TORONTO, Feb. 22, 2018 (GLOBE NEWSWIRE) -- DREAM OFFICE REAL ESTATE INVESTMENT TRUST (TSX-D.UN) or (“Dream Office REIT”, the “Trust” or “we”) today announced its financial results for the three months and year ended December 31, 2017. Management will host a conference call to discuss the results on February 23, 2018 at 8:00 a.m. (ET).
FINANCIAL HIGHLIGHTS
SELECTED FINANCIAL INFORMATION | Three months ended | Year ended | ||||||||||||||||||||
(unaudited) | December 31, | September 30, | December 31, | December 31, | December 31, | |||||||||||||||||
($000’s except per unit amounts) | 2017 | 2017 | 2016 | 2017 | 2016 | |||||||||||||||||
Operating results | ||||||||||||||||||||||
Net income (loss) | $ | 100,731 | $ | (637 | ) | $ | (100,671 | ) | $ | 134,786 | $ | (879,705 | ) | |||||||||
Adjusted net operating income (“NOI”)(1) | 38,760 | 41,624 | 41,354 | 169,075 | 174,141 | |||||||||||||||||
Comparative properties NOI(1) | 42,079 | 43,270 | 44,230 | 173,067 | 183,985 | |||||||||||||||||
Funds from Operations (“FFO”)(1) | 32,235 | 44,653 | 67,155 | 197,869 | 290,887 | |||||||||||||||||
EBITDFV(1) | 46,239 | 64,524 | 98,191 | 274,011 | 417,845 | |||||||||||||||||
Distributions | ||||||||||||||||||||||
Total distributions(5) | $ | 19,927 | $ | 22,249 | $ | 42,235 | $ | 122,422 | $ | 177,633 | ||||||||||||
Per unit amounts(6) | ||||||||||||||||||||||
Distribution rate(5) | $ | 0.25 | $ | 0.25 | $ | 0.38 | $ | 1.25 | $ | 1.56 | ||||||||||||
FFO (basic)(1) | 0.40 | 0.48 | 0.59 | 2.03 | 2.55 | |||||||||||||||||
FFO (diluted)(1) | 0.40 | 0.48 | 0.59 | 2.03 | 2.54 | |||||||||||||||||
Net asset value (“NAV”)(1) | 23.46 | 22.40 | 22.48 | 23.46 | 22.48 | |||||||||||||||||
Footnotes: please refer to definitions on page 7.
Value (in $ millions) | Per unit | GLA (in millions of sq. ft.) | Occupancy - in-place and committed (%) | WALT (years) | |||||||
Investment properties | |||||||||||
Calgary | $ | 387 | $ | 4.90 | 1.8 | 77.1 | % | 4.6 | |||
Toronto downtown | 1,708 | 21.64 | 3.5 | 96.8 | % | 5.2 | |||||
Mississauga and North York | 216 | 2.74 | 0.6 | 94.5 | % | 5.0 | |||||
Ottawa and Montréal | 356 | 4.51 | 1.1 | 93.6 | % | 5.6 | |||||
Non-core markets | 212 | 2.68 | 1.2 | 86.9 | % | 3.3 | |||||
Total Investment properties | 2,879 | 36.47 | 8.2 | 90.4 | % | 4.8 | |||||
Mortgages | (1,081 | ) | (13.69 | ) | |||||||
Investment properties, net of mortgages | 1,798 | 22.78 | |||||||||
Properties classified as held for sale and select redevelopment properties, net of related debt | 92 | 1.17 | |||||||||
Investment in Dream Industrial REIT | 221 | 2.80 | |||||||||
Unsecured debentures | (290 | ) | (3.68 | ) | |||||||
Cash and other items | 31 | 0.39 | |||||||||
NAV(1) | $ | 1,852 | $ | 23.46 | |||||||
Less: LP B units | 116 | ||||||||||
Equity per consolidated financial statements | $ | 1,736 | |||||||||
Our Toronto downtown properties currently account for approximately 42% of our total GLA and approximately 59% of our comparative portfolio fair value of investment properties.
