Mr. Michael Cooper reports

DUNDEE REIT REPORTS SOLID Q2 2013 RESULTS

Dundee Real Estate Investment Trust has released its financial results for the three and six months ended June 30, 2013. Senior management will host a conference call to discuss the results on Aug. 9, 2013, at 9 a.m. (ET).

Highlights

• Strengthened capital structure -- completed a $230-million equity offering at $36.20 per unit and issued $175-million of five-year, 3.424-per-cent senior unsecured debentures, rated BBB (low) by DBRS, the trust's first as an investment-grade-rated entity; the debenture offering reflects the trust's continued progress in strengthening its capital structure;
• FFO (funds from operations) and AFFO (adjusted funds from operations) per unit in line with the second quarter of 2012 with an approximately 5-per-cent decrease in leverage -- maintained FFO and AFFO per unit at 2012 second quarter levels, with a 5-per-cent decrease in leverage since that time;
• $360.1-million of acquisitions completed in the quarter -- one million square feet of well-leased office buildings added to the portfolio in key Canadian markets, including Vancouver, Calgary, Saskatoon and Toronto, strengthening the quality and stability of the portfolio; in addition, the trust has $140.3-million of pending acquisitions under contract;
• 1.2-per-cent growth in comparative properties net operating income (NOI) -- comparative property NOI was up $900,000, or 1.2 per cent, over the second quarter of 2012, with increases across most regions, driven by higher rental rates achieved on new leasing done over the past year and the benefit of step rents;
• Strong occupancy and rental rate increases -- occupancy rate remains strong at 94.9 per cent, well ahead of the national average, with more than 690,000 square feet of new leasing commencing in the quarter and 258,000 square feet of vacancy committed for future occupancy, all at incrementally higher rental rates; average in-place net rents approximately 11 per cent below estimated market rents.

                  SELECTED FINANCIAL INFORMATION
           (in thousands of dollars except per-unit amounts)

                                          Three months ended
                              June 30, 2013  March 31, 2013   June 30, 2012
Investment properties
revenue (1)                  $      198,225  $      189,568  $      168,008
Net operating income
(NOI) (1)(2)                        112,128         107,665          95,455
Comparative properties NOI           69,800          69,662          68,939
Funds from operations
(FFO) (3)                            76,040          72,669          66,633
Adjusted funds from
operations (AFFO) (4)                64,880          61,615          55,961
Investment properties
value (1)                         7,144,652       6,695,410       6,639,139
Debt (1)                          3,470,657       3,326,521       3,648,702
Debt-to-GBV                            46.4%           47.3%           51.2%
Per-unit data (basic)
FFO                          $         0.72  $         0.72  $         0.72
AFFO                                   0.61            0.61            0.61
Distributions                          0.56            0.55            0.55
Portfolio gross leasable
area (square feet) (5)           24,246,403      23,327,935      27,582,915
Occupied and committed
space                                 94.9%           94.7%           95.6%

                  SELECTED FINANCIAL INFORMATION
           (in thousands of dollars except per-unit amounts)

                                                      Six months ended
                                         June 30, 2013   June 30, 2012
Investment properties
revenue (1)                           $        387,793  $      307,238
Net operating income
(NOI) (1)(2)                                   219,361         173,821
Comparative properties NOI                     139,060         137,753
Funds from operations
(FFO) (3)                                      148,710         121,704
Adjusted funds from
operations (AFFO) (4)                          126,495         102,614
Investment properties value (1)
Debt (1)
Debt-to-GBV
Per-unit data (basic)
FFO                                   $           1.43  $         1.46
AFFO                                              1.22            1.23
Distributions                                     1.11            1.10

(1) Metrics include results and balances of equity-accounted
    investments and exclude discontinued operations.
(2) NOI (net rental income) excludes net rental income from
    properties held for sale and discontinued operations.
(3) FFO is net income, adjusted for items including fair-value
    adjustments on investment properties and financial
    instruments, gains on sale, and amortization of equipment.
(4) AFFO is FFO adjusted for amortization of debt costs,
    deferred unit compensation expense, straight-line rent and
    the trust's estimates of normalized leasing costs and normalized
    non-recoverable recurring capital expenditures.
(5) This excludes development and redevelopment properties, and
    properties held for sale, and the prior period also excludes
    discontinued operations -- industrial properties.

"We've assembled a portfolio that is not easy to replicate and, in the process, have become the largest landlord of office space in the Greater Toronto Area with a significant presence in other key markets across the country. We are pleased with our diversified portfolio of central business district assets and our strong balance sheet, which reflects our ongoing strategy of building a high-quality business with increasingly stable and reliable cash flows. Our ability to access the unsecured debt market at attractive rates reflects these efforts," said Michael Cooper, vice-chairman and chief executive officer of Dundee REIT.

Portfolio investment activity

In keeping with its acquisition strategy to intensify in the central business districts of major Canadian markets, Dundee REIT completed office property acquisitions comprising one million square feet for approximately $360.1-million during the quarter. The properties have a weighted average occupancy rate of 99.5 per cent and a weighted average lease term of 5.7 years. These acquisitions are located in key business districts in Vancouver, Saskatoon, Calgary and Toronto, and continue to enhance the quality and diversification of the trust's portfolio.

