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Dream Office REIT Reports Q1 2021 Results

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This press 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 REAL ESTATE INVESTMENT TRUST (D.UN-TSX) or ("Dream Office REIT", the "Trust" or "we") today announced its financial results for the three months ended March 31, 2021 and provided a business update related to the COVID-19 pandemic.

This press release features multimedia. View the full release here:

Q1 2021 Revenue by Tenant Industry (Graphic: Business Wire)



As at

March 31,

December 31,

March 31,




Total properties(1)

Number of active properties




Number of properties under development




Gross leasable area ("GLA") (in millions of sq. ft.)




Investment properties value







Total portfolio(1)

Occupancy rate – including committed (period-end)




Occupancy rate – in-place (period-end)




Average in-place and committed net rent per square foot (period-end)







Weighted average lease term ("WALT") (years)




See footnotes at end.

Three months ended

March 31,

March 31,



Operating results

Net income





Funds from operations ("FFO")(2)



Net rental income



Comparative properties net operating income ("NOI")(2)



Per unit amounts

FFO (diluted)(2)(3)





Distribution rate



See footnotes at end.

  • Net income for the quarter: For the three months ended March 31, 2021, the Trust generated net income of $10.1 million. Included in net income are net rental income totalling $26.3 million, partially offset by negative fair value adjustments to financial instruments totalling $8.2 million, primarily attributed to the revaluation of the subsidiary redeemable units and negative fair value adjustments to investment properties totalling $6.1 million primarily attributed to the Other markets region.

  • Diluted FFO per unit(2)(3) for the quarter: Diluted FFO per unit for the three months ended March 31, 2021 was $0.38, compared to $0.39 at Q1 2020.

    For the three months ended March 31, 2021, diluted FFO per unit decreased by $0.01 per unit year-over-year as the effects of the lease commencement at our completed property under development (357 Bay Street in Toronto) (+$0.01) and the effect of accretive unit repurchases under our Normal Course Issuer Bid in the prior year (+$0.03) were offset by lower comparative properties NOI(2), net of the effect of government programs, in the current year (-$0.05).

  • Net rental income for the quarter: Net rental income for the three months ended March 31, 2021 decreased by $2.7 million relative to the prior year comparative quarter primarily due to lower transient parking revenues as a result of parking lot closures from city lockdown restrictions across our portfolio, COVID-related provisions and asset sales during the prior year. Partially offsetting the year-over-year decrease was net rental income from our completed property under development at 357 Bay Street in Toronto and the effect of government programs.

  • Comparative properties NOI(2) for the quarter: For the three months ended March 31, 2021, comparative properties NOI decreased by 11.1%, or $3.5 million, over the prior year comparative quarter, primarily driven by lower parking revenues of $1.1 million across the portfolio as a result of city lockdown restrictions, and lower weighted average occupancy in Toronto downtown and Other markets of 4.5%, partially offset by higher rents on lease commencements in Toronto downtown. Excluding the effect of lost revenue from parking lot closures, the year-over-year reduction in comparative properties NOI would have improved to a decline of 7.9%. The repeated states of emergency in Toronto have significantly limited touring activity and the ability of tenants to sign leases and make business decisions. We believe that the decreases in net operating income are a result of the pandemic’s impact on leasing activity and building traffic. As the states of emergency are lifted, we anticipate leasing activity and traffic flow to our properties will improve and our comparative properties NOI and parking revenues will begin to normalize.

    We are actively managing our assets in the Toronto downtown region, which represent 86% of our investment property fair values, to improve the quality of the buildings and to continue to improve rental rates in this market. For our assets in the Other markets region, which make up the remaining 14% of our investment properties fair value, we are repositioning these assets to improve occupancy and liquidity in the private market.

