McFarlane Tower (6%); 840 7th Avenue (5%); Station Tower (5%) Scotia Plaza (10%); 700 De la Gauchètiere (5%); Adelaide Place (4%); IBM Corp. Park (3%); Telus Tower (3%); Geographic Distribution of NOI Calgary (47%); Toronto (13%); Vancouver (9%); NWT (6%); Regina (4%); Sask (3%); SW Ontario (1%); Industrial/Other (17%) Greater Toronto Area (44%); Calgary (19%); Yellowknife/Saskatoon/Regina (8%); Edmonton (8%); BC (5%); Montreal (5%); SW Ont. (4%); Ottawa (4%); QC/ Atlantic Canada (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

• f our cash flow and the quality of our balance sheet.

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

generated a total return of over 1 90%. 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%.

Proven Track Record of Growth & Performance 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

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.

Deleveraging Management Internalization

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% NOI CBD

70%

TOTAL OWNED SF

24.1 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%

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

59%

• AVG. TENANT SIZE

11,600 SF

• AVG. REMAINING

LEASE TERM

5 YEARS

PORTFOLIO OCCUPANCY

92.8%

Irreplaceable Portfolio in Core Canadian Markets Large Scale & Diversification

Q1 2015 - % NOI (excl. Reclassified Properties)

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11,36 3

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%)

Irreplaceable Portfolio Institutional Quality Assets Our top 15 properties produce ~40% of NOI (5.4 year weighted average lease term / 98% committed occupancy / ~24,000 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 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

Scarborough Population: >600,000

*Source: StatsCan 2011 Consensus

North York Population: >650,000 Mississauga Population: >700,000 Toronto Population: >2,500,000

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Suburb?

• Almost 60% percent of our suburban GTA NOI comes from properties located in strong high

density mixed use nodes, most of which are located close to downtown Toronto.

• All have excellent transit access that is continuing to improve with the added benefit of

plentiful and inexpensive parking that is accessible by major highways.

• These locations are very attractive for a wide range of tenants who want to be close to

downtown, but appreciate the affordability and accessibility that strong suburban locations can offer.

Suburb?

Irreplaceable Portfolio Not all Suburban Locations are Created Equal

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• Our 427 corridor assets enjoy tremendous highway access to downtown, the airport and other key

business locations in the GTA.

• This year, we introduced a shuttle bus that connects our buildings with subway and GO stations,

something our competitors do not have the scale to implement.

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Managing 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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Managing 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 Diversified

22% 18% 17%

• Mining, Oil & Gas – 8%
• Info. & Cultural – 6%
• Administration & Support – 5%
• Real Estate – 4%
• Retail – 3%
• Manufacturing – 3%

44%

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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

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 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.

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 roughly 4% of expiries per year on

average which helps to preserve the stability of our cash flows.

GLA

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Managing Risk Tenant Size and MTM on Rents Calgary and 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 7,200 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

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 (%)

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

Toronto -Downtown

93.5 94.4 94.3 96.8 97.3 97.3

Toronto -Suburban

86.7 86.2 85.8 92.4 89.5 89.6

Calgary – Downtown

90.9 90.2 88.2 95.9 89.5* 89.7

Calgary - Suburban

86.0 86.9 84.6 86.1 89.2 89.4

Canadian National Office Average

89.7 89.3 88.9 94.2 93.0 92.8

Our Occupancy vs. National Average

700 bps 390 bps 300 bps 500 bps

Dream Office REIT

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. Excluding this,

• ccupancy would have been 92.9%.

21 200 400 600 800 1,000 1,200 1,400 1,600 2015 2016 2017 2018 2019 2020+

Calgary Downtown Calgary Suburban Edmonton Downtown Edmonton Suburban

Managing Risk Lease Maturity schedule in Alberta

• Approximately 27% of our total NOI is derived from Alberta with Calgary comprising 19% and

Edmonton comprising 8% of NOI.

• In 2015, Alberta lease expiries represent only 1.3% of our total GLA. Over the next two years,

Alberta lease expiries represent 4.2% and 3.5% of our total GLA.

