Dream Office REIT Reports Q1 2026 Results

OPERATIONAL UPDATE

In the first quarter of 2026, the downtown Toronto office market (which represents 84% of the Trust’s active properties by fair value) realized 2.1 million square feet of positive absorption, and overall market occupancy improved by 150 bps quarter-over-quarter to 85.6%⁽⁶⁾ in Q1 2026. This represents five consecutive quarters of improving occupancy since Q4 2024, when market occupancy was 81.0%⁽⁶⁾.

In downtown Toronto, sublet space decreased by 0.5 million square feet in the quarter bringing the total amount of sublease space in that market down to 2.0 million square feet⁽⁶⁾ consistent with increased need for office space as Canadian companies, led by major financial institutions, proceed with return-to-office initiatives. The new office construction pipeline in downtown Toronto remains low, with just 0.4 million square feet currently under construction⁽⁶⁾.

For the three months ended March 31, 2026, comparative properties NOI for the Trust’s total comparative properties portfolio increased by 4.7%, or $1.1 million, over the prior year comparative quarter, as higher in-place rents and weighted average occupancy driven by rent step-ups and new leasing in Toronto downtown were partly offset by reduced weighted average occupancy in Other markets due to lease terminations. Comparative properties NOI⁽⁴⁾ in Toronto downtown increased by 6.5%, or $1.2 million, over the prior year comparative quarter, driven by higher in-place rents and weighted average occupancy from rent step-ups and new leasing.

For the three months ended March 31, 2026, the Trust secured 116,000 square feet of leasing. As at March 31, 2026, the Trust had 327,000 square feet of contractual maturities over the balance of 2026 as compared to 400,000 square feet of contractual commencements over the same period, representing net positive in-place absorption totalling 73,000 square feet, or 1.7%, over the balance of the year. In Toronto downtown, the Trust had secured 352,000 square feet of contractual commencements over the remainder of 2026 compared to 230,000 square feet of natural expiries. This 122,000 square feet of in-place absorption represents a contractual growth in in-place occupancy totalling 4.2% for the region over the remainder of 2026.

Our Toronto downtown in-place and committed occupancy rate has improved from 87.4% as at December 31, 2025 to 89.8% as at March 31, 2026 and is 5.6% higher than the in-place and committed occupancy rate of 84.2% as at March 31, 2025. Relative to Q4 2025, the increase in Toronto downtown was primarily due to positive in-place absorption (+1.2%), the effect of the reclassification of 212 King Street to assets held for sale at quarter-end due to a binding agreement to sell the property as announced on March 16, 2026 (+0.6%), and higher leasing velocity during the quarter (+0.6%).

Relative to Q4 2025, in-place and committed occupancy in our Other markets region, comprising the Trust’s properties located in Calgary, Saskatoon, Regina, Mississauga and Scarborough, decreased from 72.1% to 71.5%, primarily driven by net negative in-place absorption.

Since the end of the prior quarter, our Toronto downtown in-place occupancy improved from 79.4% to 80.9%. The increase in Toronto downtown in-place occupancy was primarily driven by net positive in-place absorption (+1.2%) as 65,000 square feet of new lease commencements and 45,000 square feet of renewals were partially offset by 75,000 square feet of expiries. Additionally, in-place occupancy in Toronto downtown improved in part due to the effect of the reclassification of 212 King Street to assets held for sale at quarter-end (+0.3%).

The Trust currently has a spread of 8.9% between in-place and in-place and committed occupancy in the region, which is attributable to extended timelines between the signing of a lease with a new tenant and the date that tenant takes economic occupancy in the space. This delay is often attributed to the current environment’s longer fixturing periods as tenants are making significant space planning decisions and fixturing improvements. A significant portion of the leases commencing over the balance of 2026 are currently in the fixturing period, which has driven elevated non-cash straight-line rent in the quarter. The Trust anticipates straight-line rent will remain elevated until the economic commencement of these leases later in the year.

