Ms. Jane Gavan reports

DREAM GLOBAL ANNOUNCES THIRD QUARTER RESULTS

Dream Global Real Estate Investment Trust has released its financial results for the third quarter of 2018. Dream Global REIT's management team will be holding a conference call on Friday, Nov. 9, 2018, at 8 a.m. ET.

Highlights:

• Strong operating performance drives Dream Global's Q3 results:
  • Fully diluted funds from operations (FFO) were 25.3 cents per unit in the quarter, compared with 26.5 cents per unit in Q2 2018. As expected, Q3 2018 FFO per unit was impacted by dilution from timing of deployment of funds from the June, 2018, equity offering.
  • Cash generated from operating activities increased to $29-million in Q3 2018, an increase of $1.2-million, or 4.3 per cent, compared with Q3 2017.
  • Comparative properties net operating income (NOI) increased by 3.8 per cent year over year from Q3 2017, reflecting the continuing leasing momentum, indexation and rental growth in the German portfolio.
  • In-place and committed occupancy rate increased by 245 basis points from Sept. 30, 2017, in comparative properties, including 310 basis points in occupancy growth in comparative Dutch properties. The trust's value-add properties had a 10.7-per-cent occupancy gain, contributing to the overall occupancy growth.
  • Net rental income increased by 19 per cent in Q3 2018 from Q3 2017, reflecting both the trust's external growth initiatives and organic growth driven by occupancy gains and rental increases in the trust's portfolio.
  • Rental income under Deutsche Post leases is subject to automatic adjustments in relation to German CPI (consumer price index). During August, 2018, CPI reached 111.7 index points, resulting in an increase of 4.1 per cent, or approximately 540,000 euros, in gross rental income on an annualized basis.
• Proceeds from the June, 2018, equity offering fully deployed:
  • Four acquisitions for 138.9 million euros ($209.2-million), excluding transaction costs, were closed in the quarter. In addition, the trust entered into a purchase agreement for Innovum in Nuremberg, Germany, for a purchase price of 79.6 million euros. The trust expects to close Innovum, as well as the previously announced acquisition of Handwerkstrasse in Stuttgart, Germany, in November, 2018.
  • Weighted average going-in cap rate was 5.5 per cent on the acquisitions completed in the quarter; including the two aforementioned assets currently under contract, the weighted average going-in cap rate for all acquisitions completed in 2018 is expected to be 5.8 per cent.
  • Dispositions totalling 30.9 million euros ($46.6-million) closed during Q3, with over 95 million euros of additional dispositions expected to close in Q4, which includes the trust's share of proceeds on the disposition of its joint venture interest in Werfthaus in Frankfurt, Germany, for 37.2 million euros, or 74.3 million euros at 100 per cent.
• Capital structure provides solid foundation:
  • The portfolio had 37.4 million euros ($56.8-million) of fair value increases in Q3 2018 as a result of completion of certain value-add initiatives, continuing strength of the German occupier markets and market rent growth, as well as capitalization rate compression in key German office markets.
  • The trust's level of debt declined to 41.9 per cent at the end of Q3 2018 from 46.3 per cent at the end of 2017; including the trust's share of joint ventures, the ratio declined to 44.7 per cent at the end of Q3 2018 from 49.2 per cent at the end of 2017.

                                              KEY PERFORMANCE INDICATORS

                                                                     Sept. 30, 2018   June 30, 2018  Sept. 30, 2017 
Portfolio                                                                                                       
Number of properties                                                            236             243             282
Gross leasable area (GLA) (in square feet)                               19,969,789      19,268,752      20,369,253
Occupancy rate -- including committed (excluding 
redevelopment assets) (%)                                                      90.8            90.0            87.3
Occupancy rate -- including committed (period-end) (%)                         89.4            89.7            87.5
Average in-place net rent per square foot (period-end) (euros)                11.17           11.05           10.71
Market rents above in-place net rents (%)                                       5.1             5.4             2.3
Operating results (euros)                                                                                          
Net operating income (NOI) (thousands)                                       46,013          45,413          40,257
Operating results                                                                                                  
Net operating income (thousands)                                           $ 69,949        $ 69,866        $ 59,288
Net rental income (thousands)                                                63,117          63,095          53,040
Funds from operations (FFO) (thousands)                                      49,271          48,042          42,722
Cash generated from operating activities (thousands)                         28,994          36,656          27,795
Adjusted funds from operations (AFFO) (thousands)                            45,292          44,044          40,785
Average exchange rate (Canadian dollars to one euro)                          1.520           1.539           1.472
Distributions                                                                                                      
Declared distributions (thousands)                                           38,379          36,432          35,123
Distribution reinvestment and unit purchase plan (DRIP)
participation ratio (for the period) (%)                                         16              19              16
Per-unit amounts                                                                                                   
Distribution                                                                 $ 0.20          $ 0.20          $ 0.20
Basic FFO                                                                      0.26            0.27            0.26
Basic AFFO                                                                     0.24            0.25            0.25
Diluted FFO                                                                    0.25            0.27            0.25
Financing (excluding trust's proportionate share of 
properties held through joint ventures and associates)                                           
Weighted average face rate of interest on debt (period-end) (%)                1.64            1.63            2.06
Interest coverage ratio                                                   5.0 times       4.9 times       4.4 times
Level of debt (net debt to gross book value, net of cash) (%)                  41.9            40.4            47.8
Debt -- average term to maturity (years)                                        4.9             5.1             5.8
Financing (including trust's proportionate share of 
properties held through joint ventures and associates)                                           
Level of debt (net debt to gross book value, net of cash) (%)                  44.7            43.4            50.7

