Welcome!

News Feed Item

Dream Office REIT Reports Solid Second Quarter 2014 Results

TORONTO, ONTARIO -- (Marketwired) -- 08/07/14 -- 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 OFFICE REIT (TSX: D.UN) today announced its financial results for the three and six months ended June 30, 2014. Senior management will host a conference call to discuss the results tomorrow, August 8, 2014 at 9:00 a.m. (ET).

HIGHLIGHTS FOR THE QUARTER


--  AFFO per unit increased 4.9% compared to same period in prior year -
    AFFO per unit was $0.64 for the quarter compared to $0.61 in the second
    quarter of 2013 and $0.62 in the first quarter of 2014.
--  FFO per unit increased 1.4% compared to same period in prior year - FFO
    per unit was $0.73, increased by 1 cent compared to the same period in
    the prior year and flat compared to Q1 2014. FFO per unit excluding
    lease termination fees and other one-time property adjustments was
    $0.72.
--  Portfolio occupancy remains strong at 94.1% - occupancy rate at quarter
    end was 94.1%, remains well above the national average of 89.6%; 664,700
    square feet of leasing was completed during the quarter at incrementally
    higher rates.
--  Leasing activity - to date, the Trust has leased approximately 2.6
    million square feet to tenants taking occupancy in 2014, or 85% of the
    leases maturing in 2014. Leasing for 2014 is composed of 466 leasing
    transactions for an average tenant size of 5,400 square feet.
--  Embedded rent growth potential - the portfolio average in-place rent was
    $18.14 per square foot, up from $17.97 at March 31, 2014 and up from
    $17.54 at June 30, 2013. Management estimates market rents to be 8%
    above average in-place net rents, availing the opportunity for revenue
    growth.
--  Strong and conservative capital structure maintained - the Trust ended
    the quarter with stable debt metrics. Net debt-to-gross book value ratio
    remained low at 47.3%. Our weighted average face rate of interest was
    4.22%; our interest coverage ratio remained solid at 2.9 times and our
    net average debt-to-EBITDFV was at 7.9 years.
--  Dispositions of four non-core assets - the Trust sold four non-core
    assets for total gross proceeds of approximately $26.7 million.

 --------------------------------------------------------------------------
 SELECTED FINANCIAL INFORMATION
 (unaudited)                                                         As at
                                    ---------------------------------------
 ($000's except unit and per unit       June 30,    March 31,     June 30,
  amounts)                                  2014         2014         2013
 --------------------------------------------------------------------------
 Portfolio
 Number of properties                        182          186          184
 Investment properties value(1)        7,266,166    7,288,526    7,112,584
 Gross leasable area ("GLA")(2)           24,509       24.558       24,246
 Occupancy rate - including
  committed (period-end)(3)                 94.1%        94.2%        94.9%
 Occupancy rate - in place (period-
  end)(3)                                   92.5%        92.5%        93.8%
 Average in-place net rent per
  square foot (period-end)(3)       $      18.14 $      17.97 $      17.54
 Market rent/in-place rent (%)               8.0%         8.9%        10.8%
 Units (period end)
   REIT Units, Series A              104,582,468  103,966,154  104,609,576
   LP Class B Units, Series 1          3,538,457    3,538,457    3,538,457
                                    ---------------------------------------
   Total number of units             108,120,925  107,504,611  108,104,033
 --------------------------------------------------------------------------
 --------------------------------------------------------------------------
See footnotes on page 4.

---------------------------------------------------------------------------
SELECTED FINANCIAL INFORMATION
                                   Three months ended     Six months ended
(unaudited)                                  June 30,             June 30,
                                -------------------------------------------
($000's except unit and per unit
 amounts)                             2014       2013       2014      2013
---------------------------------------------------------------------------
Operating results
Investment properties revenue(4) $ 204,414  $ 198,226  $ 411,093  $387,793

NOI(5)                             116,566    111,970    232,473   219,052
Comparative properties NOI(5)      107,029    106,385    213,572   212,266
FFO(6)                              79,187     76,040    157,291   148,710
AFFO(7)                             69,139     64,880    136,430   126,495
Distributions
Declared distributions           $  60,969  $  59,358  $ 121,077  $114,889

DRIP participation ratio (for
 the period)                            22%        18%        23%       18%
Per unit amounts(8)
Distribution rate                $    0.56  $    0.56  $    1.12  $   1.11

Basic:
FFO(6)                                0.73       0.72       1.46      1.43
AFFO(7)                               0.64       0.61       1.26      1.22
Diluted:
FFO(6)                                0.73       0.71       1.45      1.42
Payout ratio (%):
FFO (basic)                             77%        78%        77%       78%
AFFO (basic)                            88%        92%        89%       91%
---------------------------------------------------------------------------
---------------------------------------------------------------------------
See footnotes on page 4.