  • In-place occupancy: Total portfolio in-place occupancy on a quarter-over-quarter basis increased by 0.6% relative to Q4 2020. In the Other markets region, 94,000 square feet of net positive leasing absorption was driven by the commencements of leases at 2200-2206 Eglinton Road in Scarborough, Ontario and Saskatoon Square in Saskatchewan. These gains in Other markets were partially offset by 74,000 square feet of net negative leasing absorption during the quarter in Toronto downtown.

    Total portfolio in-place occupancy on a year-over-year basis decreased from 89.2% at Q1 2020 to 85.8% this quarter due to net negative leasing absorption across the portfolio.

  • Lease commencements for the quarter: For the three months ended March 31, 2021, approximately 418,000 square feet of leases commenced, not including temporary leases. Rental rates on renewals and relocations for the quarter were 4.7% above expiring rates. For the three months ended March 31, 2021, positive leasing spreads on renewals in Toronto downtown of 5.5% were offset by negative leasing spreads on renewals of 12.7% in our Other markets region due to negative leasing spreads on renewals in Saskatchewan within Other markets. In Toronto downtown, renewals included a 248,000 square feet tenant exercising its option to renew at expiring rates established back in 2010 with no associated leasing costs. Excluding the effect of this renewal option, the increase in net rents on renewals and relocations in Toronto downtown was 20.8%.

  • Tenant profile: As illustrated in the chart below, the Trust has a diversified and stable tenant mix.

    See Figure 1, Q1 2021 Revenue by Tenant Industry

    Our top ten tenants make up approximately 39% of gross rental revenue, and 50% of our top tenants have credit ratings of A or higher.

  • NAV per unit(2): As at March 31, 2021, our NAV per unit was stable at $28.73 when compared to $28.69 at December 31, 2020.

  • 366 Bay Street redevelopment project: On March 31, 2021, the Trust reclassified 366 Bay Street in Toronto to properties under development. The Trust is commencing a development project to transform this property into a best-in-class boutique office building by fully modernizing this property’s technical systems; installing high-efficiency heating, ventilation and air conditioning systems; improving the floorplates; and upgrading washrooms and common areas. We are targeting multiple building certifications, including LEED Gold certification, as part of this development project. We expect to invest $16.1 million over the course of the development project, with project completion planned for Q1 2023.

  • Environmental, Social & Governance ("ESG") Update: The Trust currently has a number of ESG initiatives underway. We are in the process of preparing a submission to the Global Real Estate Sustainability Benchmark to obtain a rating for 2021. In the current year, we are looking to build on our LEED Gold status certifications in our portfolio by pursuing an additional certification along with the WELL Health-Safety Certification from the International WELL Building Institute (IWBI). Subsequent to quarter end, Dream Office REIT has been recognized as Canada’s largest office portfolio to be WELL Health-Safety rated by IWBI with 25 properties totalling 4.6 million square feet or 87% of the Trust’s Canadian gross leasable area being certified by the group.

    The WELL Health-Safety Certification is an evidence-based third-party verified rating for all new and existing building and space types focusing on operational policies, maintenance protocols, stakeholder engagement and emergency plans to address a post-COVID-19 environment now and into the future. The certification is designed to empower owners and operators to take the necessary steps in order to prioritize the health and safety of their staff, visitors and other stakeholders. We believe this certification will demonstrate that our buildings are managed with a view towards the safety of our tenants and visitors. These initiatives form a component of the corporate and management goals of the Trust for 2021.


As at March 31, 2021, the Trust had approximately $139 million of available liquidity(2), $248 million of unencumbered assets(2) and a level of debt (net total debt-to-net total assets)(2) of 41.2%.

Since March 2020, the COVID-19 pandemic continues to cause significant economic and social disruptions to Canadian residents and businesses. The province of Ontario is currently under an emergency shutdown under the Emergency Management and Civil Protection Act. At this time, we still do not know the duration and extent of the pandemic or shutdown, and the impact they may have on the financial performance of the Trust for the next two years and beyond. Since we announced the launch of our strategic plan in 2016, we have transformed Dream Office REIT into a safer, higher quality company. As a result of these initiatives, we believe Dream Office REIT is currently well positioned, with a portfolio of exceptional real estate, primarily located in downtown Toronto, combined with a strong balance sheet and ample liquidity.

