DREAM Unlimited Corp. Class A · TSX:DRM
DREAM Unlimited Corp. Class A — Dream Industrial REIT — Investor Presentation (August 2019)
42 slides from DREAM Unlimited Corp. Class A's investor presentation, August 2019
Slide 1: Dream Industrial REIT Investor Presentation August 2019
dream @ industrial REIT Investor Presentation August 2019
Slide 2: Presentation Overview
dream & industrial REIT Presentation Overview Section 1 Investment Opportunity Section 2 Our Company & Strategy Section 3 Investment & Portfolio Highlights Section 4 Market Fundamentals
Slide 3: Investment Opportunity
dream & industrial REIT Investment Opportunity
Slide 4: Executive Summary
ie Gti Executive Summary Opportunity to invest in ~22 million square feet of diversified and functional industrial real estate across Canada and the U.S. Strong management platform, strategic partnerships with Dream and PAULS Corp to acquire, develop and manage industrial properties Balance sheet st
Slide 5: Portfolio mix by region and market snapshot
re 27% 32% Western Canada Ontario 25% United States 1 -As at June 30", 2019; excluding assets held forsale 2 - Distribution rate divided by unit price as at July 31%, 2019 Source: Bloomberg, “Pricing Date: July 31% 2019 Quebec 16% $1.7B* Market Capitalization 5.8%* Distribution Yield? 32%* YTD Total
Slide 6: Partnerships to Support Dream Industrial REIT's Strategy
Partnerships to Support Dream Industrial REIT’s Strategy Local Canadian Platform Local U.S. Platform Long-Standing Relationship U Acquisition & Canadian Acquisition & ~15 Years of Strategic Partnership Development Platform Development Platform building better communities dream > »] PAULS Dream and P
Slide 7: Why Invest In Industrial?
Why Invest In Industrial? Investment prospects Fatient Senior housing Worse] "Moderate income workforce apartments: Medical office Afordable apartments Flex Central-city office Research and development Student housing Midscale hotels Neighborhood/eommunity shopping centers Single-family rental Upsca
Slide 8: Total DIR Return since July 2017: 61%
Total DIR Return since July 2017: 61% DIR announces $125M equity offering, solid pipeline and target market acquisitions 70% 4 ™\ DIR announces $235M acquisition of Midwest U.S. portfolio and $125 million equity raise DIR announces sale of Eastern Canada Portfolio 60% 4 DIR announces $125M equity of
Slide 9: Compelling Valuation & Metrics vs Peer Group
Compelling Valuation & Metrics vs Peer Group 92.6% 22.lx 91.3% Siu Site 16.8% $97 1.x | SMU wir wir DIR SMU Scale Stability Value 2 2019 Al lized Net Rental Ii ~25% 7 a a 9 Greater than Closest Pesr Low & Stable LTM Diluted FFO Payout Ratio LTM P/FFO2: ~5X Multiple Spread to Peer Avg. Source: SNL Fi
Slide 10: Compelling Valuation & Metrics vs U.S. Industrial REITs
Compelling Valuation & Metrics vs U.S. Industrial REITs 5.8% 2h.tx 8.5% 1.thx US Peer Group DIR US Peer Group DIR ° Yield LTM P/FFO? Attractive ~2.5% Yield-Spread to U.S. Peers! Relative Value at ~10X Multiple Spread Source: SNL Financial, Company Disclosures; Pricing date: July 31%, 2019 +10 US. in
Slide 11: Our Strategy
dream & industrial REIT Our Strategy
Slide 12: Acquisitions
Acquisitions Targeting continued growth in DIR’s Canadian portfolio through a disciplined investment strategy and select opportunities in the U.S. Well-Positioned For Accretive Growth Active Asset Management Add value to existing properties through maximizing organic rent growth while evaluating red
Slide 13: Recent acquisitions and property examples
ae 9601 156" Avenue, Grand Prairie 120 Troop Avenue, Dartmouth 131 Ilsley Avenue, Dartmouth 40 Thornhill Drive, Halifax 1 24 months period ending June 30%, 2019; includes assets held for sale 10555 Henri-Bourassa, St. Laurent 860 Marine Drive, Charlotte 1602 Tricont Avenue, Whitby _ ee 13
Slide 14: Portfolio Transformation Continued
Portfolio Transformation Continued Increasing Exposure to Target Markets Q2 2017 Q2 2019 $2.3B $1.6B Investment Investment Property Value Property Value @ Ontario @ United States @ Quebec @ WesternCanada @ Eastern Canada DIR has focused on acquiring assets in target markets that are experiencing str