Expiring GLA (000 sf)*

* - net of commitments

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BBB (Low) Credit Rating

DBRS

(Incl. share of invest. in JV)

Q1/15 Total Assets $ 7,570 Secured Debt $ 3,066 40.5% Convertible Debt $ 51 0.7% Unsecured Debt $ 483 6.4% Debt to GBV 47.6% Undrawn Credit Facility $234.3 Borrowing Capacity on Unencumbered Assets 492.0 Potential Borrowing Capacity $726.3

Weighted Average Interest Rate 4.2% Average Term to Maturity 4.1 years

Capital Structure Composition of Existing Capital Conservative and Flexible Balance Sheet

Unencumbered Assets $820 million

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Capital Structure 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

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

Total Debt: $3.2 billion

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Comparatives Attractive Valuation Relative to Our Peers Dream Office currently trades at a 10.6x P/AFFO and 17% discount to NAV. At our current valuation, we compare favourably 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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Current Capital Initiatives Creating Value for our Unitholders

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

• million. We expect the program to be AFFO accretive on a steady-state

basis Proactively investing in our buildings: For 2015, we plan to invest $75 million in building improvements, our largest annual investment in our history Active Disposition Pipeline: We are targeting $300 million 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 continue to seek creative methods to close the value gap 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 Current Opportunity

 Dream Office REIT is currently generating a 8.8% 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

will continue to generate increased and new sources of income

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Appendix: Value Creation

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Case Study

Suburban Modernization Sussex Centre

Value Creation Repositioning Scotia Plaza

• Scotia Plaza is currently 98% leased and boasts a AAA tenant roster anchored by the Bank of

Nova Scotia who leases 60% of the 2 million sf complex

• At the end of 2017, Scotia Plaza will have a leasing opportunity representing 230,000 sf of

which, the majority is contiguous on upper floors.

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Case Study

Suburban Modernization Sussex Centre

Value Creation Repositioning Scotia Plaza

• We are rebranding Scotia Plaza with a three year capital plan that includes an $80M

investment into state of the art systems, sustainability and common areas all targeted towards a superior tenant experience.

• The first major capital project to kick off at Scotia Plaza is one directly linked to the needs of
• ur tenant. We have commenced what will be the largest elevator modernization project in

North America and have partnered with Schindler, a global leader in elevator technology.

• Scotia Plaza will benefit from the same state of the art technology used in WTC4, Rockefeller

Centre and The ICC Building in Hong Kong.

• Over the next three years, we are revitalizing the main lobby, PATH, food-court and exterior

forecourts on the King and Adelaide Street entrances.

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Case Study

Suburban Modernization Sussex Centre

Value Creation Repositioning Scotia Plaza

• Scotia Plaza is one of the busiest hubs in the PATH and this traffic is only forecasted to

increase with the continued Hotel, Condo and Office development in the financial core.

• This intensification will continue to drive demand and rents for our 40,000 SF of prime retail

space.

• We will create new multi purpose spaces for our tenants and visitors.
• Additional high value retail not only adds area and revenue but it enhances our strong

amenity base improving our tenant experience.

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Case Study

Suburban Modernization Sussex Centre

Value Creation Suburban Modernization – Sussex Centre

• Mississauga City Centre is home to four million square feet of office space as well as Square

One, one of Canada’s largest shopping centres.

• Sussex Centre is a key element of the City Centre and is surrounded by the highest residential

density in Mississauga, Canada’s 6th largest city.

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Case Study

Suburban Modernization Sussex Centre

Value Creation Suburban Modernization – Sussex Centre

• Mississauga is focusing on significant urbanization and intensification of its downtown.
• There are six 40-storey condo towers already approved and underway in the orange areas
• The orange areas will bring still more high density residential and hotel uses.
• A new light rail transit system will deliver tens of thousands of commuters each day to our

property by 2021.

Multi Residential Retail LRT Station Potential Development Sussex Centre

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• To complement these changes and bring in new tenants, we invested in LEED Gold

certification for Sussex Centre.

• We are upgrading tenant floors, taking advantage of underutilized space to create new

amenities that will complement the changing way our tenants work, including shared board rooms, new lobby furniture and WIFI to create collaborative, casual work places.

• After achieving LEED Gold in January 2014, occupancy improved from 75.5% to 84.8%. We

expect to achieve 90% occupancy in 2016 and to drive stabilized occupancy to 95% or greater in 2017 following the remaining upgrades. Value Creation Suburban Modernization – Sussex Centre

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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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Opportunities to Re-Purpose CBD space Scotia Plaza Creation on 3,000 to 5,000 sf of new high value retail premises 8 King East Ground Floor and Lower Level Retail 357 Bay Street Ground & 2nd Floor Retail 700 De la Gauchetière Pursuing new fitness centre in 10,000 sf of lower level storage

Value Creation CBD Retail 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

• Expected unlevered IRR of >14%.

Value Creation Commercial Development Opportunities

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Value Creation Urban Intensification Opportunity

East Toronto Site

• Located in Toronto, Ontario
• 15 acres
• 440,000 sf of existing office / industrial space
• Potential for 2.5 million sf of new density including residential

and retail

• Proposed Light Rail Transit station will be located directly

across from our site

• Annual development return of 10%-15%

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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 3, 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

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