Dream Global Real Estate Investment Trust Tr Unit DUNDF

Dream Global Announces Third Quarter Results

[Passerbuyer]

TORONTO, Nov. 08, 2018 (GLOBE NEWSWIRE) -- DREAM GLOBAL REIT (TSX:DRG.UN, FRA:DRG) (or "Dream Global", the "Trust" or "we") today reported its financial results for the third quarter of 2018. Dream Global REIT's management team will be holding a conference call Friday, November 9, 2018 at 8:00am (EDT).

HIGHLIGHTS

•   Strong operating performance drives Dream Global’s Q3 results  

• Fully diluted Funds from Operations (“FFO”) was 25.3 cents per unit in the quarter, compared to 26.5 cents per unit in Q2 2018. As expected, Q3 FFO per unit was impacted by dilution from timing of deployment of funds from the June 2018 equity offering;
• Cash generated from operating activities increased to $29.0 million in Q3 2018, an increase of $1.2 million, or 4.3%, compared to Q3 2017;
• Comparative properties net operating income (“NOI”) increased by 3.8% year-over-year from Q3 2017, reflecting the continuing leasing momentum, indexation and rental growth in the German portfolio;
• In-place and committed occupancy rate increased by 245 basis points from September 30^th, 2017 in comparative properties, including 310 basis points occupancy growth in comparative Dutch properties. The Trust’s value-add properties had a 10.7% occupancy gain contributing to the overall occupancy growth;
• Net rental income increased by 19% in Q3 2018 from Q3 2017, reflecting both the Trust’s external growth initiatives and organic growth driven by occupancy gains and rental increases in the Trust’s portfolio;
• Deutsche Post 2018 indexation; Rental income under Deutsche Post leases is subject to automatic adjustments in relation to German CPI. During August 2018, CPI index reached 111.7 index points resulting in an increase of 4.1%, or approximately €540 thousand in gross rental income on an annualized basis.

•   Proceeds from the June equity offering fully deployed

• Four acquisitions for €138.9 million ($209.2 million), excluding transaction costs, were closed in the quarter. In addition, the Trust entered into a purchase agreement for Innovum, in Nuremberg, Germany for a purchase price of €79.6 million. The Trust expects to close Innovum, as well as the previously announced acquisition of Handwerkstrasse, in Stuttgart, Germany in November;
• Weighted average going-in cap rate was 5.5% on the acquisitions completed in the quarter; including the two aforementioned assets currently under contract, the weighted average going-in cap rate for all acquisitions completed in 2018 is expected to be 5.8%;
• Dispositions totaling €30.9 million ($46.6 million) closed during Q3 with over €95 million additional dispositions expected to close in Q4, which includes our share of proceeds on the disposition of our joint venture interest in Werfthaus, in Frankfurt, Germany for €37.2 million, or €74.3 million at 100%.

•   Capital structure provides solid foundation

• The portfolio had €37.4 million ($56.8 million) of fair value increases in Q3 2018 as a result of completion of certain value add initiatives, continuing strength of the German occupier markets, and market rent growth as well as capitalization rate compression in key German office markets;
• Level of debt declined to 41.9% at the end of Q3 2018 from 46.3% at the end of 2017; including the Trust’s share of joint ventures, the ratio declined to 44.7% at the end of Q3 2018 from 49.2% at the end of 2017.