Slide 15: Disciplined Approach to Asset Management and Investments
Disciplined Approach to Asset Management and Investments Two Experienced Platforms Focus on Long- Term NAV and Cash Flow Growth IRR Model Target Acquisition Markets Lower Ongoing Capital Requirements Dream in Canada and PAULS Corp in the U.S., which comes at no additional cost to unitholders Focus o
Slide 16: Drivers of Comparative Property NOI Growth
Drivers of Comparative Property NOI Growth r Rental Growth in Capture higher market rents as leases roll over. For 2019 lease commitments, DIR has achieved 15.9% Ontario and Quebec and 14.1% rental rate increases in Ontario and Quebec, respectively L la Contractual Rent Average contractual increases
Slide 17: Our Acquisition Strategy
Our Acquisition Strategy Location Distribution & Logistics Ample Parking & Site Circulation 7 Industrial properties that are attractive to a wide variety of tenants with various business requirements S ( Assets that are welllocated, with easy access to transportation channels and key business nodes
Slide 18: 8.6x 8.5x 8.4x 8.4x
8.8x 8.6x 8.5x 8.4x 8.4x 54.1% 7.8x 7.2x 6.4x 37.4%
Slide 19: Investment & Portfolio Highlights
dream & industrial REIT Investment & Portfolio Highlights
Slide 20: Summary of Investment Highlights
Summary of Investment Highlights ( >) High Qualit gh uel u High quality, well-leased, reusable, strategically located assets, with a focus on multi-tenant properties ‘ ) ( >) Diversified . . . ae . Portfolio 1,000+ tenants, mix of single/multi tenant buildings and broad exposure across North America
Slide 21: Our Portfolio by Investment Property Value
Our Portfolio by Investment Property Value Industrial Usage Geography Asset Type ™ Ontario = Warehouse & Distribution mUnited States = Multi-Tenant * Flex Industrial Quebec * Single Tenant * Light Manufacturing ™Western Canada [ The portfolio is well diversified by geography and asset type, with a f
Slide 22: Portfolio key metrics
SS cw 4.8 YEARS WALT 113,200 SF Avg. Tenant Size 22
Slide 23: High Quality and Diversified Tenant Base
@ High Quality and Diversified Tenant Base Top Tenants % of Gross Rental Revenue High Quality & Diversified Tenant Base — Diversified tenant base with over 1,000 tenants — _ Strong and long-standing relationships — Top ten tenants represent ~18% of Gross Rental Revenue* and include high-quality inve
Slide 24: Strong Leasing Platform With a Track Record of Success
100% 98% 96% 94% 92% 90% Strong Leasing Platform With a Track Record of Success @ 1nPlace § Committed Occupancy | 97.1% | ; On 2019 lease commitments, DIR 95.0% has achieved 15.9% and 14.1% 2015 2016 2017 2018 rental rate increases in Ontario and Quebec, respectively Strong portfolio occupancy along
Slide 25: Capitalizing on Strong Industrial Fundamentals
@ Capitalizing on Strong Industrial Fundamentals Regional Lease Expiration Net of Commitments (000’s sf)! 1,000 800 600 Western Canada Ontario Quebec US. m20i9 m2020 m2021 m2022 WALT of 4.1 years with expiries in well-occupied markets provides an opportunity to capitalize on strong demand and captur
Slide 26: Well Positioned to Drive Further Rent Growth
@ Well Positioned to Drive Further Rent Growth Ontario and Quebec Lease Expiries Net of Commitments (000’s of sf)! 1,000 5 800 + 600 + 2019 2020 2021 2022 mOntario m Quebec Opportunity to continue to drive organic growth in core Ontario and Quebec markets - On 2019 lease commitments, DIR has achieve
Slide 27: Investment Fundamentals - Greater Toronto Area
Rent per sf Investment Fundamentals - Greater Toronto Area $9.00 5 r 4% $8.00 4 + 3% $7.00 4 b 2% Til - Q2/16 Q3/16 — Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q19 = Q2/19 Mmmm Toronto Market Rent == Toronto Availability Rate Strong value creation and opportunities for future cash flow a
Slide 28: Investment Fundamentals - Montreal
Rent per sf Investment Fundamentals - Montreal 5 9% $6.50 4 | 7% $6.00 4 + 5% | U U % Q2/16 Q3/16 — Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Qe Q2/9 $5.50 $5.00 @— Montreal Market Rent ===Montreal Availability Rate Strong value creation and opportunities for future cash flow and NAV gro
