Dream Office Real Estate Investment Trust (D-UN) Q4 2025 earnings summary

Executive summary

• Achieved strongest leasing year since before the pandemic, completing 827,000–830,000 sq ft nationally, with Toronto accounting for the majority and 85% of activity.

• Downtown Toronto committed occupancy reached 87.4% at year-end 2025, exceeding targets and reflecting portfolio concentration in this market.

• Portfolio transformation since 2016 reduced property count from 166 to 24, focusing on core Toronto assets and divesting non-core markets.

• Leasing momentum driven by return-to-office mandates, reduced sublease space, and proactive asset management.

• Strong management alignment with ~33.7% insider ownership and active management partnerships.

Financial highlights

• Q4 2025 diluted FFO per unit was CAD 0.56; full-year FFO per unit reached CAD 2.46, slightly above guidance, but down from prior year.

• Full-year same-property NOI growth was 0.5%, at the lower end of guidance; comparative NOI in Toronto downtown rose 1.8% year-over-year.

• Addressed all CAD 741 million of 2025 debt maturities and extended CAD 375 million revolving credit facility to September 2028.

• Year-end liquidity increased to CAD 172.7–173 million, aided by asset sales and credit facility extension.

• Net asset value per unit at year-end was CAD 49.92, down from CAD 59.47 at year-end 2024 due to cap rate increases and fair value losses.

Outlook and guidance

• Projecting 2026 FFO per unit of CAD 2.25–2.30, a 7.5% decline year-over-year, mainly due to asset sales and conversions.

• Targeting downtown Toronto committed occupancy of 88–89% and in-place occupancy of 82–85% by end of 2026.

• Comparative NOI growth for downtown Toronto expected at 2–5% in 2026; total portfolio NOI growth at 1–3%.

• Management expects continued improvement in occupancy and leasing momentum in 2026, with a focus on tenant retention and value creation.

• No new office construction starts in Downtown Toronto since Q2 2024, supporting stable fundamentals.