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Dream Industrial REIT Announces Solid Second Quarter Financial Results

TORONTO, ONTARIO -- (Marketwired) -- 08/05/14 -- This news release contains forward- looking information that is based upon assumptions and is subject to risks and uncertainties as indicated in the cautionary note contained within this press release.

DREAM INDUSTRIAL REIT (TSX: DIR.UN) today announced its financial results for the three and six months ended June 30, 2014.

HIGHLIGHTS

--  Adjusted Funds From Operations ("AFFO") per unit increased by 6.4% from
    Q2 2013 and 1.0% from Q1 2014 - AFFO for the three months ended June 30,
    2014 was 19.9 cents compared to 18.7 cents for the three months ended
    June 30, 2013 and 19.7 cents for the three months ended March 31, 2014.
--  Strong leasing pipeline maintained - Over 700,000 square feet of new
    leasing and renewals commenced in the quarter at rates 11% higher than
    rates on expiries. Commitments have been obtained for 1.0 million square
    feet of new leasing and renewals commencing in the remainder of 2014
    compared to 1.2 million square feet of expiries.
--  Occupancy of 95.6% at June 30, 2014 compared to 96.3% at March 31, 2014
    and 95.7% at December 31, 2013. Occupancy at June 30, 2014 includes
    245,000 square feet of commitments on vacant space.
--  AFFO payout ratio decreases to 88.6% - The AFFO payout ratio was 88.6%
    year-to-date compared to 96.6% in the same period in the prior year,
    reflecting the growth in cash flow from the portfolio.
--  Stable capital structure - Leverage remained stable at 52.4% with
    interest coverage of 3.0 times and a weighted average term to maturity
    on debt of 4.1 years.
--  Continued opportunities for rent growth - Estimated market rents exceed
    in-place rents by approximately 5.1%.

----------------------------------------------------------------------------
----------------------------------------------------------------------------
SELECTED FINANCIAL INFORMATION
(unaudited)                                    Three Months Ended
($000's except unit and per unit         June 30,    March 31,     June 30,
 amounts)                                    2014         2014         2013
----------------------------------------------------------------------------
Investment properties revenue        $     40,428 $     40,914 $     34,703
Net operating income ("NOI")(1)            27,534       27,215       24,754
Funds from operations ("FFO")(1)           17,262       17,044       15,572
Adjusted funds from operations
 ("AFFO")(1)                               14,205       14,006       12,530
Investment properties value             1,544,433    1,532,065    1,532,034
Debt                                      843,553      836,061      845,652

Per unit data (basic)
AFFO - basic and diluted             $      0.199 $      0.197 $      0.187
FFO - basic                                 0.242        0.239        0.233
FFO - diluted                               0.236        0.234        0.229
Distributions                               0.175        0.175        0.175
FFO payout ratio (%)                         72.3%        73.2%        75.1%
AFFO payout ratio (%)                        87.9%        88.8%        93.6%

Units (period-end)
REIT Units                             55,181,466   55,063,083   54,289,786
LP Class B Units, Series 1             16,282,096   16,282,096   16,282,096
                                     ---------------------------------------
Total number of units                  71,463,562   71,345,179   70,571,882
                                     ---------------------------------------
                                     ---------------------------------------

Portfolio gross leasable area (square
 feet)                                 15,613,687   15,599,084   15,659,340
Occupied and committed space                 95.6%        96.3%        95.8%
Average occupancy for the period             94.7%        94.9%        95.4%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
See footnotes on page 3.

---------------------------------------------------------------
---------------------------------------------------------------
SELECTED FINANCIAL INFORMATION
(unaudited)                               Six Months Ended
($000's except unit and per unit         June 30,     June 30,
 amounts)                                    2014         2013
---------------------------------------------------------------
Investment properties revenue        $     81,342 $     63,953
Net operating income ("NOI")(1)            54,749       44,646
Funds from operations ("FFO")(1)           34,306       27,565
Adjusted funds from operations
 ("AFFO")(1)                               28,211       21,805
Investment properties value             1,544,433    1,532,034
Debt                                      843,553      845,652

