DREAM Unlimited Corp. Class A · TSX:DRM
DREAM Unlimited Corp. Class A — Dream Industrial REIT — Investor Presentation (February 2019)
43 slides from DREAM Unlimited Corp. Class A's investor presentation, February 2019
Slide 1: Investor Presentation February 2019
dream @ industrial REIT Investor Presentation February 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
Executive Summary r Opportunity to invest in over 20 million square feet of diversified and functional industrial real estate across Canada and the U.S. Vz (Z a Strong management platform, strategic partnerships with Dream and PAULS Corp to acquire, develop and manage industrial properties ee wi r B
Slide 5: Portfolio and market snapshot
29% 28% 17% Western Canada Quebec Eastern Canada 12% $1.4B*(2) 6.4% * 15.5%* Market Distribution YTD Total Capitalization Yield Return Ontario 14% United States 1 -GAV at December 31, 2018, percentages above reflect allocation by fair value at December 31,2018 2 Market capitalization (non-GAAP measu
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 dream > »] PAULS building better communities 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: 41%
Total DIR Return since July 2017: 41% DIR announces $235M acquisition of Midwest U.S. portfolio and $125 million 45% 4 DIR announces $125M equity equity raise offering and early repayment of ; conv. debentures DIR announces $91.7M ae 40% 4 acquisition of Columbus Ui% portfolio and Montreal 95% distr
Slide 9: Compelling Valuation & Metrics vs Peer Group
Compelling Valuation & Metrics vs Peer Group , $140 92.3% 19.7x $91 14.7x 12.7x 84.3% $67 . SMU WIR DIR SMU WIR DIR SMU WIR DIR ene Scale Stability Value Annualized NOI~50% Greater than Closest Peer! Low & Stable FFO Payout Ratio LIM” LTM P/FFO2: ~5X Multiple Spread to Peer Avg. Source: SNL Financia
Slide 10: Compelling Valuation vs U.S. Industrial REITs
Compelling Valuation vs U.S. Industrial REITs 6.4% 24.9x 3.6% 12.7X US Peer Group DIR US Peer Group DIR ry Yield LTM P/FFO! Attractive ~3% Yield-Spread to U.S. Peers Relative Value at ~12X Multiple Spread Note: 10 U.S. industriabfocused peers selected with portfolios comprised of at least 90% indust
Slide 11: Our Company & Strategy
dream & industrial REIT Our Company & Strategy
Slide 12: Our Portfolio by GLA
Our Portfolio by GLA* Tenancy Profile Geography Asset Type g = Western Canada * Ontario = Multi-Tenant = Quebec = United States = Eastern Canada = Warehouse & Distribution = Flex Industrial Light * Single Tenant Manufacturing [ The portfolio is well diversified by geography and asset type, with a fo
Slide 13: 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 organic rent growth, leverage our i house expertise
Slide 14: Drivers of Comparative Property NOI Growth
Drivers of Comparative Property NOI Growth Rental Growth in Capture increasing market rental rates as leases roll over. For 2019 leases completed, DIR has Ontario and Quebec captured renewal spreads of 11% in Ontario and 9% in Quebec XY /S Contractual Rent ilt-i ~1.5Y Increases Built-in contractual
Slide 15: Our Acquisition Strategy
Our Acquisition Strategy Industrial properties that are attractive to a wide variety of tenants with various business requirements Assets that are typically less than 1 million sf, that allow us to maintain tenant and geographic diversification as well as leasing and acquisitions advantages Good qua
Slide 16: Our Financial & Debt Strategy
60% 50% 40% 30% Our Financial & Debt Strategy Increase driven by temporary dilution from Q2/18 equity offering 54.1% — —® re © 81.7% 75.9% 74.2% 73.6% var : vas 2012 2013 201% 2015 2016 2017 2018 Ml Net Debt to Assets Ratio = =®==FFO Payout Ratio 90% 70% 50% 30% 10% Through a disciplined capital all
Slide 17: Investment & Portfolio Highlights
dream & industrial REIT Investment & Portfolio Highlights
Slide 18: Summary of Investment Highlights
