Dominion Energy Annual Report 2014

FY2014 Annual Report · Dominion Energy
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Annual Report 2014
Dream Office REIT

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Letter to Unitholders

In 2014, we remained focused on executing 
our strategy of improving the quality of 
our assets, building strong relationships 
with our tenants, and continually 
improving the service we provide. 

Dream Office REIT finished 2014 strong 
and we are off to a solid start for 2015. 
Excellent tenant retention and new 
leasing momentum in the latter part 
of 2014 have resulted in fourth quarter 
results that are reflective of the appeal 
of the Trust’s portfolio. Tenant retention 
was high at 64% and new leasing 
activity remained strong, resulting in 
quarter-over-quarter positive absorption 
and in-place occupancy increasing by 
30 basis points in Q4 2014. Our portfolio 
continues to perform above the national 
average. We are keenly focused on 
engaging tenants in renewal discussions 
as early as possible, resulting in a 
strong head start on 2015 and 2016 
leasing. We have already addressed 
over half of our 2015 lease expiries, our 
strongest pre-leasing performance over 
the past five years.

We’re making more improvements 
than ever to provide a better tenant 
experience. We view proactive investment 
in our buildings as a key strategy to 
improve tenant retention, attract new 
tenants and reduce energy costs. For 
2015, we will be investing $75 million on 
upgrades and sustainability initiatives, 
the largest annual investment ever made 
by the REIT. 

We plan to further improve the overall 
asset quality of our portfolio by 
disposing of non-core assets. In the 
fourth quarter of 2014, we undertook a 
disciplined asset management review 
of every building in the portfolio and 
identified the assets that are not core 
to our business. Our disposition target 
for 2015 is $300 million, of which 
approximately 50% is currently on the 

market. We will use the proceeds of the 
dispositions to repurchase units under 
our normal course issuer bid or to invest 
in higher quality properties.

In the latter part of 2014, oil prices, the 
Canadian dollar and interest rates have 
declined and provinces are rewriting 
their outlook for growth. Across the 
country, we feel the impact of these 
macro-events to varying degrees. The 
pace of activity in the office sector in 
Alberta has slowed somewhat, with 
tenants, in particular in Calgary and 
Edmonton, putting their decision-
making on hold. Fortunately, the 
average lease term of our Calgary 
and Edmonton portfolios is almost four 
years. Additionally, our average tenant 
size in each of these markets is small 
in comparison to the tenancies of a 
majority of other landlords. With our 
average tenant size in Calgary and 
in Edmonton less than 11,000 square 
feet, our exposure is diversified and, 
historically, these tenancies have 
tended to experience higher retention 
and are generally more sensitive to 
incurring moving costs. In addition, 
these tenancies are not typically the 
targeted customer for new buildings 
presently under development. 

In contrast to a somewhat slower 
economy in Alberta, we continue to see 
robust activity in both downtown and 
suburban Toronto. In our Greater Toronto 
Area portfolio, tour activity in January 
was up almost 30% over the same time 
last year, in part due to our marketing 
initiatives as well as greater activity  
near the airport including a number of

cross-border tenants expanding due to 
a lower Canadian dollar.

We presently estimate our in-place 
rents to be approximately 8% below 
market rents. Our two largest markets, 
downtown Toronto and downtown 
Calgary, presently have in-place rents of 
10% and 15% below market, respectively, 
providing both the opportunity for 
growth or a significant buffer, should we 
see some softening of rental rates.

While we continue to operate in a 
challenging environment, we remain 
focused on executing our strategy of 
improving the quality of our assets, 
building strong relationships with our 
tenants, and continually improving 
the service we provide. We are seeing 
improved tenant retention and some 
exciting new leasing. I believe that 
the buildings in our portfolio appeal 
to tenants and, through the strength 
of our platform, we will continue to 
outperform the market. In our history, 
we’ve never had a better quality 
portfolio or a stronger balance sheet 
with embedded opportunities for growth 
and value creation. 

I would like to thank you for your 
continued support and look forward to 
the upcoming year.

P. Jane Gavan
Chief Executive Officer

March 15, 2015

Portfolio at-a-Glance

DECEMBER 31, 2014

2%
NORTHWEST
TERRITORIES

27%
ALBERTA

5%
BRITISH 
COLUMBIA

Dream Office REIT owns and 
operates high-quality, well-located 
and competitively priced business 
premises. The portfolio comprises 
approximately 24.2 million square 
feet of central business district and 
suburban office properties located 
in Canada’s key office markets.

5%
SASKATCHEWAN

6%
QUÉBEC

52%
ONTARIO

1%
ATLANTIC
CANADA

2%
UNITED STATES

Geographic Diversification 
(% of net operating income)

Photos:  1. Adelaide Place, Toronto  |  2. Gallery Building, Yellowknife  |  3. Scotia Plaza, Toronto  |  4. IBM Corporate Park, Calgary  |  5. 13888 Wireless Way, Richmond, BC

1

$7.0B

TOTAL ASSETS

2.9x

INTEREST COVERAGE  
RATIO 

2

5

7.8%

MARKET RENTS  
ABOVE  
IN-PLACE RENTS 

Diversified, High-Quality Tenants

TENANT  
Bank of Nova Scotia  
Government of Canada 
Government of Ontario  
Bell Canada  
Government of Québec 
Telus  
Enbridge Pipelines Inc. 
State Street Trust Company 
Government of Saskatchewan  
Government of British Columbia  

 OWNED AREA 
(%) 
4.1  
5.9 
2.8 
1.6 
2.7 
1.2 
1.0 
1.0 
1.4 
1.2 

GROSS 
RENTAL REVENUE  
(%)  
7.3 
6.1 
3.3  
1.8  
1.7  
1.5 
1.5  
1.4  
1.3 
1.2  

WEIGHTED AVERAGE  
REMAINING LEASE TERM 
(years)
9.7
3.1
4.6
3.3
12.2
2.1
4.1
7.3
2.2
4.6

Adjusted Funds from Operations (“AFFO”) 
(per unit)