OPERATIONAL HIGHLIGHTS


--  Portfolio occupancy remains strong at 94.1% - the overall percentage of
    occupied and committed space remains strong at 94.1%. On a comparative
    property basis, occupancy has decreased modestly by 10 basis points over
    Q1 2014. Our in-place occupancy remained strong at 92.5% at the end of
    Q2 2014, with increases in our two major markets Calgary downtown and
    Toronto downtown, increasing 240 basis points and 60 basis points
    respectively. National average occupancy was 89.6%, a decline of 10
    basis points over Q1 2014.
--  Leasing activity - The trust renewed or replaced 664,700 square feet,
    equivalent to 99.9% of the leases that expired in the quarter, all at
    higher rates than expiries. To date, the Trust has leased 2.6 million
    square feet, representing 85% of our 2014 lease expiries. Deal velocity
    was strong this quarter with 260,000 square feet of new leasing
    completed in the Greater Toronto Area, 65,000 square feet in Western
    Canada and 60,000 square feet in Calgary. In addition, we have leased
    355,900 square feet taking into effect in 2015, representing 14% of
    space which will expire in 2015.
--  Average in-place net rents 8% below market rents - The Trust continues
    to capture rental rate gains in connection with leasing activity. At the
    end of Q2 2014, the portfolio average in-place rent was $18.14 per
    square foot, up from $17.97 at March 31, 2014 and up from $17.54 at June
    30, 2013, yet remain approximately 8% below estimated market rents.

FINANCIAL HIGHLIGHTS


--  0.6% growth in comparative properties net operating income ("NOI")
    compared to Q2 2013 - comparative property NOI was up $0.6 million, or
    0.6% compared to Q2 2013, with increases in Western Canada, Calgary
    downtown and Toronto downtown, driven mainly by higher rental rates
    achieved on new leasing done over the past year and the benefit of step
    rents. Total NOI for the quarter is up $4.4 million, or 3.9% compared to
    Q2 2013, including $9.6 million generated by properties acquired in
    2013.

    Comparative properties NOI compared to Q1 2014 was up $0.6 million, or
    0.5%, mainly driven by higher in-place occupancy in the higher rental
    markets of downtown Calgary and Toronto, higher rental rates achieved on
    new leasing done over the past year and the benefit of step rents.

--  AFFO per unit growth of 4.9% over the same quarter in the prior year -
    AFFO per unit for the second quarter increased by 3 cents over the same
    period in the prior year mainly due to growth in comparative property
    net operating income, accretive acquisitions completed in 2013, lease
    termination fees and other one-time property adjustments, interest rate
    savings upon refinancing of maturing debt, and REIT A Units purchased
    for cancellation. AFFO per unit was up 2 cents compared to Q1 2014
    mainly due to growth in comparative property net operating income, lease
    termination fees and other one-time property adjustments and interest
    rate savings upon refinancing of maturing debt.
--  FFO per unit growth of 1.4% over the same quarter in the prior year -
    FFO per unit increased by 1 cent compared to the same period in the
    prior year and flat compared to Q1 2014 mainly due to the reasons noted
    above.

CAPITAL INITIATIVES


--  $31.7 million of new and renewed secured debt - During the quarter, the
    Trust obtained $24 million of new financing at a fixed face rate of
    4.16% for a ten year term and renewed a $7.7 million mortgage at a
    variable face rate of 3.25% for a one year term compared to the previous
    fixed face rate of 4.31%. The Trust has refinanced 89% of all the debt
    maturing in 2014.
--  Strong and conservative capital structure maintained - The Trust's
    leverage remained stable at 47.3% compared to 47.6% at March 31, 2014
    and December 31, 2013. Interest coverage ratio remains at 2.9 times and
    debt-to-EBITDFV ratio improved to 7.9 years compared to 8.0 years at
    March 31, 2014 and December 31, 2013. The Trust's pool of unencumbered
    assets increased to over $790 million from approximately $620 million at
    December 2013.
--  Renewed normal course issuer bid - During the quarter, the Trust renewed
    its normal course issuer bid, which commenced on June 20, 2014. Under
    the bid, the Trust has the ability to purchase for cancellation up to a
    maximum of 10,298,296 REIT A Units (representing 10% of the Trust's
    public float of 102,982,963 REIT A Units at the time of entering the
    bid.