Despite COVID-19’s disruption to the leasing market and our tenants’ abilities to make decisions for their businesses and the stay-at-home order currently in place, the Trust is continuing to manage an active pipeline of renewals and new leases with existing and prospective tenants.

During the first quarter of 2021, the Trust executed leases totalling approximately 73,000 square feet across our portfolio, compared to approximately 46,000 square feet in the first quarter of 2020. Subsequent to the quarter and up to today's date, the Trust has signed commitments for an additional 69,000 square feet. Since the beginning of the year, we have executed leases In Toronto downtown totalling approximately 30,000 square feet at a weighted average net rent of $35.46 per square foot, 41.4% higher than the weighted average expiring net rent on the same space. In the Other markets region, the Trust secured leases for approximately 112,000 square feet at a weighted average net rent of $16.28 per square foot, a decrease of 8.9% relative to prior rents, primarily due to rents on new deals rolling down to market rates in western Canada. To date, the Trust has already secured commitments for approximately 730,000 square feet, or 83%, of 2021 full-year portfolio lease expiries.

Approximately 2.3% of the Trust’s total portfolio is currently sublet, with a weighted average in-place net rent of just over $23 per square foot. This ratio is in-line with the Trust’s historical percentages pre-COVID and also in-line with the Trust’s sublet ratios over each of the past four quarters.

The following table summarizes selected operational statistics with respect to the trailing four quarters and the month of April 2021, all presented as a percentage of recurring contractual gross rent as at May 6, 2021:



25% of rent forgiven



under CECRA program


Q2 2020





Q3 2020





Q4 2020





Q1 2021





April 2021





* Includes the 50% of recurring contractual gross rent that the Trust received from the government through the Canadian Emergency Commercial Rent Assistance ("CECRA") program.
** Deferral arrangements are presented net of subsequently received cash receipts.

Our tenant relations team continues to engage with and support our tenants through the pandemic so that they can recover quickly with an economically viable business for the long term. We have been educating tenants on government-led relief initiatives and assisting tenants with back-to-work planning for their employees. In certain instances, the Trust has granted deferrals and rent repayment arrangements to select tenants on a case-by-case basis.

During Q2 2020 and Q3 2020, we agreed to work with certain tenants representing 1.6% and 1.0% of recurring contractual gross rents, respectively, by deferring their gross rent for a period of time to help their business. The Trust has subsequently received payments on outstanding deferral arrangements representing 1.0% and 0.6% of Q2 2020 and Q3 2020 recurring contractual gross rents, respectively. The current weighted average deferral period on current arrangements is approximately six months.

For the three months ended March 31, 2021, the Trust qualified for government programs totalling $0.8 million. Partially offsetting the effect of government programs are COVID-related provisions totalling approximately $0.6 million which are included in the line item "Government assistance, net of COVID-related provisions" within net rental income. These provision balances represent an estimate of potential credit losses on our trade receivables for all uncollected rent during the three months ended March 31, 2021.

"While the longer than expected duration of the COVID-19 pandemic has created a challenging and peculiar environment to manage our business over the past 12 months and likely for the remainder of 2021, we believe the future of Toronto will be very bright after the pandemic becomes manageable and our assets in downtown Toronto will become more valuable and increasingly difficult to replace," said Michael J. Cooper, Chief Executive Officer of Dream Office REIT.



As at


March 31, 2021

December 31, 2020


Weighted average face rate of interest on debt (period-end)(4)



Interest coverage ratio (times)(2)



Net total debt-to-adjusted EBITDAFV (years)(2)



Level of debt (net total debt-to-net total assets)(2)



Average term to maturity on debt (years)



Available liquidity and unencumbered assets

Available liquidity (in millions)(2)





Unencumbered assets (in millions)(2)




Total number of units (in millions)(5)



See footnotes at end.