Summary of Investment Highlights ( >) High Qualit: . 7 . 7 7 nti y High quality, wellleased, reusable, strategically located assets, with a focus on multi-tenant properties XN J (- >) Diversified aan . . woe . Over 1,300 tenants, operating in a range of industries and geographies with high-quality c
Slide 19: SS cu
SS cu 4.9 YEARS Avg. Lease Term 71 # of Tenants 104,800 SF Avg. Tenant Size 19
Slide 20: High Quality and Diversified Tenant Base
@ High Quality and Diversified Tenant Base High Quality & Diversified Tenant Base Top Tenants % of GRR* — Diversified tenant base with over 1,300 tenants Nissan North America Inc. 3.6% — _ Strong and long-standing relationships 8 9 8 P Spectra Premium Industries Inc. 2.3% — Top ten tenants represent
Slide 21: Strong Leasing Platform
100% 98% 95% 93% 90% Strong Leasing Platform ~96% Avg. Occupancy Q1/15-04/18 DEEL Q1/15 Q2/15 O3/15 QH/15 Q1/16 Q2/16 Q3/16 Q4/16 QI/17 Q2/17 Q3/17 QU/17)- QI/18 — Q2/18 —-Q3/18 = Q4/18 MIn-Place and Committed Occupancy High portfolio occupancy along with organic growth through contractual rent step
Slide 22: Capitalizing on Strong Industrial Fundamentals
@ Capitalizing on Strong Industrial Fundamentals Regional Lease Expiration by Pro Forma GLA (000s sf) 1200 5 1000 4 800 4 600 4 Western Canada Ontario Quebec Eastern Canada US. 2019 m2020 m2021 2022 WALT of 4.1 years with expiries in well-occupied markets provides an opportunity to capitalize on str
Slide 23: Opportunity to Capitalize on Strong Market Fundamentals
Opportunity to Capitalize on Strong Market Fundamentals Quebec Ontario 25% Of GLA 19% Of GLA 3.0% 1.3% A -1.2% 0.7% o— : 0.2% 1.1% 1.1% 2015 2016 2017 2018 2015 2016 2017 2018 —e—Y/Y Market Rent Growth = =@=Y/Y In-Place Rent Growth =e—Y/Y Market Rent Growth = =@®=Y/Y In-Place Rent Growth Opportunity
Slide 24: Resilience in Western Canada
Resilience in Western Canada DIR - Western Canada Historical In-Place Rents & Occupancy 100% $9.40 + —@ —o o— eo ° —e oe $9.20 + 90% $9.00 } $8.80 80% $8.60 + $8.40 + 70% $8.20 + $8.00 60% 2012 2013 2014 2015 2016 2017 2018 Mm |1-place and Committed Rents DIR Western Canada In-place and Committed Oc
Slide 25: Leasing Momentum in Eastern Canada
Leasing Momentum in Eastern Canada DIR - Eastern Canada Historical Occupancy 100% 4 95% 4 750 bps increase in occupancy over the past nine quarters 90% 4 | L L I iI 80% Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 O1/18 Q2/18 Q3/18 Q4/18 93. 7% Strong leasing activity has supported solid organic
Slide 26: Comparable U.S. and Canadian acquisitions by cap rate
Quarter Company Location Price ($M) Cap Rate Q3/17 WIR Pennsylvania $94 5.8% Q3/17 WIR Portland $74 4.8% Q4/17 WIR Reno $8 7.2% Q2/18 GRT Columbus $232* 6.0% Q2/18 GRT Pennsylvania, Indiana $74* 5.5% Q1/19 GRT Louisville, Dallas $173.3* 6.0% Average 5.9% Quarter Company Location Price ($M) Cap Rate
Slide 27: Improved Capital Structure and Enhanced Liquidity
Improved Capital Structure and Enhanced Liquidity 60% 5 . ° Leverage (net debt-to-assets ratio) as of Q4/18 was 4.4 yea rs 43.5%, a decline of 900 bps since YE 2016 Term to Maturity 3.5x 50% | Interest Coverage Ratio 7.2x 40% 4 Net debt/adj. EBITDAFV $195m 30% Unencumbered ° Assets 2012 2013 2014 20
Slide 28: Staggered Debt Maturities
@ Staggered Debt Maturities 31.6% 17.8% 17.0% 14.6% 12.6% 6.4% 2019 2020 2021 2022 2023 2024+ ™@ % of Total Debt Staggered debt maturity profile with 4.4 year weighted average debt term and ample liquidity through recently upsized corporate facility and unencumbered asset pool 28
Slide 29: U.S. Investment Thesis
U.S. Investment Thesis New Supply as % Total Vacancy Availability Average Net Rent of Total 27 59 3.9% 5.0% $3.81 1.7% 184 0.2 22 3.4% 10.2% $471 21% 2h 14 N/A 6.4% 10.2% $3.92 1.0% 116 12 5.1 5.4% 8.1% $6.50 2.9% 193 08 3.8 7.2% N/A $5.44 3.3% 1,269 N/A 19.9 3.5% 5.4% $4.98 1.0% 276 24 7.0 4.5% 5.7