Net Operating Income Breakdown  
(Q4/2014)

$2.60

$2.50

$2.40

$2.30

$2.20

$2.10

$2.00

$1.90

$2.52

28%
SUBURBAN
OFFICE

72%
CENTRAL
BUSINESS
DISTRICT

2010

2011

2012

2013

2014

3

4

 Payout Ratio   
 AFFO/Unit

 Payout Ratio    AFFO/Unit

86.6%

93%

OCCUPANCY

2,200+

TENANTS

5.0

AVERAGE REMAINING
LEASE TERM (years) 

47.5%

LEVEL OF DEBT 

0.21

0.20

0.19

0.18

0.17

0.16

0.15

Q4-12

Q1-13

 
 
 
2

Table of Contents

Management’s discussion 
  and analysis 

1

Management’s 
  responsibility for the 
  consolidated 
  financial statements 

Independent auditor’s 
  report  

Consolidated financial 
  statements 

79

80

81

Notes to the consolidated 
  financial statements 

85

Trustees 

IBC 

Corporate information  

IBC

1

3

4

Photos: 

 1.  Barclay Centre, Calgary

2.  55 King Street West, Kitchener

3.  700 de la Gauchetière, Montréal 

4.   720 Bay Street, Toronto

Management’s	
  discussion	
  and	
  analysis	
  	
  
(All	
  dollar	
  amounts	
  in	
  our	
  tables	
  are	
  presented	
  in	
  thousands,	
  except	
  for	
  rental	
  rates,	
  unit	
  and	
  per	
  unit	
  amounts)	
  

SECTION	
  I	
  –	
  FINANCIAL	
  HIGHLIGHTS	
  AND	
  OBJECTIVES	
  	
  

FINANCIAL	
  OVERVIEW	
  
Total	
   adjusted	
   funds	
   from	
   operations	
   (“AFFO”)	
   for	
   the	
   year	
   ended	
   December	
   31,	
   2014	
   was	
   $273.1	
   million,	
   an	
   increase	
   of	
  	
  
$11.3	
  million,	
  or	
  4.3%,	
  over	
  the	
  prior	
  year	
  (AFFO	
  for	
  the	
  quarter	
  was	
  $68.6	
  million,	
  an	
  increase	
  of	
  $1.6	
  million,	
  or	
  2.4%,	
  over	
  the	
  
prior	
  year	
  comparative	
  quarter).	
  AFFO	
  on	
  a	
  per	
  unit	
  basis	
  for	
  the	
  year	
  ended	
  December	
  31,	
  2014	
  increased	
  to	
  $2.52	
  from	
  $2.47	
  
over	
  the	
  prior	
  year,	
  an	
  increase	
  of	
  2.0%	
  (AFFO	
  on	
  a	
  per	
  unit	
  basis	
  for	
  the	
  quarter	
  increased	
  to	
  $0.63	
  from	
  $0.62	
  over	
  the	
  prior	
  
year	
  comparative	
  quarter,	
  an	
  increase	
  of	
  1.6%).	
  

Total	
  funds	
  from	
  operations	
  (“FFO”)	
  for	
  the	
  year	
  ended	
  December	
  31,	
  2014	
  was	
  $312.8	
  million,	
  an	
  increase	
  of	
  $6.6	
  million,	
  or	
  
2.1%,	
  over	
  the	
  prior	
  year	
  (FFO	
  for	
  the	
  quarter	
  was	
  $78.1	
  million,	
  a	
  marginal	
  decline	
  of	
  $0.1	
  million,	
  or	
  0.1%,	
  over	
  the	
  prior	
  year	
  
comparative	
  quarter).	
  

Diluted	
  FFO	
  on	
  a	
  per	
  unit	
  basis	
  for	
  the	
  year	
  ended	
  December	
  31,	
  2014	
  remained	
  flat	
  at	
  $2.87	
  when	
  compared	
  to	
  the	
  prior	
  year	
  
(diluted	
  FFO	
  on	
  a	
  per	
  unit	
  basis	
  decreased	
  to	
  $0.71	
  from	
  $0.72	
  over	
  the	
  prior	
  year	
  comparative	
  quarter).	
  	
  

The	
  increase	
  in	
  basic	
  AFFO	
  per	
  unit	
  over	
  the	
  prior	
  year	
  and	
  prior	
  year	
  comparative	
  quarter	
  resulted	
  from:	
  

• 

0.5%	
   and	
   0.7%	
   growth	
   in	
   comparative	
   properties	
   net	
   operating	
   income	
   (“NOI”)	
   over	
   the	
   prior	
   year	
   and	
   prior	
   year	
  
comparative	
  quarter,	
  respectively;	
  

Incremental	
  increase	
  in	
  AFFO	
  from	
  our	
  investment	
  in	
  Dream	
  Industrial	
  REIT;	
  

• 
•  A	
  full	
  year	
  of	
  NOI	
  from	
  accretive	
  acquisitions	
  completed	
  in	
  2013;	
  and	
  

• 

Interest	
  rate	
  savings	
  upon	
  refinancing	
  of	
  maturing	
  debt;	
  

Offset	
  by:	
  

•  Dispositions	
  completed	
  during	
  2014.	
  

The	
   decrease	
   in	
   diluted	
   FFO	
   per	
   unit	
   over	
   the	
   prior	
   year	
   comparative	
   quarter	
   primarily	
   resulted	
   from	
   the	
   favourable	
   points	
  
noted	
  above,	
  offset	
  by	
  the	
  write-‐off	
  of	
  straight-‐line	
  rent	
  due	
  to	
  early	
  lease	
  terminations	
  during	
  2014	
  and	
  dispositions	
  completed	
  	
  
during	
  2014.	
  