----------------------------------------------------------------------------
KEY PERFORMANCE METRICS
(unaudited)                                                           As at
                                         -----------------------------------
                                           June 30, December 31,   June 30,
($000's except unit and per unit amounts)      2014         2013       2013
----------------------------------------------------------------------------
Financing
Weighted average effective interest rate
 on debt (period-end)                           4.2%         4.2%       4.3%
Weighted average face rate of interest on
 debt (period-end)                              4.2%         4.2%       4.4%
Interest coverage ratio(9)                2.9 times    2.9 times  2.9 times
Net average debt-to-EBITDFV (years)(9)          7.9          8.0        8.0
Net debt-to-adjusted EBITDFV (years)(9)         7.9          8.0        8.0
Level of debt (net debt-to-gross book
 value)(9)                                     47.3%        47.6%      46.4%
Debt - average term to maturity (years)         4.4          4.6        4.8
Unencumbered assets                         793,000      622,000    377,000
Unsecured convertible and non-convertible
 debentures                                 534,237      385,532    261,294
----------------------------------------------------------------------------
----------------------------------------------------------------------------
See footnotes on page 4.

PORTFOLIO ACTIVITY


--  Dispositions of four non-core assets - During the quarter, the Trust
    completed the disposition of our 25% interest in three properties and a
    wholly owned property totalling approximately 131,700 square feet for
    total gross proceeds of approximately $26.7 million. The net proceeds of
    $16.1 million was used to repay debt.

CONFERENCE CALL

Senior management will host a conference call to discuss the results tomorrow, August 8, 2014 at 9:00 a.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 7678 875#. To access the conference call via webcast, please go to Dream Office REIT's website at www.dreamofficereit.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 consolidated financial statements and management's discussion and analysis for the Trust are available at www.dreamofficereit.ca and on www.sedar.com.

Dream Office REIT is an unincorporated, open-ended real estate investment trust. Dream Office REIT is focused on owning, acquiring, leasing and managing well-located, high-quality central business district and suburban office properties. Its portfolio currently comprises approximately 24.5 million square feet of gross leasable area in major urban centres across Canada. Dream Office REIT's portfolio is well diversified by geographic location and tenant mix. For more information, please visit www.dreamofficereit.ca.

FOOTNOTES


(1) Includes investments in joint ventures and excludes redevelopment
    properties and assets held for sale.
(2) In thousands of square feet and excludes redevelopment properties and
    assets held for sale.
(3) Includes investments in joint ventures and excludes redevelopment
    properties and assets held for sale.
(4) Includes investments in joint ventures.
(5) NOI (non-GAAP measure) is defined as total of net rental income,
    including the share of net rental income from investment in joint
    ventures and property management income, excluding net rental income
    from properties sold and assets held for sale. The reconciliation of NOI
    to net rental income can be found in section "Our results of operations"
    under the heading "Net operating income" of the MD&A.
(6) FFO (non-GAAP measure) - The reconciliation of FFO to net income can be
    found in section "Our results of operations" under the heading "Funds
    from operations and adjusted funds from operations" of the MD&A.
(7) AFFO (non-GAAP measure) - The reconciliation of AFFO to cash flow from
    operations can be found in section "Non-GAAP measures and others
    disclosures" under the heading "Cash generated from operating activities
    to AFFO" of the MD&A.
(8) A description of the determination of basic and diluted amounts per unit
    can be found in section "Non-GAAP measure and other disclosures" under
    the heading "Weighted average number of units" of the MD&A.
(9) The calculation of the following non-GAAP measures, level of debt,
    interest coverage ratio, net average debt-to-EBITDFV and net debt-to-
    adjusted EBITDFV are included in the section "Non-GAAP measures and
    other disclosures" of the MD&A.

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 Office 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 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 contained in Dream Office REIT's filings with securities regulators, including its latest annual information form and MD&A. These filings are also available at Dream Office REIT's website at www.dreamofficereit.ca.

Contacts:
Dream Office REIT
P. Jane Gavan
Chief Executive Officer
(416) 365-6572

Dream Office REIT
Mario Barrafato
Chief Financial Officer
(416) 365-4132

Dream Office REIT
Ana Radic
Chief Operating Officer
(416) 365-4136
www.dreamofficereit.ca