“Two years ago, it was clear that many of Canada’s office markets and particularly suburban and older assets were facing significant challenges,” said Michael J. Cooper, Chairman and Chief Executive Officer. “We have repositioned our business to increase our downtown Toronto presence, which is one of the healthiest office markets in the world, to about 60% of our overall value. We have attacked challenging assets, markets and known vacancies head on, having made transformational improvements in the quality of our assets and our balance sheet, with a dramatic reduction in our units outstanding. For 2018, we are focused on increasing the value of all of our assets through initiatives that provide our tenants with an even better experience within our buildings, pursuing intensification opportunities and maximizing our net operating income from our properties.”
CAPITAL HIGHLIGHTS
KEY FINANCIAL PERFORMANCE METRICS | ||||||||||||
(unaudited) | As at | |||||||||||
December 31, 2017 | September 30, 2017 | December 31, 2016 | ||||||||||
Financing | ||||||||||||
Weighted average face interest rate (period-end)(7) | 3.90 | % | 3.93 | % | 3.84 | % | ||||||
Interest coverage ratio (times)(1)(8) | 3.1 | 3.1 | 3.1 | |||||||||
Net total debt-to-adjusted EBITDFV (years)(1) | 7.1 | 6.5 | 7.7 | |||||||||
Net total debt-to-total assets(1)(8) | 39.6 | % | 39.7 | % | 52.4 | % | ||||||
Net secured debt-to-total assets(1)(8) | 30.6 | % | 30.0 | % | 44.3 | % | ||||||
Debt – average term to maturity (years) | 4.5 | 4.7 | 3.8 | |||||||||
Available liquidity(1) | ||||||||||||
Cash and cash equivalents on hand (in millions) | $ | 96.9 | $ | 259.8 | $ | 9.2 | ||||||
Undrawn demand revolving credit facilities (in millions) | 396.7 | 406.9 | 613.5 | |||||||||
Total available liquidity (in millions) | 493.6 | 666.7 | 622.7 | |||||||||
Unencumbered assets (in millions) | 299.0 | 160.0 | 244.0 | |||||||||
Capital (period-end) | ||||||||||||
Total number of REIT A Units and LP B Units (in millions)(9) | 78.9 | 81.1 | 110.0 | |||||||||
Footnotes: please refer to definitions on page 7.
OPERATIONAL HIGHLIGHTS
SELECTED FINANCIAL INFORMATION | ||||||||||||||
(unaudited) | As at | |||||||||||||
December 31, 2017 | September 30, 2017 | December 31, 2016 | ||||||||||||
Total Portfolio(2) | ||||||||||||||
Number of properties | 42 | 46 | 121 | |||||||||||
GLA (in 000's of sq. ft.) | 8,188 | 8,544 | 17,233 | |||||||||||
Investment properties value (in $000's)(3) | $ | 2,878,839 | $ | 2,837,363 | $ | 4,895,355 | ||||||||
Comparative Portfolio(4) | ||||||||||||||
Occupancy rate - including committed (period-end) | 90.4 | % | 90.4 | % | 91.8 | % | ||||||||
Occupancy rate - in-place (period-end) | 86.1 | % | 87.4 | % | 89.5 | % | ||||||||
Average in-place and committed net rent per square foot (period-end) | $ | 21.02 | $ | 20.71 | $ | 20.94 | ||||||||
Weighted average lease term (years) | 4.8 | 4.8 | 5.0 | |||||||||||
Footnotes: please refer to definitions on page 7.
APPOINTMENT OF NEW CHIEF EXECUTIVE OFFICER
The Trust is pleased to announce the appointment of Michael J. Cooper as Chief Executive Officer of the Trust. Mr. Cooper is currently and will remain the Chairman of the Trust. In his new position, Mr. Cooper will also oversee the Trust's operations as Dream Office REIT executes the next phase of its strategy.
“Jane Gavan has done an outstanding job as CEO of Dream Office REIT and has been integral to the successful transformation of the Trust,” said Michael J. Cooper, Chairman and Chief Executive Officer. “Jane has also been instrumental in the tremendous growth of Dream Global REIT, establishing it as a premier European REIT. With an expanding platform and growing asset base, Jane will be focused on executing the growth strategy for Dream Global REIT. I am pleased that she will remain a part of the Dream Office REIT leadership, and will be nominated to the Board of Trustees shortly. I would like to thank her for her remarkable achievements and wish her continued success.”
