Dream Office Real Estate Investment Trust

Good morning, ladies and gentlemen. Welcome to the Dream Office REIT Q3 2025 conference call for Friday, November 7, 2025. During this call, management of Dream Office REIT may make statements containing 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 Office REIT's control that could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking information. Additional information about these assumptions and risks and uncertainties is contained in Dream Office REIT's filings with securities regulators, including its latest annual information form and MDNA. These filings are also available on Dream Office REIT's red site at www.dreamofficereit.ca. Later in the presentation, we will have a question and answer session. To queue up for a question, press star 1 on your telephone keypad. Your host for today will be Mr. Michael Cooper, Chair and CEO of Dream Office REIT. Mr. Cooper, please go ahead.

Thank you very much, Operator. Good morning to everybody and thank you for joining our call. This morning we're here once again with Jay Zhang, the CFO, and Gord Wadley, our Chief Operating Officer. We think the third quarter was a pretty significant quarter for Dream Office. We have been able to secure high-quality tenants and are filling up a lot of vacant spaces as we turn over some of our weaker tenants. We've seen a much stronger leasing market. And we hope that over the next couple of quarters, some of the tenants that are committed and not in place will take possession and will continue to lease more space. I think the most interesting number is excluding 74 Victoria, which the federal government vacated at the end of last year. The rest of our downtown Toronto portfolio is now over 90% committed. And we can identify many vacant spaces that are quite leaseable. We expect to make progress throughout the balance of this year and into 2026. So we're feeling pretty good about the shape we're in. With some of the large deals that we've done, getting long-term leases with stable tenants, we have given up some occupancy to make space for them, and Gord will go over that in more detail. But generally, we're seeing the demand for space to be increasing. We see a lot more people back to work. And the market seems to be getting a little bit stronger. And we expect to see that continue throughout the next few quarters. So with that, I'll turn it over to the team to make their prepared comments.