Acquisitions during the quarter included the following properties in addition to those previously announced:

• 212 King St. W -- a six-storey, 73,000-square-foot office building situated on the west side of the financial district in Toronto, across the street from Roy Thompson Hall: The property is fully leased with a weighted average lease term of approximately 4.9 years. Cambridge FX, the Toronto Symphony Orchestra and the Toronto Argonauts are among the largest tenants in this property. The site is also well suited for future intensification.
• 100 Yonge St. -- a 17-storey, 242,000-square-foot Class A office building in the financial district adjacent and connected to Scotia Plaza: The property is 99 per cent leased with Bank of Nova Scotia occupying nearly half of the space, and a number of tenants in the financial and banking industries occupying much of the remainder. The weighted average lease term is 5.6 years. Dundee REIT acquired 67 per cent of the leasehold interest in the property with a partner acquiring the balance. The trust assumed its proportionate share of a $34.9-million, 3.4-per-cent mortgage due January, 2018.
• IBM Corporate Centre, Calgary -- a 357,000-square-foot institutional quality, Class A office campus consisting of three buildings in Calgary's Beltline constructed in three phases between 2002 and 2008: The complex, in which the trust has held a 33-per-cent ownership interest and managed since 2008, is over 98 per cent occupied, with an average weighted lease term of over five years and in-place rents that are approximately 5 per cent to 10 per cent below market rents. Key tenants include Newalta, IBM, Intact Insurance and Jardine Lloyd Thompson.
• 4561 Parliament Ave., Regina -- a 39,000-square-foot, three-storey office building nearing completion in suburban Regina just south of the airport: Upon completion, the building is expected to obtain a LEED (Leadership in Energy and Environmental Design) silver environmental certification. The building offers ample surface parking and is 100 per cent preleased to two tenants, KGS Group (a regional engineering firm) and Dundee Realty Corp. Both leases are for 10 years and are at market rental rates.

Operational highlights

• Portfolio occupancy remains strong at 94.9 per cent: The overall percentage of occupied and committed space across the trust's portfolio remained strong at 94.9 per cent and well ahead of the national industry average of 91.3 per cent. Occupancy increased from 94.7 per cent at March 31, 2013, as a result of acquisitions completed during the quarter that were over 99 per cent occupied.
• Leasing activity: During the quarter, leases totalling approximately 690,000 square feet of gross leasable area expired or were terminated, and leasing activity included 280,000 square feet of new leases and 412,000 square feet of renewals. To date, the trust has leased 57 per cent of the remaining 2,197,000 square feet of expiries in 2013, and, with 2013 expiring rents being approximately 7 per cent below market, the trust is confident it will capture rent increases as leasing is completed.
• Average in-place net rents 11 per cent below market rents: The trust continues to capture rental rate gains in connection with leasing activity. At the end of the second quarter, the portfolio average in-place rent was $17.43 per square foot, up from $17.26 at March 31, 2013, and $17.22 at Dec. 31, 2012, yet it remains approximately 11 per cent below estimated market rents.

Financial highlights

• Comparative property NOI up $900,000, or 1.2: Comparative property NOI was up $900,000, or 1.2 per cent, over the second quarter of 2012, with increases across most regions driven by higher rental rates achieved on new leasing completed over the past year and the benefit of step rents. Total NOI over the second quarter of 2012 is up $5-million, or 5 per cent, driven largely by the effect of acquisitions in the current and prior year.
• AFFO and FFO in line at 61 cents and 72 cents per unit, respectively: FFO and AFFO per unit are steady on both a sequential basis and compared with the same period in the prior year, reflecting comparative property NOI growth, accretion from acquisitions and savings on refinancing of maturing debt, offset by the effects of continued deleveraging of the trust's balance sheet.

Capital initiatives

Over the past 15 months, the trust has been focused on increasing balance sheet strength, which, in management's view, increases the stability and quality of the trust's cash flows, and should ultimately result in a lower relative cost of capital. The effect of this has been demonstrated by the trust's ability to continue to refinance debt at competitive rates, including accessing the unsecured debt market for the first time as an investment-grade-rated BBB (low) issuer. The trust continues to strategically review its overall debt profile, and identify areas where it can repay high-interest-bearing debt and, where appropriate, enter into new or refinancing arrangements where it takes advantage of longer terms at lower interest rates. When compared with the fourth quarter of 2012, the trust's overall debt metrics have continued to improve.

                         KEY PERFORMANCE METRICS
                                                  June 30,          Dec. 31,
                                                      2013             2012
Financing activities(6)
Weighted average face interest rate                   4.35%            4.50%
Level of debt (debt to gross book value)(7)           46.4%            48.0%
Interest coverage ratio(8)                       2.9 times        2.7 times
Proportion of total debt due in current year           4.3%            10.5%
Debt -- average term to maturity (years)         4.8 years        5.1 years
Variable rate debt as percentage of total debt         3.3%             4.3%

(6) The key performance indicators for Dec. 31, 2012, exclude the results
    of operations and the debt of discontinued operations.
(7) The level of debt is determined as total debt, including debt related
    to equity-accounted investments, divided by total assets (including
    total assets of equity-accounted investments, and adjusted for
    accumulated amortization on property and equipment).
(8) The interest coverage ratio for the period, including results from
    equity-accounted investments, is calculated as net rental income
    plus interest and fee income, less general and administrative
    expenses, all divided by interest expense on debt.

Conference call

Senior management will host a conference call to discuss the results on Aug. 9, 2013, at 9 a.m. ET. To access the call, please dial 647-317-3471 or toll-free at 1-866-551-3680 and use passcode 44853576 followed by the number sign. To access the conference call via webcast, please go to Dundee REIT's website, and click on the link for news and events, then click on calendar of events. A taped replay of the conference call and the webcast will be available 90 days.

Other information

Information appearing in this news release is a select summary of results. The consolidated financial statements, and management's discussion and analysis for the trust, as well as its supplementary information package are available at the Dundee REIT website and on SEDAR.

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