Per unit data (basic)
AFFO - basic and diluted             $      0.395 $      0.356
FFO - basic                                 0.481        0.450
FFO - diluted                               0.470        0.445
Distributions                               0.350        0.344
FFO payout ratio (%)                         72.8%        76.4%
AFFO payout ratio (%)                        88.6%        96.6%

Units (period-end)
REIT Units                             55,181,466   54,289,786
LP Class B Units, Series 1             16,282,096   16,282,096
                                     --------------------------
Total number of units                  71,463,562   70,571,882
                                     --------------------------
                                     --------------------------

Portfolio gross leasable area (square
 feet)                                 15,613,687   15,659,340
Occupied and committed space                 95.6%        95.8%
Average occupancy for the period
---------------------------------------------------------------
---------------------------------------------------------------
See footnotes on page 3.

"We are pleased with our solid financial results and leasing pipeline which reflect strong Canadian industrial fundamentals," said Randy Cameron, President and Chief Executive Officer. "Over one-third of our expiries for the year occurred in this quarter, and with continued progress on leasing, we expect positive absorption for the balance of the year."

FINANCIAL HIGHLIGHTS

--  AFFO Growth - AFFO for the quarter was $14.2 million or 19.9 cents on a
    per unit basis. AFFO per unit for the quarter was 6.4% higher than the
    same period in the prior year and 1.0% higher compared to the first
    quarter of 2014.
--  Increase in FFO per unit - FFO for the quarter was $17.3 million or 24.2
    cents per unit. FFO per unit for the quarter increased 3.9% compared to
    the same period in the prior year and was 1.3% higher than the first
    quarter of 2014.
--  Total NOI of $27.5 million for the quarter - Total NOI has grown 11.2%
    compared to the same period last year, primarily as a result of
    acquisitions completed in the second quarter of 2013. Comparative
    property NOI compared to the first quarter of 2014 increased by 0.4%, as
    a result of an increase in the average rent per square foot in the
    portfolio to $7.04 from $6.96 at March 31, 2014, partially offset by a
    decrease in average occupancy to 94.7% from 94.9% in the first quarter.

OPERATIONAL HIGHLIGHTS

--  Leasing Profile - Leasing activity during the second quarter included
    276,000 square feet of new leases, 426,000 square feet of renewals and a
    net increase in committed space for future occupancy of 87,000 square
    feet, compared to 736,000 square feet of expiries and 162,000 square
    feet of early terminations. Early terminations included a 121,000 square
    foot tenant at a multi-tenant property in Toronto, Ontario, that
    encountered financial difficulty and defaulted during the quarter.
    Replacement tenants for 100% of this space took occupancy during the
    quarter at modestly higher rents, resulting in only fifteen days of
    total downtime. At period-end, the Trust had 937,000 square feet of
    vacant space, of which 245,000 square feet is committed for future
    occupancy. The average remaining lease term at June 30, 2014 is 4.5
    years.
--  Portfolio occupancy at 95.6% - Overall occupancy (including committed
    space) was 95.6% compared to 96.3% at end of the first quarter of 2014.
--  Growth in rents per square foot - In-place rents increased to $7.04 per
    square foot at June 30, 2014, compared to $6.96 at March 31, 2014,
    primarily as a result of positive leasing spreads. The average rate on
    all new and renewal leases commencing in the quarter was $7.01 per
    square foot compared to $6.33 on all expiries and terminations. Renewals
    were completed at $6.97 per square foot which is $0.20 above expiring
    rates for these spaces.
--  Estimated market rents 5.1% above average in-place rents - At quarter-
    end, estimated market rents were approximately 5.1% above the Trust's
    current average in-place rental rate of $7.04 per square foot (March 31,
    2014 - $6.96). The 5.1% difference between in-place and market rent
    provides the Trust with opportunities for rental rate growth.

                         GLA   Occupancy     Average Average in-   Estimated
                     (million        (%)  lease term  place rent market rent
                     sq. ft.)                (years)    (per sq.    (per sq.
                                                            ft.)        ft.)
----------------------------------------------------------------------------
Western Canada            4.2       97.6         4.3      $ 8.82      $ 9.79
Ontario                   4.9       97.7         4.2        6.15        6.21
Quebec                    3.7       93.1         6.0        6.01        6.18
Eastern Canada            2.8       92.1         3.5        7.20        7.38
----------------------------------------------------------------------------
Total                    15.6       95.6         4.5      $ 7.04      $ 7.40
----------------------------------------------------------------------------

CAPITAL STRUCTURE

The Trust's capital structure remained stable during the quarter, with leverage at a stable 52.4% and interest coverage of 3.0 times.