For	
  the	
  year	
  ended	
  December	
  31,	
  2014,	
  NOI	
  from	
  comparative	
  properties	
  increased	
  over	
  the	
  prior	
  year	
  by	
  $2.2	
  million,	
  or	
  0.5%	
  
(NOI	
   from	
   comparative	
   properties	
   increased	
   by	
   $0.7	
   million,	
   or	
   0.7%,	
   over	
   the	
   prior	
   year	
   comparative	
   quarter).	
   The	
   increase	
  
was	
  mainly	
  driven	
  by	
  higher	
  rental	
  rates	
  achieved	
  on	
  new	
  leasing	
  completed	
  during	
  the	
  quarter	
  and	
  over	
  the	
  past	
  year,	
  and	
  the	
  
benefit	
  of	
  step	
  rents,	
  offset	
  by	
  lower	
  occupancy	
  on	
  an	
  overall	
  basis.	
  NOI	
  from	
  comparative	
  properties	
  decreased	
  over	
  the	
  prior	
  
quarter	
  by	
  $0.3	
  million,	
  or	
  0.2%,	
  mainly	
  due	
  to	
  a	
  tenant	
  in	
  Calgary	
  downtown	
  that	
  vacated	
  approximately	
  100,000	
  square	
  feet	
  
during	
  the	
  previous	
  quarter.	
  	
  

As	
   at	
   December	
   31,	
   2014,	
   overall	
   in-‐place	
   occupancy	
   is	
   up	
   30	
   basis	
   points	
   (“bps”)	
   to	
   91.4%,	
   when	
   compared	
   to	
   the	
   prior	
  
quarter.	
  This	
  is	
  mainly	
  driven	
  by	
  our	
  largest	
  market,	
  Toronto	
  downtown,	
  with	
  a	
  90	
  bps	
  increase,	
  Eastern	
  Canada	
  with	
  a	
  70	
  bps	
  
increase,	
   and	
   occupancy	
   gains	
   in	
   all	
   other	
   regions,	
   except	
   for	
   Calgary	
   downtown	
   and	
   Toronto	
   suburban.	
   As	
   at	
   December	
   31,	
  
2014,	
   overall	
   occupancy,	
   including	
   future	
   commitments	
   on	
   vacant	
   space,	
   remained	
   unchanged	
   at	
   93.0%,	
   with	
   all	
   regions	
  
remaining	
   steady	
   with	
   the	
   exception	
   of	
   Calgary	
   suburban,	
   which	
   experienced	
   a	
   200	
   bps	
   increase	
   while	
   Calgary	
   downtown	
  
declined	
   by	
   140	
   bps.	
   When	
   compared	
   to	
   the	
   prior	
   year,	
   overall	
   occupancy	
   and	
   in-‐place	
   occupancy,	
   including	
   future	
  
commitments	
  on	
  vacant	
  space,	
  were	
  down	
  130	
  bps	
  over	
  the	
  prior	
  year.	
  There	
  were	
  declines	
  in	
  all	
  regions,	
  with	
  the	
  exception	
  	
  
of	
   Toronto	
   downtown,	
   which	
   is	
   our	
   largest	
   market	
   and	
   had	
   posted	
   a	
   50	
   bps	
   increase,	
   as	
   well	
   as	
   Calgary	
   suburban	
   and	
  	
  
Eastern	
  Canada,	
  where	
  occupancy	
  increased	
  250	
  bps	
  and	
  70	
  bps,	
  respectively.	
  Despite	
  the	
  overall	
  decline	
  in	
  occupancy	
  when	
  
compared	
  to	
  the	
  prior	
  year,	
  the	
  Trust	
  is	
  still	
  well	
  above	
  the	
  industry	
  average	
  of	
  89.3%	
  (CBRE,	
  Canadian	
  Market	
  Statistics,	
  Fourth	
  
Quarter	
  2014).	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  1	
  

Average	
   in-‐place	
   net	
   rents	
   continue	
   to	
   increase	
   in	
   most	
   regions	
   across	
   our	
   portfolio	
   as	
   we	
   bring	
   rents	
   to	
   market	
   upon	
   lease	
  
renewal.	
  We	
  ended	
  the	
  quarter	
  with	
  an	
  average	
  in-‐place	
  net	
  rent	
  of	
  $18.22	
  per	
  square	
  foot,	
  representing	
  a	
  $0.39	
  per	
  square	
  
foot,	
  or	
  2.2%,	
  increase	
  over	
  Q4	
  2013	
  and	
  $0.01	
  per	
  square	
  foot,	
  or	
  0.1%,	
  increase	
  over	
  Q3	
  2014.	
  

Estimated	
  average	
  market	
  rents	
  remain	
  approximately	
  8%	
  above	
  average	
  in-‐place	
  net	
  rents.	
  

We	
  ended	
  another	
  quarter	
  with	
  continuing	
  stable	
  debt	
  metrics.	
  Our	
  net	
  debt-‐to-‐gross	
  book	
  value	
  ratio	
  remained	
  low	
  at	
  47.5%.	
  
Our	
  weighted	
  average	
  face	
  rate	
  of	
  interest	
  was	
  4.18%,	
  our	
  interest	
  coverage	
  ratio	
  remained	
  solid	
  at	
  2.9	
  times,	
  our	
  net	
  average	
  
debt-‐to-‐EBITDFV	
   was	
   at	
   7.8	
   years	
   and	
   our	
   pool	
   of	
   unencumbered	
   assets	
   remains	
   at	
   approximately	
   $796	
   million.	
   During	
   the	
  
quarter,	
   we	
   refinanced	
   the	
   Adelaide	
   Place	
   mortgage	
   for	
   $200	
   million	
   at	
   a	
   fixed	
   face	
   rate	
   of	
   3.59%	
   per	
   annum	
   for	
   a	
   ten-‐year	
  
term.	
   During	
   the	
   year,	
   the	
   Trust	
   purchased	
   for	
   cancellation	
   832,200	
   REIT	
   A	
   Units	
   under	
   the	
   normal	
   course	
   issuer	
   bid	
   at	
   an	
  
average	
   price	
   of	
   $25.14	
   per	
   unit	
   (excluding	
   transaction	
   costs)	
   and	
   a	
   total	
   cost	
   of	
   approximately	
   $20.9	
   million.	
   Subsequent	
   to	
  
year-‐end,	
   the	
   Trust	
   purchased	
   an	
   additional	
   835,000	
   REIT	
   A	
   Units	
   at	
   an	
   average	
   price	
   of	
   $26.76	
   per	
   unit	
   and	
   a	
   total	
   cost	
   of	
  
approximately	
  $22.3	
  million.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  2	
  