Well, that's great. Thanks very much, Michael. Good morning. I hope everyone's keeping well. As always, it's really nice to get a chance to connect with you all today and share some of the work that our team's been doing year to date. I also look forward to taking the opportunity to share some of our priorities to close out 2025, as well as key milestones regarding our asset strategies, operating performance and leasing. We remain very committed and I would say laser focused on leasing up and improving the quality of our assets, despite operating in a challenging environment for the sector. For the last two years, we've continued to see very steady and measured growth across the portfolio. As a management team, we've been very consistent in the messaging where we'd say there would be incremental net absorption quarter over quarter, and we've been very hypersensitive in identifying and managing risks well in advance to mitigate any material drop in income or committed occupancy. This approach has yielded another consecutive quarter where we've seen committed occupancy growth directly in line with the guidance we shared throughout the year. For Dream Office, leasing continues to actually be quite resilient. We've done over 630,000 square feet of gross leasing year to date, and that's made up of 110 deals across the portfolio. More specifically, in Toronto, we've done 520,000 square feet completed across 92 deals, and of that, 252,000 square feet were new leases and 270,000 square feet were renewals. We're in advanced negotiations on another 60,000 square feet of deals, which would bring our annual total just from Toronto to 580,000 square feet. For context for everybody, the three-year average annual leasing volume in Toronto was about 530,000 square feet. This pushed us on track to exceed this level in 2025 with even fewer assets. For the 252,000 square feet of new leasing, NERs are outperforming the business plan at about $18 a square foot versus $15 This outperformance is driven by longer waltz, which allow higher TI and LC costs to be amortized over the extended terms. The average new lease term is eight and a half years versus five years what we had in the budget, reducing effective costs to $11 a square foot per year versus $16 a square foot per year. While net rents remain in line with our guidance and top of the market for their respective classes in the mid-30s. For the 267,000 square feet of renewals, NERs are in line with guidance, even with a few large deals executed at lower NERs to accommodate certain blend-in extends and protect occupancy. Most notably, IFDS at 30 Adelaide to accommodate a large new tenant at 30 Adelaide to backfill the space we got back. On the balance of the renewals, we've seen improved performance with the weighted average NERs, kind of low to mid-20s when you exclude those big blend-in extends. To quickly touch on other markets, year-to-date we've completed 110,000 feet of leasing across 21 deals in Western Canada, including 23,000 square feet of new leasing across 10 deals and 87,000 square feet of renewals across 11 deals. We are well in line with our three-year average annual leasing volume in other markets or Western Canada. Deal velocity and absorption and committed occupancy is honestly what I get asked the most about by investors, analysts and researchers. I want to give you all some very important context. Our best year of total leasing was 2023, where we did approximately 604,000 square feet gross. And subsequently, the best year of leasing volume, the number of deals that we did, was 2024, where we did 104 deals. We're quite pleased year to date that we've eclipsed total square footage leased already with 630,000 square feet and total deal volume with over 110 transactions. We still have another quarter to go. We have consistently said our goal is to get incrementally better each quarter, and we have, from a committed occupancy perspective, quarter over quarter since 2023. A big catalyst for our absorption has been our model suite program. Since 2024, we've built out 26 model modified suites across 120,000 square feet of vacancy in the portfolio. By being proactive and investing the capital and improving space to attract move-in ready tenants, we've leased 20 of the 26 spaces for 85,000 square feet. We're also conditional on another three for an additional 15,000 feet, which would be 101,000 of the 121,000, or approximately 90% of the units. This summer, many of you might remember, but we had a slide at our AGM that illustrated the growth in occupancy on our Bay Street collection assets. In Q2 2024, we were at 72% occupancy. we showed that to close out Q1 2025, we were up almost 400 basis points to 76%. And now with our model suite deals completed on Bay Street and the two conditional deals we have in the pipeline, we're up another 500 basis points to 81%, just on the Bay Street collection. As such, we're pretty pleased to see some steady growth in committed occupancy since Q1 2024 in that specific note. Over the course of the year, we've consistently worked and guided our committed occupancy to be in the mid to high 80s to close out 2025. We're well on pace to achieve this and feel confident to reach about 86.5% supported by deals signed this year on vacant space with future commitments. A great example is our largest asset at Adelaide Place. Currently, it has 78.5% in-place occupancy. I'm pleased to share that we've done significant leasing in that asset the last 12 months to the tune of 220,000 square feet, bringing our committed, not our in-place, but our committed occupancy to 95.7%. These deals, while not immediately contributing to NOI, will see our NOI go from $15.5 million to just over $18 million in the next year at AP alone. This de-risks and anchors the portfolio by being a large, fully leased asset with strong, steady cash flow, great covenants, long term. Going asset by asset, when you drill down a little further, if you net out our largest single exposure, being the remaining vacancy that we had at 74 Victoria, our committed occupancy for the portfolio, as Michael said, is about 90%. As a quick reminder, we had PSPC inform us just over 18 months ago that they were leaving the building in full, giving us 200,000 square feet of vacancy. Since then, we've secured 70,000 square feet direct with PSPC. We completed another deal for 44,000 square feet, and we have a very active prospect in advanced negotiations for another 25,000 square feet. That would take us to over 130,000 square feet of the vacancy that we had received just over a year ago. We had about 187,000 square feet of expiries this year, of which 91,000 square feet are renewals. and it got us to a renewal ratio over the year of about 48.7% year-to-date. What I would like everybody to know is, on top of that, we did another 40,000 square feet of new leasing on that exact same expiring space in advance of them vacating this year, which gets us to 74% coverage on units that are expiring. Ultimately, the management team feels quite good going into 2026 and carrying on the momentum. As a Toronto portfolio, has about 340,000 square feet of expiries next year. Of these, about 40% are addressed. Net of known vacates, we only have about another 110,000 square feet of unaddressed expiries. When you look at the deal velocity and absorption we've had over the years, it's quite manageable. Of this 110,000 square feet, we currently have proposals with about 76,000 square feet So we feel like we're in good shape on addressing year-over-year rollover, and more importantly, backfilling space as it comes up. And we've got a track record of doing that over the course of the past 18 months. In closing, our Q3 results reflect the strength and resilience of DREAM's office strategy and execution. Despite ongoing sector challenges, we've tried to be transparent and share with everyone our guidance and really work towards the guidance and do what we say we're going to do. Our team's proactive approach to leasing, risk management, and asset quality has delivered consistent growth in occupancy and net absorption. Our Toronto and other markets are outperforming historical averages to date over the last five years. Our model suite program and targeted investments continue to attract high-quality tenants, while our disciplined management of renewals and backfilling expiries position us to achieve our committed occupancy targets for year-end and beyond. As we look ahead to 2026, we remain very confident in our ability to sustain this momentum, drive portfolio stability, and create long-term value for our stakeholders. Thank you to our team for all their efforts and continued commitment, and thanks to you all online for your continued support and interest. I'll now turn it over to my good friend and CFO, JJ.