Dream Industrial Real Estate Investment Trust

Please be advised that all participants are currently in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star then 0. During this call, management of DREAM Industrial 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 Industrial REITs 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 Industrial REITs filings with securities regulators. including its latest annual information form and MD&A. These filings are also available on Dream Industrial REIT's website at www.dreamindustrialreit.ca. Your host for today will be Mr. Alexander Sanikov, CEO of Dream Industrial REIT. Mr. Sanikov, please proceed.

Thank you. Good morning, everyone. Thank you for joining us today for Dream Industrial REIT's first quarter 2025 conference call. Here with me today is Lennis Kwon, our Chief Financial Officer. We started off 2025 with healthy operating and financial results. For the quarter, we delivered 5.8% year-over-year FFO per unit growth, driven by comparable properties NOI growth of 3.1%. We continue to observe stable activity in the leasing market. So far in 2025, we have signed 1.5 million square feet of leases. Rental spreads were healthy at 57% and 51% in Ontario and Quebec, respectively. In the West, where we have seen a meaningful increase in leasing activity, the spreads have been consistent with prior quarters at 9%. In Europe, leasing momentum remained steady as we signed over 700,000 square feet of leases at an average spread of 16%, including the lease-up of our 140,000 square foot vacancy in France which pushed occupancy up to the same level as a year ago at 96.9%. We ended the quarter with in-place and commuted occupancy at 95.4% and a stable tenant retention ratio. Our first quarter results highlight the strength and the resilience of our business, supported by a robust balance sheet. When considering the current economic climate, the contractual rent growth in our portfolio is a key driver of resilient cash flows. The average rent steps in our Canadian portfolio are over 3%. In Europe, our portfolio is well protected against inflation, with 85% of leases indexed directly to CPI, and the remainder subject to fixed contractual escalators. We have already seen the advantage of growing organically with CPI during high inflationary periods of 2022 and 2023, when our European portfolio delivered approximately 10% organic growth. We have taken a proactive approach in reviewing our tenant base for tariff exposure. This included a direct outreach to over 250 of our major occupiers to better understand any potential impacts and any incremental space requirements associated with tariffs, as well as a comprehensive risk assessment of our top 100 tenants across our wholly owned and managed portfolios. We found that our portfolio generally has limited direct tariff exposure across a diverse tenant mix. Turning over to the occupier market. The positive momentum we have observed in late 24 carried into early 25, with leasing activity remaining healthy, particularly amongst the small and mid-bay users, while the large bay segment showed a gradual rebound. In March and April, we observed slower new leasing activity and longer decision timelines across Ontario and Quebec, largely influenced by the uncertainty surrounding tariff discussions as select occupiers adopted a wait-and-see approach. As we move into May, we're starting to see encouraging sign of leasing activity picking up again. Meanwhile, renewal activity across our various market has remained healthy and we are achieving our targeted net rents. At the same time, we have seen robust leasing momentum in Western Canada, exceeding our expectations. Both in Calgary and in Edmonton, we see broad base demand across all unit sizes, resulting in occupancy increase of 80 basis points over last quarter. We're also making progress on development leasing with over 450,000 square feet of leases and active negotiations at our recently completed Balzac developments, which will lift the occupancy at those projects to over 90%. Europe has remained consistently strong throughout this period, supported by sustained occupier demand and limited new supply. While today's environment presents a higher degree of uncertainty, it is creating new opportunities as well. we are beginning to observe pockets of leasing demand across Canada driven by the shifting trade dynamics. For example, some tenants are rerouting their supply chains or capitalizing on the increasing domestic demand for goods imported from Asia and Europe in response to additional costs from tariffs. Additionally, the higher tariffs recently imposed by the U.S. on certain countries relative to Canada's more moderate trade position are leading some occupiers, particularly those in consumer packaged goods, chemical, and automotive sectors, to choose Canadian distribution hubs as strategic alternatives for servicing the North American markets. We're already seeing this in our recent leasing velocity with increased tenant inquiries and an uptick in RFP activity in the past few weeks. To put this into perspective, on our February call, we highlighted 2 million square feet of new leases signed or in advanced negotiations. Over the past two months, we have successfully converted over 1.2 million square feet of that pipeline into new leases, with an additional 660,000 square feet of potential new lease opportunities added to the pipeline. Our NCLE revenue program is growing and increasingly contributing to our results. We have made significant progress on our solar program. During the quarter, we substantially completed a project in the Netherlands at an estimated yield on cost of 10%, and commence construction on four new projects with an expected yield on cost of over 8%. Our near-term solar pipeline is comprised of 80 projects in various stages of feasibility, representing over $100 million in investments at an average yield on cost of 8% to 10%. In addition, we have been actively exploring distributed generation opportunities, which would allow us to sell surplus energy back to the grid in some of our Canadian markets. translating into meaningful additional scale of our solar program. Our focus on private capital partnerships remains a key source of long-term recurring and diversified revenue. Our property management and leasing platform generated $3 million in net fees for the quarter, 19% higher than the prior year. We expect these fees to grow as we add scale to our ventures, and with our recently completed acquisitions in the Dream Summit Venture, we expect to add more than $2 million in incremental revenue on a run rate basis. We're also executing on our strategy to upgrade the power capacity at select sites across our portfolio for data center users. For our pilot program, we have received favorable early feedback from the utility providers for up to 180 megawatts of power across three sites located in Ontario and up to 40 megawatts of additional power capacity on one of our joint venture assets in Ontario. We are highly encouraged by this initial feedback. At the proposed power levels, we believe that these sites will be attractive to a wide range of data center users, and we intend to commence leasing discussions over the coming months as we advance our power procurement work. We are also looking to expand our Powered Land portfolio across Canada and Europe by adding new sites to this program. With that, we remain committed to disciplined capital allocation. Supported by a balance sheet strength, we have been actively deploying capital into our private ventures at compelling returns. Despite the ongoing economic uncertainty, we continue to see evidence of strong private market demand and healthy pricing for our assets. Over the course of late March and April, we engaged in discussions or have received bids on over 20 potential non-strategic dispositions representing more than $350 million in values across a wholly owned portfolio and private ventures, at pricing in line or above appraised values. This reinforces our view that private market valuations remain strong and supports our assessment of the value of our assets. In March, we implemented a normal course issue or bid program to accretively deploy capital and take advantage of the market volatility. Subsequent to the quarter, We repurchased 1.9 million units at a weighted average price of $10.42 for a total consideration of $20 million. Looking ahead to the rest of the year and to 2026, we have strong conviction that our core business is underpinned by multiple growth drivers capable of delivering consistent organic growth. I will now turn it over to Lennis to discuss our financial highlights.