KEY	
  PERFORMANCE	
  INDICATORS	
  
Performance	
  is	
  measured	
  by	
  these	
  and	
  other	
  key	
  indicators:	
  

Portfolio	
  
Number	
  of	
  properties	
  
Gross	
  leasable	
  area	
  (“GLA”)(1)	
  
Occupancy	
  rate	
  –	
  including	
  committed	
  (period-‐end)(2)	
  
Occupancy	
  rate	
  –	
  in-‐place	
  (period-‐end)(2)	
  
Average	
  in-‐place	
  net	
  rent	
  per	
  square	
  foot	
  (period-‐end)(2)	
  
Market	
  rent/average	
  in-‐place	
  net	
  rent	
  (%)	
  

	
   December	
  31,	
  	
  

	
   September	
  30,	
  

	
   December	
  31,	
  	
  

2014	
  

2014	
  

2013	
  

As	
  at	
  

	
  177	
  
	
  24,223	
  
93.0%	
  
91.4%	
  
	
  18.22	
  
7.8%	
  

	
  $	
  

	
  177	
  
	
  24,219	
  
93.0%	
  
91.1%	
  
	
  18.21	
  
8.2%	
  

	
  $	
  

	
  186	
  
	
  24,562	
  
94.3%	
  
92.7%	
  
	
  17.83	
  
8.9%	
  

	
   $	
  

Operating	
  results	
  	
  
Investment	
  properties	
  revenue(3)	
  
NOI(4)	
  
Comparative	
  properties	
  NOI(4)	
  
FFO(5)	
  
AFFO(6)	
  
Distributions	
  	
  
Declared	
  distributions	
  	
  
DRIP	
  participation	
  ratio	
  (for	
  the	
  period)	
  
Per	
  unit	
  amounts(7)	
  
  Distribution	
  rate	
  	
  
  Basic:	
  	
  
  FFO(5)	
  
  AFFO(6)	
  
  Diluted:	
  
  FFO(5)	
  
  Payout	
  ratio	
  (%):	
  
  FFO	
  (basic)	
  
  AFFO	
  (basic)	
  

Three	
  months	
  ended	
  December	
  31,	
  	
  	
  

Year	
  ended	
  December	
  31,	
  

2014	
  

2013	
  

2014	
  

2013	
  

	
   $	
  

	
  $	
  

	
  205,186	
  
	
  114,164	
  
	
  105,815	
  
	
  78,149	
  
	
  68,570	
  

	
  $	
  

	
  208,418	
  
	
  114,873	
  
	
  105,119	
  
	
  78,242	
  
	
  66,984	
  

	
  $	
  

	
  817,995	
  
	
  458,844	
  
	
  423,937	
  
	
  312,829	
  
	
  273,060	
  

	
  800,531	
  
	
  447,387	
  
	
  421,742	
  
	
  306,247	
  
	
  261,776	
  

	
   $	
  

	
  62,622	
  
29%	
  

	
  $	
  

	
  59,989	
  
24%	
  

	
  $	
  

	
  242,220	
  
26%	
  

	
  $	
  

	
  235,751	
  
21%	
  

	
   $	
  

	
  0.56	
  

	
  $	
  

	
  0.56	
  

	
  $	
  

	
  2.24	
  

	
  $	
  

	
  0.72	
  
	
  0.63	
  

	
  0.71	
  

78%	
  
89%	
  

	
  0.72	
  
	
  0.62	
  

	
  0.72	
  

78%	
  
90%	
  

	
  2.88	
  
	
  2.52	
  

	
  2.87	
  

78%	
  
89%	
  

	
  2.23	
  

	
  2.88	
  
	
  2.47	
  

	
  2.87	
  

77%	
  
90%	
  

As	
  at	
  

	
   December	
  31,	
  	
  

	
   September	
  30,	
  

	
   December	
  31,	
  	
  

2014	
  

2014	
  

2013	
  

Financing	
  	
  
Weighted	
  average	
  effective	
  interest	
  rate	
  on	
  debt	
  (year-‐end)	
  
Weighted	
  average	
  face	
  rate	
  of	
  interest	
  on	
  debt	
  (year-‐end)	
  
Interest	
  coverage	
  ratio	
  (times)(8)	
  
Net	
  average	
  debt-‐to-‐EBITDFV	
  (years)(8)	
  
Net	
  debt-‐to-‐adjusted	
  EBITDFV	
  (years)(8)	
  
Level	
  of	
  debt	
  (net	
  debt-‐to-‐gross	
  book	
  value)(8)	
  
Level	
  of	
  debt	
  (net	
  secured	
  debt-‐to-‐gross	
  book	
  value)(8)	
  
Debt	
  –	
  average	
  term	
  to	
  maturity	
  (years)	
  
Unencumbered	
  assets	
  
Unsecured	
  convertible	
  and	
  non-‐convertible	
  debentures	
  
(1)  In	
  thousands	
  of	
  square	
  feet	
  and	
  excludes	
  redevelopment	
  properties	
  and	
  assets	
  held	
  for	
  sale.	
  