Relative to Q4 2025, our Other markets in-place occupancy decreased from 71.2% to 70.7%, which is primarily attributed to net negative in-place absorption as 29,000 square feet of expiries were partially offset by 16,000 square feet of renewals and 5,000 square feet of new lease commencements.

The Trust has made significant capital investments into our downtown Toronto portfolio over the past seven years so that our best assets are well positioned to attract tenants. We remain committed to continuing to invest in our portfolio to improve occupancy, income and value. In the Other markets region, the Trust continues to manage its assets to improve net cash flow and liquidity, and will continue to seek opportunities to sell assets at a fair price to the Trust.

During Q1 2026, the Trust executed leases totalling approximately 106,000 square feet in Toronto downtown at a weighted average initial net rent of $31.06 per square foot, or 8.3% lower than the weighted average prior net rent per square foot on the same space, with a weighted average lease term of 5.2 years.

In the Other markets region, the Trust executed leases totalling 10,000 square feet over Q1 2026 at a weighted average initial net rent of $16.41 per square foot, or 9.9% higher than the weighted average prior net rent per square foot on the same space, with a weighted average lease term of 5.0 years.

Subsequent to March 31, 2026, the Trust executed a further 23,000 square feet of leases in Toronto downtown at a weighted average initial net rent of $35.33 per square foot, or 10.0% higher than the weighted average prior net rent per square foot on the same space, with a weighted average lease term of 3.9 years. In the Other markets region, the Trust executed a further 9,000 square feet of leases at a weighted average initial net rent of $20.50 per square foot, or 20.6% higher than the weighted average prior net rent per square foot on the same space, with a weighted average lease term of 10.0 years.

DISPOSITION OF 212 KING STREET WEST, TORONTO, ON

On March 16, 2026, the Trust announced that it had entered into a binding agreement to sell 212 King Street West, a 73,000 square foot property located in Toronto, Ontario, for gross proceeds before adjustments of $39.5 million, or approximately $541 per square foot. The transaction is expected to close in the second quarter of 2026, subject to customary closing conditions. As of March 31, 2026, the property was classified as a property held for sale.

The property currently carries an $18.0 million mortgage at a 7.5% interest rate and the Trust intends to use the net proceeds from the sale to repay the outstanding mortgage and pay down the Trust’s revolving credit facilities.

DISPOSITION OF 12800 FOSTER STREET, OVERLAND PARK, KANSAS, U.S.

On January 2, 2026, the Trust sold its sole investment property located in the United States for gross proceeds before transaction costs of $9.5 million (or US$7.0 million). The property was vacant and unencumbered at the time of sale.

UPDATE ON PROGRESS OF 606-4th STREET REDEVELOPMENT PROJECT

The Trust owns a 50% joint venture interest in a partnership for the development project at 606-4th Street in Calgary, Alberta that will convert the existing 126,000 square foot office building into a brand new 166-unit, purpose-built rental residential apartment building. As at March 31, 2026, the property had been fully vacated and demolition progress was underway. The project remains on time and on budget with construction substantial completion scheduled for the fourth quarter of 2027. The tendering process for construction contracts is substantially complete with over 80% of contracts awarded to date, which enhances the predictability of project costs.

FINANCING AND LIQUIDITY UPDATE

As at March 31, 2026, the Trust had $2.2 billion of total assets, including $2.0 billion of investment properties and $1.2 billion of total debt.

On March 31, 2026, the Trust amended and extended the maturity of its $10 million revolving credit facility to March 31, 2028. The amended facility bears interest at the unadjusted one-month term CORRA plus 2.895% or at the bank’s prime rate plus 0.950%.

On February 5, 2026, the Trust negotiated a one-year extension to December 7, 2027 for a $66.5 million interest-only mortgage secured by a property in Scarborough, Ontario, bearing interest at a daily CORRA plus 2.245%. The Trust has previously entered into a fixed-for-variable interest rate swap relating to this mortgage, fixing the interest rate at 6.14%.