Slide 30: Successful U.S. Expansion
OO Successful U.S. Expansion Strategic Plan: In 2017, we announced our U.S. expansion, appointed Brian Pauls as CEO, and formed a strategic partnership with PAULS Corp Cross-Border Platform: Working together with the PAULS U.S. platform to source and manage attractive investment opportunities in our
Slide 31: Midwest U.S. Logistics Portfolio map
Chicago, IL Cincinnati, OF * - Expected closing in March 2019 - (properties include: Chicago- 301-368 N. Third Ave., 3800 Sunset Ave., 5100 W 123rd St., 5300 Proviso Dr.; Columbus - 1819 N Walcutt Rd., 4311 Janitrol Rd., 640- 700 Dearborn Park Ln., Roberts Road Business Park; Indianapolis- 1201 Perr
Slide 32: Midwest U.S. Logistics Portfolio Overview
Midwest U.S. Logistics Portfolio Overview Functional Properties Well Located Attractive Markets Diversified Tenant Base Growth Potential a > The portfolio is comprised of highly functional distribution facilities that are reusable and cater to a wide range of users r Properties are strategically sit
Slide 33: DIR Proforma Midwest U.S. Logistics Portfolio Acquisition
@ DIR Proforma Midwest U.S. Logistics Portfolio Acquisition Q4/18 GAV by Geographic Segment $627M Western Canada $254M Eastern Canada $610M Ontario $294M United States Proforma GAV by Geographic Segment $627M Western Canada $610M Ontario $529M United States | 2231) | $2.1B | 20.2M Properties GAV SF
Slide 34: Market Fundamentals
dream & industrial REIT Market Fundamentals
Slide 35: Attractive Macro Economic Backdrop
Attractive Macro Economic Backdrop Real GDP Growth 2019E Real GDP Growth 2020E 2.9% 2.6% 2.7% 2.1% 2.2% 1.9% 16% 1.6% ium — 18% 1.4% 1.1% 0.9% 0.99 1.0% ” | 0.7% | Italy = Japan U.K. France Germany Canada U.S. Australia Italy Japan U.K. France Germany Canada U.S. Australia [ Canada and the U.S. are
Slide 36: Strong Industrial Fundamentals in DIR's Markets
Strong Industrial Fundamentals in DIR’s Markets DIR Portfolio Occupancy by Region Q4/18 - Construction as % of Market Supply) 100.0% 3.4% Total Portfolio O 97.1% ecupancy: * Y op.0% 98.1% --- -=- —-e ee = 2.2% 95.2% 1.7% 93.7% y, 1.2% 1.0% 1.1% 0.8% ri l | Western Ontario Quebec Eastern United State
Slide 37: E-Commerce Tailwinds
E-Commerce Tailwinds E-commerce & Industrial Real Estate Rapidly Changing Environment (- ~ $60 5 $56 [ 12% 3X E-commerce requires approximately three times as much space as traditional distribution $50 10% V y (~ ~) eae snes 40 8% For every additional $1 billion in e-commerce § ° 1 ms) M sales, ecom
Slide 38: Canada: Mid-Term Demand Vs. Supply Growth
Total Inventory (MM sf) Canada: Mid-Term Demand Vs. Supply Growth 30M out m (otal Current E-commerce Demand 7.2M 7M : 25M 239 6.5M 5.9M 27M 237 E-commerce 20M Demand 235 15M 233 10M 231 13M 229 Total Current oM Construction 227 OM 2017 2018 2019 2020 Space Demanded (MM sf) With sales forecast to gro
Slide 39: The Industrial Investment Market
The Industrial Investment Market Historical Cap Rate Compression 9.0% 4 8.5% 4 8.0% + 75% 4 7.0% 4 6.5% 4 6.0% + 5.5% 4 5.0% + 4.5% Q4/04 = Q4/05 = Q4/06 =Q4/07-Q4/08_—Q4/09- 4/10 4/11 4/12, 4/13. 4/14 = 4/15. 4/16 QH/17, 4/18 —IndustrialA = ==Industrial B 21bps 38bps Y/Y Class A Y/Y Class B Compres
Slide 40: Industrial Vs. Office Cap Rates Suggest Strong Demand
5% aI" Industrial Vs. Office Cap Rates Suggest Strong Demand Q4/05 Q4/06 Q4/07 Q4/08 Q4/09 Q4/10 Qu/11 Qu/12 Mmmm Spread «=Office Q4/13 "Industrial Qu/14 Qu/15 QH/16 Q4u/17 Q4/18 0.6% 0.4% 0.2% 0.0% -0.2% 0.4% -0.6% -0.8% Industrial-A cap rates are currently ~60 bps below office-A and ~130 bps lower
Slide 41: 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 42: Thank you
thank you.
Slide 43: 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 and strategies and plans to expand our presence in our existing markets, the anticipated timing for cl
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