(2)  Includes	
  investments	
  in	
  joint	
  ventures	
  and	
  excludes	
  redevelopment	
  properties	
  and	
  assets	
  held	
  for	
  sale.	
  
(3)  On	
  a	
  non-‐GAAP	
  basis	
  as	
  revenue	
  includes	
  investments	
  in	
  joint	
  ventures.	
  

	
  $	
  
	
   $	
  

4.15%	
  	
  
4.18%	
  	
  
	
  2.9	
  
	
  7.8	
  
	
  7.9	
  
47.5%	
  
40.4%	
  
	
  4.4	
  
	
  796,000	
  
	
  $	
  
	
  533,860	
  	
   $	
  

4.20%	
  
4.21%	
  
	
  2.9	
  
	
  7.8	
  
	
  7.8	
  
46.9%	
  
39.9%	
  
	
  4.2	
  
	
  794,000	
  
	
  533,795	
  

	
  $	
  
	
  $	
  

4.18%	
  
4.22%	
  
	
  2.9	
  
	
  8.0	
  
	
  8.0	
  
47.6%	
  
42.5%	
  
	
  4.6	
  
	
  622,000	
  
	
  385,532	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  3	
  

	
  
	
  
	
  
 
	
  
	
  
 
 
 
	
  
 
	
  
	
  
	
  
	
  
 
	
  
 
	
  
	
  
	
  
	
  
	
  
	
  
	
      
  
    
 
  
 
	
      
	
  	
  
	
  	
  
	
  	
  
	
      
	
  	
  
	
  	
  
	
  	
  
	
  
 
 
	
  
	
  
	
  	
  
	
  	
  
	
  
 
 
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
 
	
  
	
  
 
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
 
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
    
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
    
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
    
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
    
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
    
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
    
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
    
	
  	
  
	
  	
  
	
  	
  
 
	
  
	
    
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
 
 
 
 
 
 
	
  
	
  
	
  
	
  
	
  
	
    
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
 
	
  
	
  
	
  
	
  	
  
	
  
	
  
 
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
 
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
 
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
 
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
 
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
 
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
 
	
  
	
  
 
(4)  NOI	
  (non-‐GAAP	
  measure)	
  is	
  deﬁned	
  as	
  total	
  of	
  net	
  rental	
  income,	
  including	
  the	
  share	
  of	
  net	
  rental	
  income	
  from	
  investment	
  in	
  joint	
  ventures	
  and	
  property	
  
management	
  income,	
  excluding	
  net	
  rental	
  income	
  from	
  properties	
  sold	
  and	
  assets	
  held	
  for	
  sale.	
  The	
  reconciliation	
  of	
  NOI	
  to	
  net	
  rental	
  income	
  can	
  be	
  found	
  
in	
  the	
  section	
  “Our	
  results	
  of	
  operations”	
  under	
  the	
  heading	
  “Net	
  operating	
  income”.	
  

(5)  FFO	
  (non-‐GAAP	
  measure)	
  –	
  The	
  reconciliation	
  of	
  FFO	
  to	
  net	
  income	
  can	
  be	
  found	
  in	
  the	
  section	
  “Our	
  results	
  of	
  operations”	
  under	
  the	
  heading	
  “Funds	
  from	
  

operations	
  and	
  adjusted	
  funds	
  from	
  operations”.	
  

(6)  AFFO	
   (non-‐GAAP	
   measure)	
   –	
   The	
   reconciliation	
   of	
   AFFO	
   to	
   cash	
   flow	
   from	
   operations	
   can	
   be	
   found	
   in	
   the	
   section	
   “Non-‐GAAP	
   measures	
   and	
   other	
  

disclosures”	
  under	
  the	
  heading	
  “Cash	
  generated	
  from	
  operating	
  activities	
  to	
  AFFO”.	
  

(7)  A	
  description	
  of	
  the	
  determination	
  of	
  basic	
  and	
  diluted	
  amounts	
  per	
  unit	
  can	
  be	
  found	
  in	
  the	
  section	
  “Non-‐GAAP	
  measures	
  and	
  other	
  disclosures”	
  under	
  the	
  

heading	
  “Weighted	
  average	
  number	
  of	
  units”.	
  

(8)  The	
  calculation	
  of	
  the	
  following	
  non-‐GAAP	
  measures	
  –	
  interest	
  coverage	
  ratio,	
  net	
  average	
  debt-‐to-‐EBITDFV,	
  net	
  debt-‐to-‐adjusted	
  EBITDFV	
  and	
  levels	
  of	
  

debt	
  –	
  are	
  included	
  in	
  the	
  section	
  “Non-‐GAAP	
  measures	
  and	
  other	
  disclosures”.	
  

BASIS	
  OF	
  PRESENTATION	
  
Our	
   discussion	
   and	
   analysis	
   of	
   the	
   ﬁnancial	
   position	
   and	
   results	
   of	
   operations	
   of	
   Dream	
   Office	
   Real	
   Estate	
   Investment	
   Trust	
  
(“Dream	
   Office	
   REIT”	
   or	
   the	
   “Trust”),	
   formerly	
   known	
   as	
   Dundee	
   REIT,	
   should	
   be	
   read	
   in	
   conjunction	
   with	
   the	
   audited	
  
consolidated	
  ﬁnancial	
  statements	
  for	
  the	
  year	
  ended	
  December	
  31,	
  2014.	
  Unless	
  otherwise	
  indicated,	
  our	
  discussion	
  of	
  assets,	
  
liabilities,	
   revenue	
   and	
   expenses	
   includes	
   our	
   investment	
   in	
   joint	
   ventures,	
   which	
   are	
   equity	
   accounted	
   at	
   our	
   proportionate	
  
share	
  of	
  assets,	
  liabilities,	
  revenue	
  and	
  expenses.	
  	
  	
  

This	
  management’s	
  discussion	
  and	
  analysis	
  (“MD&A”)	
  is	
  dated	
  as	
  at	
  February	
  19,	
  2015.	
  	
