Annual General Meeting – May 4, 2016
Detlef Bierbaum Chairman of the Board
Jane Gavan Chief Executive Officer
Dream Global REIT is an owner and operator of 13.5 million square feet of office and mixed-use space in Germany and Austria and provides a unique opportunity to gain exposure to the European real estate market.
DRG.UN at-a-glance*
13.5M
203
Square Feet GLA
Properties
$2.8B
9%
Total Assets
Distribution yield As at March 31, 2016
Hamburg
Düsseldorf Cologne
Frankfurt
Stuttgart Munich
Vienna, Austria
Key 2015 highlights
o Over $500 million of high quality office property acquisitions, including expansion into Vienna with a new JV partner; o Early refinancing of term loan credit facility, expected to result in incremental AFFO of $0.05/unit;
o Strong leasing performance with 1.3 million square feet of new leases and renewals; o Successful lease negotiations with Deutsche Post and Deutsche Postbank – 99% of GRI subject to 2016 termination rights retained o 79% tenant retention, with 620,000 sf of renewals completed in 2015
Strong German real estate fundamentals o Unemployment rate at 4.5% - among the lowest in the EU o GDP growth of 1.7% in 2015 and economic growth for 2016 is expected to remain strong o Record-low vacancy and moderate new supply in Germany’s 7 largest office markets
o Increasing rental rates across major German office markets o Total investment in commercial real estate reached €55 billion in 2015 – an increase of almost 40% over 2014 o Mortgage rates in Germany are among the lowest recent history; we completed a 7-year mortgage at 1.07%
$565 million of acquisitions since the beginning of 2015
Millerntorplatz 1, Hamburg Purchase Price: Going–in cap rate: Interest rate: GLA: Occupancy:
$136 million 6.1% (growing to 7%) 1.71% 375,000 sf 88%
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Anger Entrée, Erfurt Purchase Price: Cap rate: Interest rate: GLA: Occupancy:
$27.5 million 7.1% 1.42% 131,000 sf 96%
Zimmer 56, Berlin Purchase Price: Going-in cap rate: Interest rate: GLA: Occupancy:
$64.7 million 4.8% (growing to 6%) 0.95% variable (capped at 1.95%) 170,000 sf 99%
Vienna, Austria
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Rivergate, Vienna
Rivergate, Vienna Purchase Price: $285 million Going-in cap rate: 5.2% Interest rate: 1.6% GLA: 574,000 sf Occupancy: 94%
Europa-Center, Essen Purchase Price: Cap rate: Interest rate:
$41.5 million 7.2% 1.62%
GLA: Occupancy:
147,000 sf 96%
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Werner-Eckert-Strasse, Munich Purchase Price: Cap rate: Interest rate:
$23.2 million 6.1% 1.07%
GLA: Occupancy:
Centrally located office property in Berlin’s Mitte district
64,000 sf 96%
Rene Gulliver Chief Financial Officer
Key operating metrics
Key metrics Occupancy Average in-place net rent per sf Average market rents per sf Market rents above in-place rents Weighted average lease term
Q1 2016
Q4 2015
Q4 2014
88.0%
87.5%
85.3%
€9.66
€9.61
€8.86
€10.30
€10.20
€9.57
6.6%
6.1%
2.9%
4.4 years
4.4 years
4.4 years
Continued improvements in operating metrics
Q1 2016 financial results Financial results – Q1 2016
Q1 2016
Q1 2015
$41.5 million
$38.3 million
FFO/unit (basic)
20 cents
19 cents
AFFO/unit (basic)
20 cents
18 cents
Net operating income
35%
16%
Improving AFFO quality Q1 2016 AFFO 84%
Q1 2015 AFFO
Initial Properties New Acquisitions 65%
Interest 74bps 500
New Blanket Facility
600 IPO Blanket Facility
Debt Maturities (in $ millions)
Transformed debt maturity profile
400 300 200
Average Overall term to LTV maturity extended by 0.2 years 300bps
Debt Maturity 1 year
Q4 2014 Q4 2015
100 0 2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
As at December 30, 2015
Transformed our debt maturity profile while reducing borrowing costs
Proactive leasing strategy to maximize value of our assets
Deutsche Post renewal
600,000
Square feet
500,000 400,000
79% tenant retention in 2015
300,000
1.3 million sf leased in 2015
200,000 100,000 -
Q2 2014
Q3 2014
Q4 2014
Q1 2015
Q2 2015
New leases and renewals (sf)
Q3 2015
Q4 2015
Q1 2016
Average remaining lease term of 4.4 Years
Michael Schwöbel Head of Real Estate, Europe
Active asset management
o Reduced overall exposure to largest tenant o Active capital recycling program o Mitigated loss of GRI due to proactive discussion with tenant
Lüdenscheid
Hamburg
Bremen
Darmstadt
o Took advantage of large blocks of contiguous space o Value-add opportunities
Value creation update - Saarbrücken
Value creation update – Saarbrücken
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Value creation update - Saarbrücken
30% Pipeline 33% Leased
37% Final stages
Value creation update - Millerntorplatz 1, Hamburg
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Value creation update - Millerntorplatz 1, Hamburg
http://www.bilderbuchhamburg.de/bilder/hamburg_st_pauli_mille rntorplatz_luftbild_reeperbahn_simon_von _utrecht_stra%C3%9Fe_kleine_seilerstra %C3%9Fe_f34b195223_978x1304xin.jpeg
signed 6,000 square foot lease at $60/sf adding $0.5 million annually to NOI
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Value creation update - Millerntorplatz 1, Hamburg
http://www.bilderbuchhamburg.de/bilder/hamburg_st_pauli_mille rntorplatz_luftbild_reeperbahn_simon_von _utrecht_stra%C3%9Fe_kleine_seilerstra %C3%9Fe_f34b195223_978x1304xin.jpeg
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Outlook
o Focus on leasing & driving occupancy of our properties o Pursue refinancing of convertible debentures o Continue recycling capital & improving the quality of our portfolio
o Grow and create new joint venture relationships o Actively manage our real estate with a focus on adding value
Forward looking information This presentation 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 Global 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, global 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 Canadian and European economies remain 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 presentation. Dream Global REIT does not undertake to update any such forwardlooking 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 Global REIT’s filings with securities regulators, including its latest annual information form and MD&A. These filings are also available at Dream Global REIT’s website at www.dreamglobalreit.ca. Non-GAAP Measures The Trust’s condensed consolidated financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”). In this presentation, as a complement to results provided in accordance with IFRS, the Trust discloses and discusses certain non-GAAP financial measures, including net operating income (“NOI”), funds from operations (“FFO”), adjusted funds from operations (“AFFO”), as well as other measures discussed elsewhere in this presentation. These nonGAAP 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. Non-GAAP measures should not be considered as alternatives to net income, cash generated from (utilized in) operating activities 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, please refer to the “NonGAAP Measures and Other Disclosures” in Dream Global REIT’s Management’s Discussion and Analysis for the three months ended March 31, 2016.