As at March 31, 2026, the Trust’s 2026 mortgage maturities totalled $26.0 million across two mortgages, of which $18 million relates to the 212 King Street West mortgage which will be repaid at closing. The Trust anticipates that it will be able to successfully address its remaining 2026 mortgage expiry at or before maturity.

As at March 31, 2026, the Trust had approximately $166.3 million of total liquidity⁽¹²⁾, comprising cash and undrawn revolving credit facilities⁽¹¹⁾ of $91.7 million and additional liquidity related to undrawn amounts on our CIB Facility of $74.6 million, which provides low-cost, fixed-rate financing solely for the purpose of commercial property retrofits to achieve certain energy efficiency savings and greenhouse gas (“GHG”) emission reductions. Cash and undrawn revolving credit facilities⁽¹¹⁾ totalling $91.7 million comprises $10.9 million of cash and $80.8 million of undrawn revolving credit facilities.

During Q1 2026, the Trust drew $0.5 million against the CIB Facility. In total, we have drawn $38.3 million against the CIB Facility since 2022. These draws represent 80% of the costs to date for capital retrofits at certain properties in Toronto downtown for projects to reduce the operational carbon emissions in these buildings. Of the $38.3 million drawn on the CIB Facility, $8.9 million was used to fund the full building retrofit of 366 Bay Street to secure a full building lease for a term of 15 years and $6.3 million was used to fund the development project at 67 Richmond Street West.

SUMMARY OF KEY PERFORMANCE INDICATORS

• Net income for the quarter: For the three months ended March 31, 2026, the Trust generated a net income of $10.1 million. Included in net income for the three months ended March 31, 2026 are net rental income totalling $24.2 million, fair value gains on subsidiary redeemable units, deferred trust units and derivative contracts totalling $11.5 million, realized foreign currency translation adjustments on the disposal of our sole U.S. property of $6.4 million and net income from our investment in Dream Industrial REIT of $2.2 million partially offset by interest expense on debt of $15.6 million, net losses from equity accounted investments of $8.9 million and negative fair value adjustments to investment properties totalling $5.4 million across the portfolio.

• Diluted FFO per unit⁽⁵⁾ for the quarter: For the three months ended March 31, 2026, diluted FFO per unit decreased by $0.11 per unit to $0.57 per unit relative to $0.68 per unit in Q1 2025. The primary drivers of the decline were lower net income due to the sale of assets over 2025 and Q1 2026 including 438 University Avenue, Toronto, 12800 Foster Street, Overland Park in Kansas, U.S. and our vendor takeback mortgage (-$0.16), reduced FFO from Dream Industrial REIT due to the sale of units in 2025 (-$0.07), lower NOI from a property held for sale (-$0.02), lower lease termination and other income (-$0.02) and other items (-$0.01), partially offset by higher straight-line rent revenue on committed leases (+$0.07), higher comparative properties NOI (+$0.06), and lower interest expense (+$0.04).

• Net rental income for the quarter: For the three months ended March 31, 2026, net rental income decreased by 3.3%, or $0.8 million, over the prior year comparative quarter due to lower income attributed to the sale of 438 University Avenue in Q1 2025 and our U.S. property in January 2026, partially offset by higher straight-line rent and higher comparative properties NOI.

• Comparative properties NOI⁽⁴⁾ for the quarter: For the three months ended March 31, 2026, comparative properties NOI increased by 4.7%, or $1.1 million, over the prior year comparative quarter, as higher in-place rents and weighted average occupancy driven by rent step-ups and new leasing in Toronto downtown were partly offset by reduced weighted average occupancy in Other markets due to lease terminations.