  	
  	
  

For	
  simplicity,	
  throughout	
  this	
  discussion	
  we	
  may	
  make	
  reference	
  to	
  the	
  following:	
  	
  

• 
• 
• 
• 

“REIT	
  A	
  Units”,	
  meaning	
  the	
  REIT	
  Units,	
  Series	
  A	
  

“REIT	
  B	
  Units”,	
  meaning	
  the	
  REIT	
  Units,	
  Series	
  B	
  

“REIT	
  Units”,	
  meaning	
  the	
  REIT	
  Units,	
  Series	
  A,	
  and	
  REIT	
  Units,	
  Series	
  B	
  	
  

“LP	
  B	
  Units”	
  and	
  “subsidiary	
  redeemable	
  units”,	
  meaning	
  the	
  LP	
  Class	
  B	
  Units,	
  Series	
  1,	
  limited	
  partnership	
  units	
  of	
  Dream	
  
Office	
  LP	
  (formerly	
  known	
  as	
  Dundee	
  Properties	
  Limited	
  Partnership)	
  

Certain	
   market	
   information	
   has	
   been	
   obtained	
   from	
   CBRE,	
   Canadian	
   Market	
   Statistics,	
   Fourth	
   Quarter	
   2014,	
   a	
   publication	
  
prepared	
   by	
   a	
   commercial	
   ﬁrm	
   that	
   provides	
   information	
   relating	
   to	
   the	
   real	
   estate	
   industry.	
   Although	
   we	
   believe	
   this	
  
information	
  is	
  reliable,	
  its	
  accuracy	
  and	
  completeness	
  is	
  not	
  guaranteed.	
  We	
  have	
  not	
  independently	
  veriﬁed	
  this	
  information	
  
and	
  make	
  no	
  representation	
  as	
  to	
  its	
  accuracy.	
  	
  

When	
  we	
  use	
  terms	
  such	
  as	
  “we”,	
  “us”	
  and	
  “our”,	
  we	
  are	
  referring	
  to	
  the	
  Dream	
  Office	
  REIT	
  and	
  its	
  subsidiaries.	
  

Market	
   rents	
   disclosed	
   throughout	
   the	
   MD&A	
   are	
   management’s	
   estimates	
   and	
   are	
   based	
   on	
   current	
   period	
   leasing	
  
fundamentals.	
   The	
   current	
   estimated	
   market	
   rents	
   are	
   at	
   a	
   point	
   in	
   time	
   and	
   are	
   subject	
   to	
   change	
   based	
   on	
   future	
   market	
  
conditions.	
  

In	
  addition,	
  certain	
  disclosure	
  incorporated	
  by	
  reference	
  into	
  this	
  report	
  includes	
  information	
  regarding	
  our	
  largest	
  tenants	
  that	
  
has	
  been	
  obtained	
  from	
  publicly	
  available	
  information.	
  We	
  have	
  not	
  independently	
  verified	
  any	
  such	
  information.	
  

Certain	
  information	
  herein	
  contains	
  or	
  incorporates	
  comments	
  that	
  constitute	
  forward-‐looking	
  information	
  within	
  the	
  meaning	
  
of	
   applicable	
   securities	
   legislation.	
   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	
  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;	
   the	
   ﬁnancial	
   condition	
   of	
   tenants;	
   our	
   ability	
   to	
  
reﬁnance	
  maturing	
  debt;	
  leasing	
  risks,	
  including	
  those	
  associated	
  with	
  the	
  ability	
  to	
  lease	
  vacant	
  space;	
  our	
  ability	
  to	
  source	
  and	
  
complete	
  accretive	
  acquisitions;	
  and	
  interest	
  rates.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  4	
  

Although	
  the	
  forward-‐looking	
  statements	
  contained	
  in	
  this	
  MD&A	
  are	
  based	
  on	
  what	
  we	
  believe	
  are	
  reasonable	
  assumptions,	
  
there	
   can	
   be	
   no	
   assurance	
   that	
   actual	
   results	
   will	
   be	
   consistent	
   with	
   these	
   forward-‐looking	
   statements.	
   Forward-‐looking	
  
information	
  is	
  disclosed	
  in	
  this	
  MD&A	
  as	
  part	
  of	
  Our	
  Results	
  of	
  Operations	
  under	
  the	
  heading	
  “Adjusted	
  funds	
  from	
  operations”.	
  
Factors	
   that	
   could	
   cause	
   actual	
   results	
   to	
   differ	
   materially	
   from	
   those	
   set	
   forth	
   in	
   the	
   forward-‐looking	
   statements	
   and	
  
information	
   include,	
   but	
   are	
   not	
   limited	
   to,	
   general	
   economic	
   conditions;	
   local	
   real	
   estate	
   conditions,	
   including	
   the	
  
development	
  of	
  properties	
  in	
  close	
  proximity	
  to	
  the	
  Trust’s	
  properties;	
  timely	
  leasing	
  of	
  vacant	
  space	
  and	
  re-‐leasing	
  of	
  occupied	
  
space	
   upon	
   expiration;	
   dependence	
   on	
   tenants’	
   ﬁnancial	
   condition;	
   the	
   uncertainties	
   of	
   acquisition	
   activity;	
   the	
   ability	
   to	
  
effectively	
   integrate	
   acquisitions;	
   interest	
   rates;	
   availability	
   of	
   equity	
   and	
   debt	
   ﬁnancing;	
   our	
   continued	
   compliance	
   with	
   the	
  
real	
  estate	
  investment	
  trust	
  (“REIT”)	
  exception	
  under	
  the	
  specified	
  investment	
  flow-‐through	
  trust	
  (“SIFT”)	
  legislation;	
  and	
  other	
  
risks	
  and	
  factors	
  described	
  from	
  time	
  to	
  time	
  in	
  the	
  documents	
  ﬁled	
  by	
  the	
  Trust	
  with	
  securities	
  regulators.	
  	