Thank you, Alex. Our business continues to deliver stable and consistent growth. we reported diluted FFO per unit of $0.26 for the first quarter, which was 5.8% higher than the prior year quarter. The solid year-over-year growth was primarily driven by comparative properties NOI growth of 3.1% for this quarter, led by 4.2% growth in Canada and 1.6% in Europe. In addition, early renewals from existing tenants lease-up of newly completed development and fee income generated from our property management platform contributed to our overall FFO growth. Our net asset value per unit at quarter end was $16.76, relatively consistent from the prior quarter. Due to increased market volatility, we continue to actively monitor our tenant receivables and any arrears. Our bad debt provision levels remain in line with prior year, although we are currently managing an isolated dispute with a tenant, which is unrelated to recent tariff developments, translating into increased provisions in the quarter. We continue to actively pursue financing initiatives to optimize our cost of debt and maintain a strong and flexible balance sheet with ample liquidity. To date, we have addressed approximately half of our 2025 debt maturities. During the quarter, we repaid $60 million of European mortgages and amended our U.S. $250 million unsecured term facility, extending VAT maturity to February 2029, inclusive of a one-year extension option at our discretion, at an all-in rate of 3.17%. There were no other changes to terms and covenants. We also entered into an unsecured credit facility with a Canadian financial institution for up to $50 million to fund commercial property retrofits related to energy efficiency savings and greenhouse gas emission reductions. We expect the interest rate to be around 3% and the first draw to be in late June. Our Q1 credit metrics illustrate our solid financial position with leverage in our targeted mid-30% range and net debt to EBITDA ratio of 8.2 times. We are actively evaluating several refinancing options for the remaining $450 million debt maturity, which is in December 2025. We are currently observing rates in the low 4% range in the Canadian unsecured market with Euro equivalent debt 40 to 50 basis points lower. With growing cash flow generated from the business and total available liquidity of over $750 million, we retain sufficient capital to fund our value-add and strategic initiatives, including funding our development pipeline solar program and contributing to our private capital partnerships. Our first quarter performance demonstrates the resilience of our business, and we remain confident in our growth trajectory for the balance of the year and into 2026. Given the uncertainty in the current economic and political environment, it is difficult to predict the impact on our tenants' businesses and their operational decisions. We do expect it will increase the variability in the pace at which leasing decisions are made. As such, we issued a wider range for our 2025 outlook this past February. Alongside the embedded organic growth drivers in our existing portfolio, we have integrated additional drivers of growth including development, a property management and leasing platform, solar, and other ancillary revenue streams. These initiatives have already proven to contribute meaningfully to our business and position us well for long-term sustainable growth. While we have a high degree of visibility on our near-term renewals and are making solid progress on new leasing activity, It is difficult to predict the impact on the leasing velocity in any given quarter, especially from prolonged tariff uncertainty. Accordingly, the expected growth outlined in our outlook was weighted towards the second half of the year, reflecting our expectation of some occupancy variability in the first half. With that, the upper end of our initial range for 2025 comparative properties NOI and FFO is currently less likely and the 2025 comparative properties and FFO per unit growth is more likely to land at around the lower end of the outlook range. Our outlook for 2026 is to a greater degree informed by our ability to capture market rents, execute on our growth drivers, and maintain occupancy at the long-term average levels. Accordingly, we continue to expect a continued strong pace of FFO per unit growth into 2026. Our FFO growth expectations for 2025 and 2026 continue to be predicated on current foreign exchange rates, leverage levels, and interest rate expectations, as well as expected timing of the lease up of our transitory vacancies. I will turn it back to Alex to wrap up.