  For the three months ended March 31, 2026, comparative properties NOI in Toronto downtown increased by 6.5%, or $1.2 million, over the prior year comparative quarter, driven by higher in-place rents and weighted average occupancy from rent step-ups and new leasing. In the Other markets region, comparative properties NOI decreased by 2.7%, or $0.1 million, over the prior year comparative quarter, primarily driven by negative net absorption.

• In-place occupancy: Relative to Q4 2025, our Toronto downtown in-place occupancy improved by 1.5% from 79.4% in Q4 2025 to 80.9% in Q1 2026. The increase in Toronto downtown in-place occupancy was primarily driven by net positive in-place absorption (+1.2%) as 65,000 square feet of new lease commencements and 45,000 square feet of renewals were partially offset by 75,000 square feet of expiries. Additionally, in-place occupancy in Toronto downtown improved in part due to the effect of the reclassification of 212 King Street to assets held for sale at quarter-end (+0.3%).

  In the Other markets region, in-place occupancy decreased by 0.5% relative to Q4 2025. The decrease in in-place occupancy in Other markets was driven by net negative leasing absorption as 29,000 square feet of expiries were partially offset by 16,000 square feet of renewals and 5,000 square feet of new lease commencements.

• Lease commencements for the quarter: For the three months ended March 31, 2026, excluding temporary leasing, 110,000 square feet of leases commenced in Toronto downtown at net rents of $31.37 per square foot, or 7.1% lower compared to the previous rent on the same space, with a weighted average lease term of 8.3 years. In the Other markets region, excluding temporary leasing, 21,000 square feet of leases commenced at $17.74 per square foot, or 6.1% lower than the previous rent on the same space, with a weighted average lease term of 7.1 years.

• NAV per unit⁽¹⁴⁾: As at March 31, 2026, our NAV per unit decreased to $49.61 compared to $49.92 at December 31, 2025. The decrease in NAV per unit relative to December 31, 2025 was primarily driven by fair value losses on investment properties primarily due to maintenance capital write-offs in both regions and net losses from equity accounted investments, partially offset by cash flow retention (FFO net of distributions) and fair value gains on interest rate swap contracts. As at March 31, 2026, equity per the condensed consolidated financial statements was $0.9 billion.

• Fair value adjustments to investment properties for the quarter: For the three months ended March 31, 2026, the Trust recorded a fair value loss totalling $5.4 million, comprising fair value losses of $3.3 million in Toronto downtown and $2.1 million in Other markets. Fair value losses in both regions were primarily driven by write-offs of maintenance capital spend.

CONFERENCE CALL

Management will host a conference call to discuss the financial results on Friday, May 8, 2026, at 10:00 a.m. (ET). To access the conference call, please dial 1-800-715-9871 in Canada or 647-932-3411 elsewhere. To access the conference call via webcast, please go to Dream Office REIT’s website at www.dreamofficereit.ca and click on the link for News, then click on Events. A taped replay of the conference call and the webcast will be archived for 90 days.

ANNUAL MEETING OF UNITHOLDERS

Dream Office REIT welcomes its investors to its annual meeting of unitholders at the TMX Market Centre, 120 Adelaide Street West, Toronto, Ontario M5H 1T1 on Wednesday, June 3, 2026 at 12:00 p.m. (ET). The audio webcast and digital replay can be accessed by going to www.dreamofficereit.ca, clicking on news and events and selecting events.

OTHER INFORMATION

Information appearing in this press release is a selected summary of results. The condensed consolidated financial statements and Management’s Discussion and Analysis (“MD&A”) of the Trust are available at www.dreamofficereit.ca and on www.sedarplus.ca.

Dream Office REIT is an unincorporated, open-ended real estate investment trust. Dream Office REIT is a premier office landlord in downtown Toronto with over 4 million square feet owned and managed. We have carefully curated an investment portfolio of high-quality assets that are well located in central financial districts with convenient access to public transport amenities. For more information, please visit our website at www.dreamofficereit.ca.