  

All	
  forward-‐looking	
  information	
  is	
  as	
  of	
  February	
  19,	
  2015.	
  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	
  applicable	
  law.	
  
Additional	
   information	
   about	
   these	
   assumptions,	
   risks	
   and	
   uncertainties	
   is	
   contained	
   in	
   our	
   ﬁlings	
   with	
   securities	
   regulators,	
  
including	
  our	
  latest	
  Annual	
  Information	
  Form.	
  Certain	
  ﬁlings	
  are	
  also	
  available	
  on	
  our	
  website	
  at	
  www.dreamofficereit.ca.	
  

OUR	
  OBJECTIVES	
  
We	
  are	
  committed	
  to:	
  

•  Managing	
   our	
   business	
   to	
   provide	
   stable	
   and	
   growing	
   cash	
   ﬂows	
   and	
   sustainable	
   returns,	
   through	
   adapting	
   our	
   strategy	
  

and	
  tactics	
  to	
  changes	
  in	
  the	
  real	
  estate	
  industry	
  and	
  the	
  economy;	
  	
  

•  Building	
   and	
   maintaining	
   a	
   diversiﬁed,	
   growth-‐oriented	
   portfolio	
   of	
   ofﬁce	
   properties	
   in	
   Canada,	
   based	
   on	
   an	
   established	
  

platform;	
  	
  

Providing	
  predictable	
  and	
  sustainable	
  cash	
  distributions	
  to	
  unitholders	
  and	
  prudently	
  managing	
  distributions	
  over	
  time;	
  and	
  	
  

• 
•  Maintaining	
   a	
   REIT	
   status	
   that	
   satisﬁes	
   the	
   REIT	
   exception	
   under	
   the	
   SIFT	
   legislation	
   in	
   order	
   to	
   provide	
   certainty	
   to	
  

unitholders	
  with	
  respect	
  to	
  taxation	
  of	
  distributions.	
  	
  

Distributions	
  	
  
For	
   the	
   three	
   months	
   ended	
   December	
   31,	
   2014,	
   approximately	
   29%	
   of	
   our	
   total	
   units	
   were	
   enrolled	
   in	
   the	
   Distribution	
  
Reinvestment	
   and	
   Unit	
   Purchase	
   Plan	
   (“DRIP”).	
   There	
   is	
   no	
   equivalent	
   program	
   for	
   the	
   REIT	
   B	
   Units	
   (for	
   a	
   description	
   of	
  
distributions,	
  refer	
  to	
  the	
  section	
  “Our	
  Equity”).	
  

Annualized	
  distribution	
  rate	
  
Monthly	
  distribution	
  rate	
  
Period-‐end	
  closing	
  unit	
  price	
  
Annualized	
  distribution	
  yield	
  on	
  	
  
	
  	
  	
  closing	
  unit	
  price	
  (%)(1)	
  
8.9%	
  	
  
(1)  Annualized	
  distribution	
  yield	
  is	
  calculated	
  as	
  the	
  annualized	
  distribution	
  rate	
  divided	
  by	
  period-‐end	
  closing	
  unit	
  price.	
  

$	
  
$	
  
$	
  

7.7%	
  	
  

8.0%	
  	
  

7.6%	
  	
  

7.8%	
  	
  

Q4	
  
2.24	
   $	
  
0.187	
   $	
  
25.15	
   $	
  

Q3	
  
2.24	
   $	
  
0.187	
   $	
  
27.96	
   $	
  

Q2	
  
2.24	
   $	
  
0.187	
   $	
  
29.29	
   $	
  

Q4	
  
2.24	
   $	
  
0.187	
   $	
  
28.82	
   $	
  

2014	
  

Q1	
  
2.24	
   $	
  
0.187	
   $	
  
29.06	
   $	
  

Q3	
  
2.24	
   $	
  
0.187	
   $	
  
29.04	
   $	
  

Q2	
  
2.24	
   $	
  
0.187	
   $	
  
32.64	
   $	
  

2013	
  

Q1	
  
2.20	
  
0.183	
  
36.65	
  

7.7%	
  	
  

6.9%	
  	
  

6.0%	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  5	
  

	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
OUR	
  STRATEGY	
  
Dream	
  Office	
  REIT’s	
  core	
  strategy	
  is	
  to	
  invest	
  in	
  ofﬁce	
  properties	
  in	
  key	
  markets	
  across	
  Canada,	
  providing	
  a	
  solid	
  platform	
  for	
  
stable	
   and	
   growing	
   cash	
   ﬂows.	
   We	
   are	
   the	
   largest	
   pure-‐play	
   office	
   REIT	
   in	
   Canada.	
   The	
   majority	
   of	
   our	
   portfolio	
   comprises	
  
central	
  business	
  district	
  ofﬁce	
  properties	
  concentrated	
  in	
  nine	
  of	
  Canada’s	
  top	
  ten	
  ofﬁce	
  markets.	
  The	
  execution	
  of	
  our	
  strategy	
  
is	
   continuously	
   reviewed,	
   including	
   acquisitions	
   and	
   dispositions,	
   our	
   capital	
   structure	
   and	
   our	
   analysis	
   of	
   current	
   economic	
  
conditions.	
   Our	
  executive	
  team	
  is	
  experienced,	
  knowledgeable	
   and	
  highly	
  motivated	
  to	
  continue	
  to	
  increase	
  the	
  value	
  of	
  our	
  
portfolio	
  and	
  provide	
  stable,	
  reliable	
  and	
  growing	
  returns	
  for	
  our	
  unitholders.	
  	