Growth initiatives

Acquisitions

During the third quarter, the trust closed on acquisitions of four properties for a total purchase price of 138.9 million euros ($209.2-million), excluding transaction costs, but including the previously announced acquisition of Podbi Park in Hannover, as well as three additional acquisitions in the Netherlands: Bleiswijk, Gaudi and Yin Yang.

On Aug. 31, 2018, the trust acquired a 258,900-square-foot, high-quality industrial property located in Bleiswijk at the centre of the Randstad metropolitan region, between The Hague and Rotterdam. The property is 100 per cent occupied by a high-covenant tenant and is expected to deliver strong NOI performance. The purchase price was 12.1 million euros ($18.4-million), with a going-in cap rate of 9.3 per cent.

On Sept. 20, 2018, the trust also acquired Gaudi, a Core+ office asset totalling 89,000 square feet in the southeast submarket of Amsterdam, Netherlands. The property is located adjacent to Apollo, one of the trust's existing investments. It was built in 2004 and is among the newest buildings in the submarket. It is currently fully leased to the Municipality of Amsterdam for a term of five years, with estimated in-place rents at more than 15 per cent below market. The purchase price of 23.7 million euros ($36-million) represents a going-in cap rate of 5.8 per cent.

On Sept. 21, 2018, the trust also acquired Yin Yang in Utrecht, Netherlands, a 74,000-square-foot value-add office building, for 11.8 million euros ($17.9-million). The building is 70 per cent occupied with a weighted average lease term of 4.3 years. The trust expects to implement its well-established office concepts in the property and stabilize the asset at a higher occupancy, resulting in NOI and value growth. The going-in cap rate is 5.8 per cent and is expected to average 7.8 per cent over the next five years.

During the quarter, the trust entered into an agreement to acquire Innovum, a 379,500-square-foot office property located in Nuremburg, Germany. This centrally located office campus consists of eight buildings developed and refurbished between 2000 and 2012 around a historic typewriter factory. The site enjoys direct subway access as well as a strong local amenity base. It is currently 95 per cent leased to 37 tenants with a WALT of 3.4 years. The trust estimates that in-place rents are 15 per cent below market. The purchase price is approximately 79.6 million euros, with a going-in cap rate of 5.1 per cent, and is expected to close on Nov. 9, 2018.

Dispositions

During the three months ended Sept. 30, 2018, the REIT disposed of 16 German properties and two Dutch properties for an aggregate gross sales price of approximately 30.9 million euros ($46.6-million), increasing total sales during 2018 to 27 investment properties for approximately 50.1 million euros ($76.6-million).

On Nov. 7, 2018, the REIT and its joint venture partner completed the sale of their respective joint venture interests in Werfthaus in Frankfurt, Germany. The trust's share of the gross sale price amounted to 37.2 million euros, representing a 14-per-cent premium to the most recent book value. As part of the transaction, the purchaser will assume the existing 40.7-million-euro (20.4 million euros at share) 3.1 per cent mortgage maturing in 2023, subject to a customary mark-to-market adjustment.

"We are pleased with the price we achieved for Werfthaus, capitalizing on the strength of the German investment market," commented Alex Sannikov, chief operating officer of Dream Global. "We opportunistically recycled capital from this asset and have already accretively reinvested the proceeds into high-quality acquisitions announced today with a stronger growth profile and higher total returns."

Operating highlights and initiatives

Occupancy

Excluding redevelopment assets, the occupied and committed occupancy of the trust's total portfolio was 90.8 per cent at Sept. 30, 2018, representing an increase of 350 basis points since Q3 2017. On a comparative property basis, occupancy increased by 245 basis points to 90.7 per cent at Sept. 30, 2018, relative to Q3 2017, excluding redevelopment assets.