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
Today we can collect lots and lots of performance data. We build beautiful dashboards and even have fancy query languages to access and transform the data. Still performance data is a secret language only a couple of people understand. The more business becomes digital the more stakeholders are interested in this data including how it relates to business. Some of these people have never used a monitoring tool before. They have a question on their mind like “How is my application doing” but no id...
IoT solutions exploit operational data generated by Internet-connected smart “things” for the purpose of gaining operational insight and producing “better outcomes” (for example, create new business models, eliminate unscheduled maintenance, etc.). The explosive proliferation of IoT solutions will result in an exponential growth in the volume of IoT data, precipitating significant Information Governance issues: who owns the IoT data, what are the rights/duties of IoT solutions adopters towards t...
It is ironic, but perhaps not unexpected, that many organizations who want the benefits of using an Agile approach to deliver software use a waterfall approach to adopting Agile practices: they form plans, they set milestones, and they measure progress by how many teams they have engaged. Old habits die hard, but like most waterfall software projects, most waterfall-style Agile adoption efforts fail to produce the results desired. The problem is that to get the results they want, they have to ch...
With the introduction of IoT and Smart Living in every aspect of our lives, one question has become relevant: What are the security implications? To answer this, first we have to look and explore the security models of the technologies that IoT is founded upon. In his session at @ThingsExpo, Nevi Kaja, a Research Engineer at Ford Motor Company, discussed some of the security challenges of the IoT infrastructure and related how these aspects impact Smart Living. The material was delivered interac...
The current age of digital transformation means that IT organizations must adapt their toolset to cover all digital experiences, beyond just the end users’. Today’s businesses can no longer focus solely on the digital interactions they manage with employees or customers; they must now contend with non-traditional factors. Whether it's the power of brand to make or break a company, the need to monitor across all locations 24/7, or the ability to proactively resolve issues, companies must adapt to...
Wooed by the promise of faster innovation, lower TCO, and greater agility, businesses of every shape and size have embraced the cloud at every layer of the IT stack – from apps to file sharing to infrastructure. The typical organization currently uses more than a dozen sanctioned cloud apps and will shift more than half of all workloads to the cloud by 2018. Such cloud investments have delivered measurable benefits. But they’ve also resulted in some unintended side-effects: complexity and risk. ...
With major technology companies and startups seriously embracing Cloud strategies, now is the perfect time to attend 21st Cloud Expo October 31 - November 2, 2017, at the Santa Clara Convention Center, CA, and June 12-14, 2018, at the Javits Center in New York City, NY, and learn what is going on, contribute to the discussions, and ensure that your enterprise is on the right path to Digital Transformation.
In 2014, Amazon announced a new form of compute called Lambda. We didn't know it at the time, but this represented a fundamental shift in what we expect from cloud computing. Now, all of the major cloud computing vendors want to take part in this disruptive technology. In his session at 20th Cloud Expo, Doug Vanderweide, an instructor at Linux Academy, discussed why major players like AWS, Microsoft Azure, IBM Bluemix, and Google Cloud Platform are all trying to sidestep VMs and containers wit...
The taxi industry never saw Uber coming. Startups are a threat to incumbents like never before, and a major enabler for startups is that they are instantly “cloud ready.” If innovation moves at the pace of IT, then your company is in trouble. Why? Because your data center will not keep up with frenetic pace AWS, Microsoft and Google are rolling out new capabilities. In his session at 20th Cloud Expo, Don Browning, VP of Cloud Architecture at Turner, posited that disruption is inevitable for comp...
While DevOps most critically and famously fosters collaboration, communication, and integration through cultural change, culture is more of an output than an input. In order to actively drive cultural evolution, organizations must make substantial organizational and process changes, and adopt new technologies, to encourage a DevOps culture. Moderated by Andi Mann, panelists discussed how to balance these three pillars of DevOps, where to focus attention (and resources), where organizations might...
No hype cycles or predictions of zillions of things here. IoT is big. You get it. You know your business and have great ideas for a business transformation strategy. What comes next? Time to make it happen. In his session at @ThingsExpo, Jay Mason, Associate Partner at M&S Consulting, presented a step-by-step plan to develop your technology implementation strategy. He discussed the evaluation of communication standards and IoT messaging protocols, data analytics considerations, edge-to-cloud tec...
New competitors, disruptive technologies, and growing expectations are pushing every business to both adopt and deliver new digital services. This ‘Digital Transformation’ demands rapid delivery and continuous iteration of new competitive services via multiple channels, which in turn demands new service delivery techniques – including DevOps. In this power panel at @DevOpsSummit 20th Cloud Expo, moderated by DevOps Conference Co-Chair Andi Mann, panelists examined how DevOps helps to meet the de...
When growing capacity and power in the data center, the architectural trade-offs between server scale-up vs. scale-out continue to be debated. Both approaches are valid: scale-out adds multiple, smaller servers running in a distributed computing model, while scale-up adds fewer, more powerful servers that are capable of running larger workloads. It’s worth noting that there are additional, unique advantages that scale-up architectures offer. One big advantage is large memory and compute capacity...
In the world of DevOps there are ‘known good practices’ – aka ‘patterns’ – and ‘known bad practices’ – aka ‘anti-patterns.' Many of these patterns and anti-patterns have been developed from real world experience, especially by the early adopters of DevOps theory; but many are more feasible in theory than in practice, especially for more recent entrants to the DevOps scene. In this power panel at @DevOpsSummit at 18th Cloud Expo, moderated by DevOps Conference Chair Andi Mann, panelists discussed...
"When we talk about cloud without compromise what we're talking about is that when people think about 'I need the flexibility of the cloud' - it's the ability to create applications and run them in a cloud environment that's far more flexible,” explained Matthew Finnie, CTO of Interoute, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.