DIR.UN Dream Industrial Real Estate Investment Trust

Dream Industrial REIT (DIR.UN-TSX) or (the “Trust” or the “REIT” or “we”) today announced the launch of a $250 million equity offering and an update on its robust pace of capital deployment.

ACQUISITION UPDATE

The Trust continues to execute on its strategy to grow and upgrade portfolio quality in its target markets. Below, the Trust has provided an update on its acquisition activity since Q2-2021.

• Completed the acquisition of seven assets totalling approximately 1.4 million square feet for a total purchase price of over $202 million, equating to a weighted average capitalization rate (“cap rate”) of approximately 4.7%;
• Waived all conditions on four assets totalling approximately 1.1 million square feet for a total purchase price of over $209 million, equating to a weighted average cap rate of approximately 4.6%;
• The Trust is also in exclusive negotiations on seven assets totalling approximately 2.6 million square feet for a total purchase price of approximately $420 million.

“Our acquisition pipeline remains robust, and we have completed or secured over $700 million of acquisitions in addition to approximately $100 million of acquisitions announced along with our Q2-2021 results. These acquisitions are consistent with our strategy of adding high-quality logistics assets in markets with significant barriers to entry that offer strong organic growth potential over the long term,” said Brian Pauls, Chief Executive Officer of Dream Industrial REIT. “Our on-the-ground local acquisition teams allow us to consistently access a deep pool of investment opportunities, through both marketed and off-market deals at attractive economics to the REIT. We are poised to complete over $3 billion of acquisitions since we announced our European expansion at the beginning of 2020, significantly enhancing our portfolio quality, diversification, growth potential, and balance sheet flexibility. With a high-quality $5 billion global industrial portfolio and an investment grade balance sheet with access to financing at attractive rates, we are well-positioned to continue to create long term sustainable value for our unitholders.”

Completed acquisitions

• A 360,000 square foot modern logistics facility located in the Tilburg Region, one of the top logistics nodes in the Netherlands, for a purchase price of €37 million ($55 million). Fully refurbished and expanded in the past year, the asset has a clear ceiling height of over 35 feet across nearly two-thirds of its footprint. The property is 100% leased to a logistics company for a 15-year term with the rental rate on the lease fully indexed to CPI.
• A 124,000 square foot asset located in the Greater Montreal Area for a purchase price of $26 million. Completely renovated in the early 2010s, this single-tenant asset is 100% occupied with a weighted average lease term (“WALT”) of approximately six years and in-place rents approximately 10% below current market rent, providing an attractive balance between stability and cash flow growth. The asset is LEED Gold certified and features geothermal heating, energy efficient lighting and skylights for additional natural light.
• A 118,000 square foot urban logistics asset in the Eindhoven Region, Netherlands for €14 million ($21 million). Substantially renovated in 2013/2014, the building has a clear ceiling height of 31 feet and is 100% occupied by a tenant in the Food and Beverage industry. The asset includes a rooftop solar array as well as full LED lighting.

• The Trust also closed on four assets across Canada, Germany, and the Netherlands for a total purchase price of $100 million, which added approximately 770,000 square feet of high-quality logistics assets to the Trust’s portfolio. These acquisitions were previously announced in the "Business Update" section of the Trust’s Q2-2021 report.

Recently waived acquisitions

• In the Netherlands, the Trust waived all conditions on a 600,000 square foot urban logistics and high tech industrial campus located in the heart of the Randstad region, known as Technology Park Ypenburg (“TPY”), for €100 million ($144 million). TPY is well located at the junction of the A4, A12, and A13 motorways in a densely populated part of The Hague, where land is scarce and vacancy rates are amongst the lowest in the Netherlands. The complex is well-connected with extensive public transport connections, including a tram station with direct service to The Hague’s central train station. The asset is 100% occupied by tenants primarily in the technology and life sciences sector with a WALT of seven years.The going-in yield on the transaction is approximately 4.5% with significant upside from growing rents, which are below market and fully indexed to CPI, and additional density on the site. There are two pre-leased expansions for 65,000 square feet currently underway, the costs of which are included in the purchase price. These expansion projects are expected to be finalized in 2022.The Trust has also identified a third expansion site that could accommodate approximately 39,000 square feet of additional density. The Trust expects to intensify this site in the next 24 months, with yields on cost forecast to exceed 6.5%.

• In Germany, the Trust waived all conditions on two logistics assets totalling 380,000 square feet for €33 million ($48 million). These assets are located in close proximity to major transportation corridors and are being acquired below replacement cost. These assets offer the potential to grow rental rates on lease roll-over as well as to potentially add incremental density over time.
• In Canada, the Trust waived all conditions on a 78,000 square foot distribution facility in the Greater Toronto Area for $18 million. Built in the early 2000s, the asset has a clear ceiling height of 28 feet and is located just north of Highway 401 in Ajax, near Amazon’s new one million square foot distribution centre that is expected to be completed in late 2021. The Trust agreed to acquire the asset fully vacant and shortly after the completion of the due diligence period, leased the entire building for a 10-year term with 3.5% annual contractual rental rate growth, resulting in an initial yield of approximately 4.7%.