NON-GAAP FINANCIAL MEASURES, RATIOS AND SUPPLEMENTARY FINANCIAL MEASURES

The Trust’s condensed consolidated financial statements are prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (“IFRS Accounting Standards”). In this press release, as a complement to results provided in accordance with IFRS Accounting Standards, the Trust discloses and discusses certain non-GAAP financial measures, including FFO, comparative properties NOI, cash and undrawn revolving credit facilities, total liquidity, adjusted EBITDAFV, trailing 12-month adjusted EBITDAFV, trailing 12-month interest expense on debt, net total debt, net total assets, normalized trailing 12-month adjusted EBITDAFV and total equity (including subsidiary redeemable units) and non-GAAP ratios, including diluted FFO per unit, level of debt (net total debt-to-net total assets), interest coverage ratio, net total debt-to-normalized trailing 12-month adjusted EBITDAFV ratio (years) and NAV per unit, as well as other measures discussed elsewhere in this release. These non-GAAP financial measures and ratios are not standardized financial measures under IFRS Accounting Standards and might not be comparable to similar financial measures disclosed by other issuers. The Trust has presented such non-GAAP financial measures and non-GAAP ratios as Management believes they are relevant measures of the Trust’s underlying operating and financial performance. Certain additional disclosures such as the composition, usefulness and changes, as applicable, of the non-GAAP financial measures and ratios included in this press release are expressly incorporated by reference from the MD&A for the first quarter of 2026 and can be found under the section “Non-GAAP Financial Measures and Ratios” and respective sub-headings labelled “Funds from operations and diluted FFO per unit”, “Comparative properties NOI”, “Level of debt (net total debt-to-net total assets)”, “Net total debt-to-normalized trailing 12-month adjusted EBITDAFV ratio (years)”, “Interest coverage ratio (times)”, “Cash and undrawn revolving credit facilities and total liquidity”, “Total equity (including subsidiary redeemable units)”, “Adjusted earnings before interest, taxes, depreciation, amortization and fair value adjustments (“adjusted EBITDAFV”)”, “Trailing 12-month Adjusted EBITDAFV and trailing 12-month interest expense on debt”, and ” NAV per Unit”. The MD&A for the first quarter of 2026 is available on SEDAR+ at www.sedarplus.ca under the Trust’s profile and on the Trust’s website at www.dreamofficereit.ca under the Investors section. Non-GAAP financial measures should not be considered as alternatives to net income, net rental income, cash flows generated from (utilized in) operating activities, cash and cash equivalents, total assets, non-current debt, total equity, or comparable metrics determined in accordance with IFRS Accounting Standards as indicators of the Trust’s performance, liquidity, leverage, cash flow, and profitability. Reconciliations for FFO, comparative properties NOI, cash and undrawn revolving credit facilities, total liquidity, adjusted EBITDAFV, and total equity (including subsidiary redeemable units) to the nearest comparable IFRS Accounting Standards measure are contained at the end of this press release.