Slide 29: Comparable industrial transactions: U.S., Ontario and Quebec
United States Quarter Company Location Price ($M) Square Ft. Price PSF Q2/18 GRT Columbus $302 3,800,000 $79 Q2/18 GRT Pennsylvania, Indiana $96 1,000,000 $96 Q1/19 GRT Louisville, Dallas $225 1,700,000 $132 Q2/19 WIR Multiple U.S. Markets $294 2,222,098 $132 Q3/19 GRT Multiple U.S. Markets, Netherl
Slide 30: Improved Capital Structure
Improved Capital Structure 60% 7 Leverage (net debt-to-assets ratio) as at Q2/19 was 3.7x 37.4%, a decline of 15.1% since YE 2016 litres Coverage Ratio 55% 4 50% 4 6.4x Net debt/adj. EBITDAFV 45% 4 ; $150m 40% Credit Facility 35% 4 $381m 30% Unencumbered Assets 2012 2013 2014 2015 2016 2017 2018 Q2
Slide 31: Staggered Debt Maturities
@ Staggered Debt Maturities 35.1% 24.5% 16.5% 12.3Y 10.9% % 0.7% —— 2019 2020 2021 2022 2023 2024+ ™Mortgages m™ Credit Facility Staggered debt maturity profile with 4.4 year weighted average debt term and ample liquidity through credit facility and unencumbered asset pool ‘As at June 30", 2019 31
Slide 32: Market Fundamentals
dream & industrial REIT Market Fundamentals
Slide 33: Attractive Macro Economic Backdrop
Attractive Macro Economic Backdrop Real GDP Growth 2019E Real GDP Growth 2020E 2.8% 2.5% 2.3% 2.3% 0% 12% 13% 1.3% 1.2% 13% 1.0% 0.74 0.7% % oem 0.6% 0.0% I 1 | i Italy Japan Germany U.K. France Canada Australia U.S. Italy = Japan U.K. Germany France Canada U.S. — Australia Canada and the U.S. are e
Slide 34: Canadian Industrial Investment Market
Canadian Industrial Investment Market Historical Cap Rate Compression 9.0% 8.5% 8.0% 75% 7.0% 6.5% 6.0% 5.5% 5.0% 4.5% 02/05 02/06 02/07 02/08 + O2/09 O2/10 O2/11 O2/12 O2/13 O2/14 O2/15 O2/16 O2/17 O2/18 O2/19 Industrial A Industrial B 27bps 25bps Y/Y Class A Y/Y Class B Compression - Q2/19 Compres
Slide 35: Canadian Industrial Vs. Office Cap Rates Suggest Strong Demand
Canadian Industrial Vs. Office Cap Rates Suggest Strong Demand Q2/06 Q2/07 Q2/08 Q2/09 Q2/10 Q2/11 2/12, 2/138. Q 2/14 mmm Spread =—Office "Industrial Q2/15 Q2/16 Q2/17 Q2/18 Q2/19 0.6% 0.4% 0.2% 0.0% -0.2% 0.4% -0.6% -0.8% Industrial-A cap rates are currently ~30 bps below office-A and ~130 bps low
Slide 36: Canadian Industrial Fundamentals
Canadian Industrial Fundamentals $9.00 - 7% an Ee * 8.00 s F 5% $7.50 L 4% $7.00 + 3% $6.50 L 29 $6.00 % $5.50 p 1% $5.00 0% 2/13 Q2/14 2/15 2/16 Q2/17 Q2/18 Q2/19 Average Net Rent (CAD$) = Availability Rate Source: CBRE 36
Slide 37: Fundamentals in our U.S. Target Markets
Fundamentals in our U.S. Target Markets Gm Q2 Absorption(mmsf) Total Vacancy Availability Average NetRent Now Supply as wei Columbus 261 14 4.1% 5.4% $3.76 1.9% Nashville 187 04 10.0% 11.9% $4.88 0.7% Memphis 244 11 5.7% 10.2% $3.36 2.1% Orlando 117 0.4 6.2% 8.6% $6.79 2.8% Charlotte 194 0.1 5.7% 5.
Slide 38: E-Commerce Driving Demand for U.S. Urban Logistics
E-Commerce Driving Demand for U.S. Urban Logistics @ Online Retail as a % of Total Retail Sales Expected 500Msf of Net Absorption and 12% - 4 29 1% : 10-12% 9 growth in 8% % Net Asking Rents 2017 2018 2019 2020 2021 Source: eMarketer
Slide 39: U.S. Industrial Fundamentals
U.S. Industrial Fundamentals $8.00 5 $7.50 4 $7.00 4 $6.50 4 $6.00 4 $5.50 4 $5.00 Q2/13 Source: CBRE Q2/14 Q2/15 Q2/16 —= Average Net Rent (US$) Q2/17 Availability Rate Q2/18 Q2/9 12% 11% 10% 9% 8% 7% 6% 39
Slide 40: Our Management
Our Management Mr. Brian Pauls is the Chief Executive Officer of Dream Industrial REIT and President of PAULS Corp LLC. He is an accomplished real estate professional with 23 years of industry experience, and was responsible for developing over eight million sf of industrial properties in Canada and
Slide 41: Thank you
thank you.
Slide 42: Forward Looking Information
Forward Looking Information This investor presentation may contain forward-looking information within the meaning of applicable securities legislation, including statements regarding our objectives. strategies to achieve those objectives, its outlook, beliefs, plans, estimates, projections and inten
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