TORONTO, ONTARIO — (Marketwired) — 11/12/14 — DREAM GLOBAL REIT (TSX: DRG.UN) –
Editors Note: There is two photos associated with this press release.
DREAM GLOBAL REIT (TSX: DRG.UN) today reported its quarterly financial results for the quarter ended September 30, 2014. Dream Global REIT–s management team will be holding a conference call tomorrow, November 13, 2014 at 10:00 a.m. (ET).
HIGHLIGHTS
KEY PERFORMANCE INDICATORS
GROWTH INITIATIVES
Joint venture with Public Officials Benefit Association (“POBA”) set to close – as previously announced, Dream Global entered into a long-term joint venture with POBA, a South Korean pension fund, committing to sell a 50% interest in seven properties to POBA. On October 15, the Trust finalized the sale of a 50% interest in the first two properties – Lowenkontor in Berlin and Z-UP in Stuttgart – for net proceeds of EUR21.9 million ($31.6 million), subject to post-closing adjustments. Closing of the sale of the remaining five properties will take place by the end of 2014. On average, these properties were financed with mortgage interest of 2.47% for a term of 4.6 years, which is approximately 70 bps above the rates currently achieved when financing reinvestment properties. The Trust has already started to reinvest the net proceeds from this transaction in high quality office properties, such as Europahaus in Darmstadt and Cologne Tower in Cologne.
Acquisitions during the quarter – on September 30, 2014, the Trust completed the acquisition of “Europahaus” in Darmstadt, Germany, a fully leased multi-tenant office property with a weighted average remaining lease term of 6.3 years. Darmstadt is located 30 kilometres south of Frankfurt and home to scientific institutions, universities and high technology companies. The acquisition of this EUR40.3 million ($57.0 million) property has a cap rate of 6.7% and will add approximately 211,000 square feet of high quality office to the Trust–s portfolio. The Trust has negotiated 8-year mortgage financing for this property at a loan-to-value of approximately 61% and an interest rate of 1.82%. As previously announced, the Trust also completed the acquisition of “Officium” in Stuttgart on July 31, 2014, adding an aggregate EUR87.2 million ($125.5 million) of office properties to its asset base in Q3.
Acquisition subsequent to quarter-end – on October 22, the Trust entered into a purchase and sale agreement for Cologne Tower, a EUR113.6 ($159.7 million) office property in Cologne, Germany, representing the Trust–s largest single-asset acquisition to date. This property, which was built in 2002 and extensively renovated in 2012, received LEED Gold certification in 2013 and is a dominant feature of Cologne–s skyline. The property comprises approximately 297,000 square feet of gross leasable area with a high-profile tenant roster that includes IQWiG, a scientific institute sponsored by the German Federal Government, Boston Consulting Group, Swiss Life Select and Liberty Mutual Group and has a weighted average remaining lease term of 6.2 years. The Trust will acquire the property at a cap rate of 5.4% and has signed a term sheet for mortgage financing at an approximate 60% loan-to-value for a 10-year term at an interest rate of 1.77%. The closing of this acquisition is expected to occur on November 14, 2014.
“We are excited to have added such a landmark property in one of Germany–s top office markets to our portfolio,” said Jane Gavan, CEO of Dream Global REIT. “With this acquisition, we are not only increasing our presence in one of Germany–s “Big 7″ office markets, but will own Cologne–s most recognizable office tower.”
In addition, the Trust secured exclusivity for a high quality office property in one of Germany–s largest office markets at an attractive going-in cap rate and significant growth potential. This EUR100 million asset, which is expected to close at the beginning of 2015, will allow the Trust to fully deploy its proceeds from the joint venture with POBA.
Dispositions of nine properties at 108% of their book value – nine properties were disposed during the third quarter as part of the Trust–s continuing capital recycling program for an aggregate sales price of $30.1 million. This brings the number of total dispositions year-to-date to 21 properties for sales proceeds of $61.3 million, representing 111% of their fair value at the last reporting period prior to sale.
FINANCIAL HIGHLIGHTS
Funds from operations – FFO increased to $23.2 million and $74.1 million, respectively, for the three and nine months ended September 30, 2014, from $23.0 million and $60.2 million during the same periods in 2013. On a per unit basis, FFO for the three months and nine months ended September 30, 2014 was $0.21/unit and $0.67/unit, respectively, compared to $0.21/unit and $0.63/unit, respectively, for the same periods in 2013. Increased contributions from acquisitions were offset by Deutsche Post lease terminations effective as at July 1, 2014 as well as the impact of the Trust no longer receiving head lease payments for space terminated by Deutsche Post in 2012.
Adjusted funds from operations – AFFO increased to $21.7 million and $69.0 million, respectively, for the three and nine months ended September 30, 2014, from $21.4 million and $55.7 million during the same periods in 2013. On a per unit basis, AFFO for the three months and nine months ended September 30, 2014 was $0.20/unit and $0.62/unit, respectively, compared to $0.20/unit and $0.58/unit, respectively, for the same periods in 2013.
CAPITAL INITIATIVES
Equity – On October 31, 2014, the Trust had 111,161,358 units outstanding. At the October 31, 2014 closing price of $9.13 per unit, the Trust–s market capitalization was $1.0 billion.
Financing – On July 31, 2014, the Trust drew down a mortgage with a principal balance of $41.6 million at a fixed rate of 1.99%, maturing on January 31, 2022 in connection with the acquisition of Officium in Stuttgart. On October 20, 2014, the Trust drew down a mortgage in connection with the acquisition of Europahaus in Darmstadt with a principal balance of $35.3 million at a fixed rate of 1.82% per annum, maturing on September 30, 2022.
CONFERENCE CALL DETAILS
Dream Global REIT–s management team will be holding a conference call tomorrow, Thursday, November 13 2014 at 10:00 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 8694 191#. A taped replay of the call will be available for ninety days. For access details, please go to Dream Global REIT–s website at and click on the News & Events link, then click on Calendar of Events.
Information appearing in this news release is a select summary of results. The financial statements and management–s discussion and analysis for the Trust are available at and on SEDAR at .
Dream Global REIT is an unincorporated, open-ended real estate investment trust that provides investors with the opportunity to invest in commercial real estate exclusively outside of Canada. Dream Global REIT–s portfolio currently consists of approximately 15.8 million square feet of gross leasable area of office, industrial and mixed use properties across Germany. For more information, please visit .
Non-GAAP Measures
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 Funds From Operations (“FFO”), Adjusted Funds From Operations (“AFFO”), interest coverage ratio, debt-to-EBITDFV and level of debt (net debt-to-gross book value, net of cash) 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 issuers. 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, 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 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 Global REIT–s Management–s Discussion and Analysis for the three and nine months ended September 30, 2014.
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 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 German 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 press release. Dream Global 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 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 .
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Contacts:
Dream Global REIT
P. Jane Gavan
President and Chief Executive Officer
(416) 365-6572
jgavan@dream. ca
Dream Global REIT
Rene D. Gulliver
Chief Financial Officer
(416) 365-5447