Dream Office Real Estate Investment Trust (D-UN) Q4 2024 earnings summary

Executive summary

• 2024 marked the most active leasing year since pre-COVID, with 114 deals totaling over 635,000 sq ft, surpassing previous years in deal volume and velocity.

• Owns and manages over 2.9M sf of high-quality office assets, mainly in downtown Toronto, with 82% of portfolio fair value in this market.

• Reported Q4 2024 net loss of $19.1 million, improved from $42.4 million loss in Q4 2023, mainly due to negative fair value adjustments and impairment charges.

• Major refinancing was completed for nearly 60% of total debt maturing in 2025, with favorable terms and no paydowns required.

• Sale of 438 University closed for CAD 105 million, unlocking additional portfolio benefits and supporting deleveraging.

Financial highlights

• Q4 2024 diluted FFO was CAD 0.72 per unit, down from CAD 0.75 in Q4 2023, mainly due to higher interest expense.

• 2024 reported FFO per unit was CAD 2.98, up 4% year-over-year; recurring FFO (excluding non-recurring items) was CAD 2.88, at the high end of guidance.

• Net asset value per unit was CAD 59.47, down 3% from Q3, reflecting CAD 39 million in fair value write-downs.

• Comparative properties NOI was flat for Q4 and up 2% for the year versus 2023.

• Total assets of $2.6B and 4.8M sf gross leasable area as of Q4 2024.

Outlook and guidance

• Committed downtown occupancy expected to dip to 81% in 2025, then rise to high 80s in 2026 and stabilize above 90% in 2027.

• Recurring FFO per unit for 2025 projected at CAD 2.60–2.70, with comparative NOI expected to be flat to low single-digit growth.

• Annual distribution to be maintained at CAD 1 per unit.

• Management expects continued operational and financial stability in 2025, with a focus on leasing up vacancies and executing redevelopment projects.

• Future development includes major mixed-use projects at 250 Dundas St. W, 212-220 King St. W, and 2200 Eglinton Ave. E, targeting significant residential and office expansion.