Comparative properties NOI

For the three months ended Sept. 30, 2018, comparative properties NOI increased by 1.1 million euros, or 3.8 per cent, in Q3 2018, compared with Q3 2017. For the nine months ended Sept. 30, 2018, comparative properties NOI increased by 2.8 million euros, or 3.5 per cent, from the comparative period in 2017. The increase was driven by higher in-place rents and increased occupancy in the comparative properties.

Strong operating environment

Office vacancy rate in Germany's Big 7 markets declined to 3.9 per cent at the end of the third quarter, a drop of 100 bps from Q3 2017. Over the last 12 months, prime rents increased in all Big 7 cities in Germany. The biggest increases were registered in Berlin (plus 12 per cent), Stuttgart (plus 7 per cent) and Cologne (plus 5 per cent). Fundamentals in the Dutch office market continued to strengthen, leading to a decline in the vacancy rate in the G5 office markets to 7.1 per cent in Q3 2018, a 200 bps decline from the end of 2017 and a 70 bps decline over Q2 2018.

Financial highlights

Funds from operations

FFO for the three months ended Sept. 30, 2018, was $49.3-million, compared with $42.7-million for the three months ended Sept. 30, 2017. On a per-unit basis, basic FFO for the quarter ended Sept. 30, 2018, was 25.6 cents per unit, flat compared with Sept. 30, 2017. On a fully diluted basis, FFO for the quarter ended Sept. 30, 2018, was 25.3 cents per unit, no change from the comparative period of last year.

Adjusted funds from operations

AFFO was $45.3-million for the three months ended Sept. 30, 2018, compared with $40.8-million for the three months ended Sept. 30, 2017. On a per-unit basis, basic AFFO for three months ended Sept. 30, 2018, was 24 cents per unit, compared with 25 cents per unit for the quarter ended Sept. 30, 2017.

Cash generated from operating activities

Cash generated from operating activities was $29-million for the three months ended Sept. 30, 2018, compared with $27.8-million for the three months ended Sept. 30, 2017. The increase in FFO, AFFO and cash flow from operations in Q3 2018, compared with Q3 2017, reflects the trust's investments in the Netherlands and Germany, as well as comparative properties operating performance, offset by dilution impact on deployment of equity offering proceeds and the expiries of 2018 Deutsche Post leases.

Net rental income

For the three months ended Sept. 30, 2018, net rental income increased by 19 per cent to $63.1-million, compared with Q3 2017, reflecting the trust's growth initiatives and strong leasing markets.

Capital initiatives

Reduced leverage

The trust's level of debt was 41.9 per cent at the end of Q3 2018, declining from 46.3 per cent at the end of 2017. Including the trust's share of debt from investment in joint ventures and associates, its level of debt was 44.7 per cent at the end of Q3 2018, compared with 49.2 per cent at the end of 2017. On Oct. 9, 2018, the trust placed a senior mortgage in relation to the acquisition of Podbi Park for 46.75-million euros for a term of 10 years at a rate of 1.84 per cent. The trust has the option to draw an additional 9.35 million euros at any time during the term of the loan. The trust expects to partially finance the acquisition of Innovum with a senior mortgage, with the remaining acquisitions added to its unencumbered asset pool.

Equity

On Sept. 30, 2018, the trust had 192,052,084 units outstanding at the Nov. 7, 2018, closing price of $13.81 per unit. The trust's market capitalization is $2.7-billion.

Management changes

The REIT has appointed Mr. Sannikov to the position of chief operating officer. In that role, Mr. Sannikov will have oversight of the operating performance of the trust's properties and portfolio strategy, as well as capital allocation of the trust's core, value-add and redevelopment assets.

"Alex has been an invaluable member of our management team from the inception of Dream Global in 2011. He has been instrumental to achieving our strategy of growing in scale and quality in the best office markets in Europe," commented Jane Gavan, chief executive officer of Dream Global. "In his new role, Alex will have responsibility for driving higher returns from our investments through value-add strategies, with a focus on customer satisfaction and improving our competitiveness in a dynamic office environment."

Mr. Sannikov joined Dream Global in 2008. He most recently acted as the REIT's senior vice-president of commercial properties. Prior to joining Dream Global, Mr. Sannikov was with American Appraisal in Moscow, Russia.

Conference call details

Dream Global's management team will be holding a conference call on Friday, Nov. 9, 2018, at 8 a.m. ET. To access the conference call, please dial 1-888-465-5079 in Canada and the United States, or 416-216-4169 elsewhere. The passcode to access the call is 9227230. A taped replay of the call will be available for 90 days. For access details, please go to Dream Global's website.

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 the company's website and on SEDAR.

About Dream Global Real Estate Investment Trust

Dream Global is a 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 19.3 million square feet of gross leasable area of office, industrial and mixed-use properties across Germany, the Netherlands, Austria and Belgium.

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