CALL
Management will host a conference call to discuss the results tomorrow, February 23, 2018 at 8:00 a.m. (ET). To access the conference call, please dial 1-888-465-5079 in Canada and the United States or 416-216-4169 elsewhere and use passcode 5098 584#. 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 archived for 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 (“MD&A”) of 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 owns well-located, high-quality central business district office properties in major urban centres across Canada, with a focus on downtown Toronto. For more information, please visit our website at www.dreamofficereit.ca.
FOOTNOTES
(1) Adjusted NOI, comparative properties NOI, EBITDFV, FFO, basic FFO per unit, diluted FFO per unit, NAV, NAV per unit, available liquidity, interest coverage ratio, net debt-to-adjusted EBITDFV, net debt-to-total assets, and net secured debt-to-total assets are non-GAAP measures used by Management in evaluating operating and financial performance. Please refer to the cautionary statements under the heading “Non-GAAP Measures” in this press release.
(2) Total portfolio includes investment in joint ventures and excludes properties held for sale and redevelopment properties at the end of each period.
(3) Investment properties excludes properties held for sale and redevelopment properties at the end of each period.
(4) Comparative portfolio includes investment in joint ventures and excludes properties sold, properties held for sale and redevelopment properties at the end of Q4 2017.
(5) Effective with the February 2016 distribution, the Trust revised its monthly distribution to $0.125 per unit or $1.50 per unit on an annualized basis; the Trust further revised its monthly distribution to $0.08333 per unit, or $1.00 on an annualized basis, effective with the July 2017 distribution.
(6) A description of the determination of basic and diluted amounts per unit can be found in section "Our Equity" under the heading “Weighted average number of units” of the MD&A.
(7) Weighted average face interest rate is calculated as the weighted average face rate of all interest bearing debt on balance, including investment in joint ventures that are equity accounted.
(8) Interest coverage ratio, net debt-to-total assets, and net secured debt-to-total assets have been restated in the comparative periods to conform to current period presentation.
(9) Total number of REIT A Units and LP B Units includes 5.2 million LP B Units which are classified as a liability under IFRS.
NON-GAAP MEASURES
The Trust’s consolidated financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”). In this press release, as a complement to results provided in accordance with IFRS, the Trust discloses and discusses certain non-GAAP financial measures, including adjusted NOI, comparative properties NOI, EBITDFV, FFO, basic FFO per unit, diluted FFO per unit, NAV, NAV per unit, available liquidity, interest coverage ratio, net total debt-to-adjusted EBITDFV, net total debt-to-total assets, net secured debt-to-total assets, as well as other measures discussed elsewhere in this release. These non-GAAP measures are not defined by IFRS, do not have a standardized meaning and may not be comparable with similar measures presented by other income trusts. The Trust has presented such non-GAAP measures as Management believes they are relevant measures of the Trust’s underlying operating performance and debt management. Non-GAAP measures should not be considered as alternatives to net income, net rental income, cash generated from (utilized in) operating activities, non-current debt, or comparable metrics determined in accordance with IFRS as indicators of the Trust’s performance, liquidity, cash flow, and profitability. For a full description of these measures and, where applicable, a reconciliation to the most directly comparable measure calculated in accordance with IFRS, please refer to the “Non-GAAP Measures and Other Disclosures” in Dream Office REIT’s MD&A for the three months and year ended December 31, 2017.
FORWARD LOOKING INFORMATION
This press release may contain forward-looking information within the meaning of applicable securities legislation, including statements regarding the future composition of our portfolio, the terms of and duration of secured tenant renewals, and anticipated market rents. 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 fluctuations. 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 except as required by law. 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.
For further information, please contact:
Michael J. Cooper | Rajeev Viswanathan |
Chairman and Chief Executive Officer | Chief Financial Officer |
(416) 365-5145 [email protected] | (416) 365-8959 [email protected] |