                                                      June 30,    March 31,
Key performance indicators(2)                             2014         2014
----------------------------------------------------------------------------
Level of debt (debt-to-total assets)(3)                   52.4%        52.4%
Interest coverage ratio(4)                           3.0 times    2.9 times
Weighted average face interest rate on all debt           4.16%        4.17%
Debt - weighted average term to maturity (years)           4.1          4.2
----------------------------------------------------------------------------
See footnotes on page 3

The Trust also signed an agreement to increase the demand revolving credit facility from $50 million to $75 million with amended terms to extend the maturity date from October 2014 to June 2016 and to reduce the interest rate by fifteen basis points.

During the quarter, the Trust completed the acquisition of our partner's 50% interest in a 26,000 square foot property in Edmonton for $2.4 million, the only property in which we had a co-ownership interest.

RETIREMENT OF CEO

Mr. Randy Cameron advised the Board of Trustees that he will be retiring as President and Chief Executive Officer of Dream Industrial REIT. "We appreciate Randy's contribution to our business since he joined us in 1998. He has been responsible for creating Dream Industrial's very strong management team. We had hoped that he would have continued as the CEO for longer, but due to family reasons, Randy has decided to retire at the end of October" said Michael Cooper, Chair of the Executive Committee.

CONFERENCE CALL

Senior management will host a conference call to discuss the results tomorrow, August 6, 2014 at 2:00 p.m. (ET). To access the conference call, please dial 1-866-229-4144 in Canada and the United States or 416-216-4169 elsewhere and use passcode 9411 711#. To access the conference call via webcast, please go to Dream Industrial REIT's website at www.dreamindustrialreit.ca and click on the link for News & Events, then click on Calendar of Events. A taped replay of the conference call and the webcast will be available 90 days.

Other information

Information appearing in this news release is a select summary of results. The condensed consolidated financial statements and management's discussion and analysis for the Trust will be available at www.dreamindustrialreit.ca and on www.sedar.com.

Dream Industrial REIT is an unincorporated, open-ended real estate investment trust. Dream Industrial REIT owns a portfolio of 205 primarily light industrial properties comprising approximately 15.6 million square feet of gross leasable area in key industrial markets across Canada. Its objective is to build upon and grow its portfolio and to provide stable, sustainable and growing cash distributions to its unitholders. For more information, please visit www.dreamindustrialreit.ca.

FOOTNOTE

(1) NOI, FFO and AFFO - are key measures of performance used by real estate operating companies; however, they are not defined by International Financial Reporting Standards ("IFRS"), do not have standard meanings and may not be comparable with other industries or income trusts.

(2) The key performance indicators include the results of operations for the three months ended June 30, 2014 and March 31, 2014.

(3) Level of debt is determined as total debt before deferred financing costs and mark-to-market adjustments, divided by total assets.

(4) The interest coverage ratio for the three months ended June 30, 2014 and March 31, 2014 is calculated as net rental income plus interest and fee income, less general and administrative expenses, plus deferred unit compensation expense, all divided by interest expense on debt, excluding deferred financing and mark-to-market adjustments.

Forward looking information

This press release may contain 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 Industrial 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 functions. 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 press release speaks as of the date of this press release. Dream Industrial 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 contained in Dream Industrial REIT's filings with securities regulators, including its latest annual information form and MD&A. These filings are also available at Dream Industrial REIT's website at www.dreamindustrialreit.ca.

Contacts:
Dream Industrial REIT
Michael Cooper
Chairman, Executive Committee
(416) 365-5145
[email protected]

Dream Industrial REIT
Randy Cameron
President & Chief Executive Officer
(403) 270-2480
[email protected]

Dream Industrial REIT
John Todd
Chief Financial Officer
(416) 365-8963
[email protected]

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