  • Financing update: On April 1, 2021, subsequent to quarter-end, a $9.7 million mortgage secured by an investment property in Toronto matured and was repaid in full. On the same day, the Trust entered into an interest-only mortgage secured by the same property totalling $30 million, with a term of three years and an annual fixed interest rate of 2.97%.

    Also on April 1, 2021, the Trust repaid in full, without penalty a $26.6 million mortgage secured by our sole property in the United States prior to its maturity date.

    On May 1, 2021 the Trust refinanced a mortgage secured by an investment property in Calgary at maturity totalling $28.3 million, for a term of three years at an annual fixed interest rate of 3.50%.

"We have focused on maintaining a safe balance sheet and ample liquidity throughout the course of the pandemic and prioritized capital allocation in an effort to improve our assets and repurchase our units at a discount to intrinsic value," said Jay Jiang, Chief Financial Officer of Dream Office REIT. "We remain confident in the intrinsic value and the future of our assets notwithstanding the slower than expected reopening of the economy in downtown Toronto in 2021."


Dream Office REIT holds semi-annual conference calls following the release of second and fourth quarter results.


Information appearing in this press release is a selected summary of results. The condensed consolidated financial statements and Management’s Discussion and Analysis ("MD&A") of the Trust are available at and on

Dream Office REIT is an unincorporated, open-ended real estate investment trust. Dream Office REIT is a premier office landlord in downtown Toronto with approximately 3.5 million square feet owned and managed. We have carefully curated an investment portfolio of high-quality assets in irreplaceable locations in one of the finest office markets in the world. We intend to enhance these properties to elevate their desirability to tenants and investors, and improve the overall community experience. For more information, please visit our website at



Excludes joint ventures that are equity accounted at the end of each period.


FFO, comparative properties NOI, diluted FFO per unit, NAV per unit, interest coverage ratio, net total debt-to-adjusted EBITDAFV, level of debt (net total debt-to-net total assets), available liquidity and unencumbered 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.


A description of the determination of diluted amounts per unit can be found in section "Our Equity" under the heading "Weighted average number of units" of the MD&A for the three months ended March 31, 2021.


Weighted average face rate of interest on debt is calculated as the weighted average face rate of all interest bearing debt balances excluding debt in joint ventures that are equity accounted.


Total number of units includes 5.2 million LP B Units which are classified as a liability under IFRS.


The Trust’s condensed 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 FFO, comparative properties NOI, diluted FFO per unit, NAV per unit, available liquidity, unencumbered assets, level of debt (net total debt-to-net total assets), interest coverage ratio and net total debt-to-adjusted EBITDAFV, 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 flows generated from (utilized in) operating activities, cash and cash equivalents, total assets, non-current debt, total equity, 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" section in Dream Office REIT’s MD&A for the three months ended March 31, 2021.


This press release may contain forward-looking information within the meaning of applicable securities legislation, including statements regarding our objectives and strategies to achieve those objectives, our expectations regarding parking revenues after the COVID-19 pandemic, our expectations regarding the effectiveness of the CERS program, the ability of our tenants to qualify for government programs, our ability to increase the desirability of our buildings, our asset management strategies, development project costs and timing of project completion, future purchases of units through its NCIB program, prospective leasing activity, anticipated timing of our first Global Real Estate Sustainability Benchmark assessment, our ability to achieve building certifications, our ability to collect and track ESG data in a timely manner. 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; employment levels; mortgage and interest rates and regulations; the uncertainties around the timing and amount of future financings; uncertainties surrounding the COVID-19 pandemic; the ability of the Trust and its tenants to access government programs; the financial condition of tenants; our ability to refinance maturing debt; leasing risks, including those associated with the ability to lease vacant space; rental rates on future leasing; future parking revenues 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

View source version on


Michael J. Cooper
Chairman and Chief Executive Officer
(416) 365-5145

Jay Jiang
Chief Financial Officer
(416) 365-6638