Additional acquisitions

Furthermore, the Trust has approximately $270 million of assets totalling 1.4 million square feet in Ontario under contract and is currently in exclusive negotiations on an additional approximately €105 million ($151 million) of assets totalling 1.2 million square feet in Germany. These assets are expected to close in the next 60-90 days, subject to satisfactory due diligence. Including the acquisitions that are currently firm and in exclusivity, the Trust expects to complete at least $2.5 billion of acquisitions in 2021, representing an over 75% increase in the Trust’s investment properties value since the beginning of 2021.

FINANCING UPDATE

The Trust continues to focus on growing and improving portfolio quality while maintaining a strong and flexible balance sheet. Subsequent to Q2-2021, the Trust repaid approximately $265 million of Canadian mortgages at an average interest rate of 3.54%. The Trust’s debt strategy has allowed it to reduce its average interest rate on its total debt outstanding by approximately 250 basis points or approximately 70% over the past 12 months, from over 3.4% to 1% currently. At the same time, the Trust’s secured debt as a proportion of total debt outstanding is now below 40%, compared to 100% a year ago.

The Trust today announced that it has entered into an agreement to sell, on a bought deal basis, 15,160,000 units of the Trust (“Units”) at a price of $16.50 per Unit to a syndicate of underwriters led by TD Securities Inc. (the “Underwriters”) for total gross proceeds of approximately $250 million (the “Offering”). In addition, the Trust has granted the Underwriters an over-allotment option to purchase up to an additional 2,274,000 Units, exercisable in whole or in part, for a period of 30 days following closing of the Offering. If the over-allotment option is exercised in full, the gross proceeds of the Offering will total approximately $288 million. Closing of the Offering is subject to certain customary conditions, including the approval of the Toronto Stock Exchange. The Offering is expected to close on or about October 22, 2021.

The Trust intends to use the net proceeds from the Offering, together with cash on hand: (i) to fund the closing of the aforementioned acquisitions and (ii) for general trust purposes.

“This equity offering allows us to continue to execute on our growth strategy while retaining ample financial flexibility to capitalize on the deep pool of investment opportunities available to the REIT,” said Lenis Quan, Chief Financial Officer of Dream Industrial REIT. “We expect this offering will allow us to execute on our near-term acquisition pipeline, while keeping leverage in our targeted mid-to-high 30% range.”

The Units will be offered by way of a shelf prospectus supplement to the Trust's base shelf prospectus dated October 11, 2019, to be filed on or about October 15, 2021 with the securities commissions and other similar regulatory authorities in each of the provinces of Canada.

This news release does not constitute an offer to sell securities, nor is it a solicitation of an offer to buy securities, in any jurisdiction in which such offer or solicitation is unlawful. This news release is not an offer of securities for sale in the United States (“U.S.”). The securities being offered have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and accordingly are not being offered for sale and may not be offered, sold or delivered, directly or indirectly within the U.S., its possessions and other areas subject to its jurisdiction or to, or for the account or for the benefit of a U.S. person, except pursuant to an exemption from the registration requirements of that Act.

About Dream Industrial Real Estate Investment Trust

Dream Industrial REIT is an unincorporated, open-ended real estate investment trust. As at June 30, 2021, Dream Industrial REIT owns and operates a global portfolio comprising approximately 39 million square feet of gross leasable area in key markets across North America and Europe. Dream Industrial REIT’s objective is to continue to grow and upgrade the quality of its portfolio and to provide attractive overall returns to its unitholders. For more information, please visit www.dreamindustrialreit.ca

Forward looking information

This press release may contain forward-looking information within the meaning of applicable securities legislation, including statements regarding the potential upside from growing rents; expected timing of expansion projects and potential for densification, including expected yield on costs; the potential to grow rental rates on lease roll-over of certain assets; the potential to add incremental density over time with certain assets; the Trust’s intended use of the net proceeds from the Offering; the Trust’s ability to execute on its near-term acquisition pipeline; the filing date of the Trust’s shelf prospectus supplement and timing for closing of the Offering; the effect of acquisitions on its leverage levels; the anticipated timing of closing of the acquisitions referred to in this press release; the expected going-in cap rate of the acquisitions; and the Trust’s acquisition pipeline and the expected costs of such acquisitions;. 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 REIT’s control, which could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking information. These risks and uncertainties include, but are not limited to, general and local economic and business conditions; employment levels; mortgage and interest rates and regulations; the uncertainties around the timing and amount of future financings; uncertainties surrounding the COVID-19 pandemic; the financial condition of tenants; leasing risks, including those associated with the ability to lease vacant space; rental rates on future leasing; and interest and currency rate fluctuations. The Trust’s objectives and forward-looking statements are based on certain assumptions, including that the general economy remains stable, interest rates remain stable, conditions within the real estate market remain consistent, competition for acquisitions remains consistent with the current climate and that the capital markets continue to provide ready access to equity and/or debt. All forward-looking information in this press release speaks as of the date of this press release. Dream Industrial REIT does not undertake to update any such forward-looking information whether as a result of new information, future events or otherwise except as required by law. Additional information about these assumptions and risks and uncertainties is contained in Dream Industrial REIT’s filings with securities regulators, including its latest annual information form and MD&A. These filings are also available at Dream Industrial REIT’s website at www.dreamindustrialreit.ca.

For further information, please contact:

Dream Industrial Real Estate Investment Trust

Brian Pauls	Lenis Quan	Alexander Sannikov
Chief Executive Officer	Chief Financial Officer	Chief Operating Officer
(416) 365-2365	(416) 365-2353	(416) 365-4106
bpauls@dream.ca	lquan@dream.ca	asannikov@dream.ca