FORWARD-LOOKING INFORMATION

This press release may contain forward-looking information within the meaning of applicable securities legislation, including, but not limited to statements regarding our objectives and strategies to achieve those objectives; statements regarding the value and quality of our portfolio, the effect of the Trust’s leasing strategy on the return on invested capital, occupancy at our buildings, property value, cash flows, liquidity and refinancing value; our strategies to reduce risk and improve the value of individual assets within the portfolio; the Trust’s growing confidence in the office market and leasing demand, including in downtown Toronto and the impact on the Trust’s portfolio over the next year; the Trust’s expectations regarding the office sector and the impact on the Trust including occupancy, operational performance and financial results thereto; the focus on its buildings and tenants and its ability to improve occupancy and increase the value of the business; the impact of return-to-office mandates; the Trust’s leasing performance and its focus on leasing vacancies and pursuing renewals; future growth in committed occupancy, net operating income and value; the Trust’s expectations regarding market conditions and its impact on the spread between in-place and committed occupancy, and the impacts and timing thereof; the commitment to continue to invest in the Trust’s Toronto downtown portfolio to improve occupancy, income and value; the Trust’s ability to sell assets in the Other markets region, including pricing thereof; the Trust’s ability to complete the sale of investment properties under contract, including 212 King Street West; the effect of portfolio positioning on long-term performance and our ability to attract tenants; the effect of building improvements on tenant experience and performance; our ability to complete leases that are in an advanced stage of negotiation; our expectations regarding straight-line rent and our belief that straight-line rent will remain elevated until economic commencement of leases in the fixturing period; our expectations regarding lease commencements and net rents; our development, redevelopment and renovation plans, including timelines, square footage, our ability to lease properties under development and other project characteristics; the profitability and value of contemplated development projects; our expectations regarding 606 4th Street, including timing, construction and budget; the effect of redevelopment projects on leasing risk, portfolio quality, portfolio risk and portfolio value; the effect of contemplated development projects on building operational and financial risk; our future capital requirements and cost to complete development projects; the expectation that we will be able to use our CIB Facility to fund development costs for certain projects; our ability to increase building performance and achieve certain energy efficiency and greenhouse gas reduction goals, including in respect of specific properties and of retrofits made in connection with the CIB Facility; expectations regarding our financing undertakings, including our ability to address future debt maturities; capital allocation, investments and expected benefits; the use of proceeds from dispositions and the effect of those uses on leverage and liquidity; prospective leasing activity, including with respect to our strategy to attract future potential tenants; the safety of our business; and our overall financial performance, profitability, value, safety and liquidity for future periods and years. Forward-looking statements generally can be identified by words such as “outlook”, “objective”, “may”, “will”, “would”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “should”, “could”, “likely”, “plan”, “project”, “budget”, “continue” or similar expressions suggesting future outcomes or events. 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, 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, including in respect of real estate; mortgage and interest rates and regulations; inflation; risks related to a potential economic slowdown in certain of the jurisdictions in which we operate and the effect inflation and any such economic slowdown may have on market conditions and lease rates; risks associated with unexpected or ongoing geopolitical events, including disputes between nations, war, terrorism or other acts of violence; the uncertainties around the availability, timing and amount of future equity and debt financings; development risks including construction costs, project timings and the availability of labour; NOI from development properties on completion; the impact of duties, tariffs and other trade restrictions on the Trust; the effect of government restrictions on leasing and building traffic; the ability of the Trust and its tenants to access government programs; the financial condition of tenants and borrowers; employment levels; the uncertainties around the timing and amount of future financings; leasing risks, including those associated with the ability to lease vacant space and properties under development; rental rates on future leasing; and interest and currency rate fluctuations.

Our objectives and forward-looking statements are based on certain assumptions, which include but are not limited to: that the general economy remains stable; our interest costs will be relatively low and stable; that we will have the ability to refinance our debts as they mature; inflation and interest rates will not materially increase beyond current market expectations; conditions within the real estate market remain consistent; the timing and extent of current and prospective tenants’ return to the office; our future projects and plans will proceed as anticipated; that government restrictions on the ability of us and our tenants to operate their businesses at our properties will not be imposed in any material respects; competition for acquisitions remains consistent with the current climate; and that the capital markets continue to provide ready access to equity and/or debt to fund our future projects and plans. All forward-looking information in this press release speaks as of the date of this press release. Dream Office 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 Office REIT’s filings with securities regulators, including its latest annual information form and MD&A. These filings are also available at Dream Office REIT’s website at www.dreamofficereit.ca.

APPENDICES

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Contacts

For further information, please contact:

Michael J. Cooper
Chairman and Chief Executive Officer
(416) 365-5145
mcooper@dream.ca

Jay Jiang
Chief Financial Officer
(416) 365-6638
jjiang@dream.ca