KEY PERFORMANCE INDICATORS

			September 30, 2018				June 30, 2018				September 30, 2017
Portfolio
Number of properties(1)				236				243				282
Gross leasable area ("GLA") (in square feet) (1)				19,969,789				19,268,752				20,369,253
Occupancy rate – including committed (excluding redevelopment assets) (1)				90.8	%			90.0	%			87.3	%
Occupancy rate – including committed (period-end) (1)				89.4	%			89.7	%			87.5	%
Average in-place net rent per square foot (period-end) (1)			€	11.17			€	11.05			€	10.71
Market rents above in-place net rents(1)				5.1	%			5.4	%			2.3	%
Operating results – in €
Net operating income("NOI")(3) (2)			€	46,013			€	45,413			€	40,257
Operating results – in $
Net operating income("NOI")(3) (2)			$	69,949			$	69,866			$	59,288
Net rental income				63,117				63,095				53,040
Funds from operations ("FFO")(3)				49,271				48,042				42,722
Cash generated from operating activities				28,994				36,656				27,795
Adjusted funds from operations ("AFFO")(3)				45,292				44,044				40,785
Average exchange rate (Canadian dollars to one euro)				1.520				1.539				1.472
Distributions
Declared distributions			$	38,379			$	36,432			$	35,123
Distribution reinvestment and Unit Purchase Plan (“DRIP”) participation ratio (for the period)				16	%			19	%			16	%
Per unit amounts(4)
	Distribution		$	0.20			$	0.20			$	0.20
	Basic FFO			0.26				0.27				0.26
	Basic AFFO			0.24				0.25				0.25
	Diluted FFO			0.25				0.27				0.25
Financing (excluding Trust’s proportionate share of properties held through joint ventures and associates)
Weighted average face rate of interest on debt (period-end)				1.64	%			1.63	%			2.06	%
Interest coverage ratio(3)				5.0 times				4.9 times				4.4 times
Level of debt (net debt-to-gross book value, net of cash)(3)				41.9	%			40.4	%			47.8	%
Debt – average term to maturity (years)(3)(5)				4.9				5.1				5.8
Financing (including Trust’s proportionate share of properties held through joint ventures and associates)
Level of debt (net debt-to-gross book value, net of cash)(3)				44.7	%			43.4	%			50.7	%

1. Includes Trust’s owned share of joint ventures, but excludes properties classified as assets held for sale.  
2. Includes Trust’s owned share of joint ventures.
3. Net operating income, FFO, AFFO, interest coverage ratio, level of debt (net debttogross book value, net of cash) are nonGAAP measures used by Management in evaluating operating performance.  Please refer to the cautionary statements under the heading “NonGAAP Measures” in this press release.
4. A description of the determination of basic and diluted amounts per unit can be found in section "Non-GAAP measure and other disclosures" under the heading "Weighted average number of Units" of the latest management discussion and analysis of the Trust .
5. This metric excludes amounts outstanding under the revolving credit facility.

 

GROWTH INITIATIVES

Acquisitions  During the third quarter, the Trust closed on acquisitions of four properties for a total purchase price of €138.9 million ($209.2 million) excluding transaction costs, including the previously announced acquisition of Podbi Park in Hannover, as well as three additional acquisitions in the Netherlands; Bleiswijk, Gaudi and Yin Yang.

On August 31^st, the Trust acquired a 258,900 square foot high quality industrial property located in Bleiswijk, at the center of the Randstad metropolitan region, between the Hague and Rotterdam. The property is 100% occupied by a high covenant tenant, and is expected to deliver strong NOI performance. The purchase price was €12.1 million ($18.4 million) with a going-in cap rate of 9.3%.

On September 20^th, the Trust also acquired Gaudi, a Core+ office asset totalling 89,000 square feet in the South East submarket of Amsterdam, Netherlands. The property is located adjacent to Apollo, one of the Trust’s existing investments. It was built in 2004 and is among the newest buildings in the submarket, currently fully leased to the Municipality of Amsterdam for a term of 5 years, with estimated in-place rents at more than 15% below market. The purchase price of €23.7 million ($36.0 million) represents a going-in cap rate of 5.8%.

On September 21^st, the Trust acquired also Yin Yang, in Utrecht, Netherlands, a 74,000 square foot value-add office building for €11.8 million ($17.9 million). The building is 70% occupied with a WALT of 4.3 years. The Trust expects to implement its well established office concepts in the property and stabilize the asset at a higher occupancy resulting in NOI and value growth. The going-in cap rate is 5.8% and is expected to average 7.8% over the next five years.

During the quarter, the Trust entered into an agreement to acquire Innovum, a 379,500 square foot office property located in Nuremburg, Germany. This centrally located office campus consists of eight buildings developed and refurbished between 2000 and 2012 around a historic typewriter factory. The site enjoys direct subway access as well as a strong local amenity base.  It is currently 95% leased to 37 tenants with a WALT of 3.4 years. The Trust estimates that in-place rents are 15% below market. The purchase price is approximately €79.6 million with a going-in cap rate of 5.1%, and is expected to close on November 9^th, 2018.

Source:
https://www.nasdaq.com/press-release/dream-global-announces-third-quarter-results-20181108-01768