  

Dream	
  Office	
  REIT’s	
  methodology	
  to	
  execute	
  its	
  strategy	
  and	
  to	
  meet	
  its	
  objectives	
  includes:	
  

Investing	
  in	
  high-‐quality	
  ofﬁce	
  properties	
  	
  
Dream	
  Office	
  REIT	
  has	
  an	
  established	
  presence	
  in	
  key	
  urban	
  markets	
  across	
  Canada.	
  Our	
  portfolio	
  comprises	
  high-‐quality	
  office	
  
properties	
   that	
   are	
   well-‐located	
   and	
   attractively	
   priced	
   and	
   produce	
   consistent	
   cash	
   ﬂow.	
   When	
   considering	
   acquisition	
  
opportunities,	
   we	
   look	
   for	
   quality	
   tenancies,	
   strong	
   occupancy,	
   the	
   appeal	
   of	
   the	
   property	
   to	
   future	
   tenants,	
   how	
   it	
  
complements	
  our	
  existing	
  portfolio	
  and	
  how	
  we	
  can	
  create	
  additional	
  value.	
  	
  

Optimizing	
  the	
  performance,	
  value	
  and	
  cash	
  ﬂow	
  of	
  our	
  portfolio	
  	
  
We	
  manage	
  our	
  properties	
  to	
  optimize	
  long-‐term	
  cash	
  ﬂow	
  and	
  value.	
  With	
  a	
  fully	
  internalized	
  property	
  manager,	
  we	
  offer	
  a	
  
strong	
   team	
   of	
   highly	
   experienced	
   real	
   estate	
   professionals	
   who	
   are	
   focused	
   on	
   achieving	
   more	
   from	
   our	
   assets.	
   Occupancy	
  
rates	
   across	
   our	
   portfolio	
   have	
   remained	
   steady	
   and	
   strong	
   for	
   a	
   number	
   of	
   years	
   and	
   have	
   been	
   consistently	
   above	
   the	
  
national	
   average.	
   We	
   view	
   this	
   as	
   compelling	
   evidence	
   of	
   the	
   appeal	
   of	
   our	
   properties	
   and	
   our	
   ability	
   to	
   meet	
   and	
   exceed	
  
tenant	
  expectations.	
  Dream	
  Office	
  REIT	
  has	
  a	
  proven	
  ability	
  to	
  identify	
  and	
  execute	
  value-‐add	
  opportunities.	
  	
  

Diversifying	
  our	
  portfolio	
  to	
  mitigate	
  risk	
  	
  
Since	
   the	
   credit	
   crisis	
   in	
   2009,	
   we	
   have	
   carefully	
   repositioned	
   our	
   portfolio	
   through	
   a	
   significant	
   number	
   of	
   accretive,	
   high-‐
quality	
  acquisitions.	
  In	
  addition	
  to	
  expanding	
  and	
  diversifying	
  our	
  geographic	
  footprint	
  across	
  the	
  country,	
  the	
  acquisitions	
  have	
  
served	
  to	
  enhance	
  the	
  stability	
  of	
  our	
  business,	
  diversifying	
  and	
  strengthening	
  the	
  quality	
  of	
  our	
  revenue	
  stream	
  and	
  increasing	
  
cash	
  ﬂow.	
  Our	
  existing	
   tenant	
  base	
  is	
  well	
  diversified,	
  representing	
  a	
  number	
  of	
  industries	
  and	
  different	
  space	
  requirements,	
  
and	
  offers	
  strong	
  financial	
  covenants.	
  Our	
  lease	
  maturity	
  profile	
  is	
  well	
  staggered	
  over	
  the	
  next	
  ten	
  years.	
  We	
  will	
  continue	
  to	
  
pursue	
   opportunities	
   for	
   growth	
   but	
   only	
   when	
   it	
   enhances	
   our	
   overall	
   portfolio,	
   further	
   improves	
   the	
   sustainability	
   of	
   our	
  
distributions,	
  strengthens	
  our	
  tenant	
  proﬁle	
  and	
  mitigates	
  risk.	
  We	
  have	
  experience	
  in	
  each	
  of	
  Canada’s	
  key	
  markets	
  and	
  have	
  
the	
  ﬂexibility	
  to	
  pursue	
  acquisitions	
  in	
  whichever	
  markets	
  offer	
  compelling	
  investment	
  opportunities.	
  

Maintaining	
  and	
  strengthening	
  our	
  conservative	
  ﬁnancial	
  proﬁle	
  	
  
We	
   have	
   always	
   operated	
   our	
   business	
   in	
   a	
   disciplined	
   manner,	
   with	
   a	
   keen	
   eye	
   on	
   ﬁnancial	
   analysis	
   and	
   balance	
   sheet	
  
management	
  to	
  ensure	
  that	
  we	
  maintain	
  a	
  prudent	
  capital	
  structure.	
  We	
  continue	
  to	
  generate	
  cash	
  ﬂow	
  sufﬁcient	
  to	
  fund	
  our	
  
distributions	
  while	
  maintaining	
  a	
  conservative	
  debt	
  ratio	
  and	
  staggered	
  debt	
  maturities.	
  	
  

Identifying	
  opportunities	
  within	
  our	
  portfolio	
  for	
  intensification	
  and	
  alternative	
  uses	
  
We	
  look	
  at	
  ways	
  to	
  generate	
  additional	
  revenue	
  and	
  value	
  from	
  our	
  existing	
   buildings	
  through	
  intensification	
  and	
  alternative	
  
uses,	
  especially	
  in	
  our	
  downtown	
  buildings	
  where	
  urbanization	
  allows	
  for	
  opportunities	
  to	
  increase	
  revenue	
  in	
  both	
  office	
  and	
  
retail	
  space.	
  

Investing	
  capital	
  in	
  our	
  portfolio	
  
The	
  current	
  leasing	
  environment	
  is	
  challenging	
  and	
  requires	
  us	
  to	
  look	
  for	
  new	
  ways	
  to	
  retain	
  tenants	
  and	
  increase	
  revenue.	
  A	
  
key	
  to	
  this	
  strategy	
  is	
  investing	
  capital	
  in	
  our	
  buildings	
  that	
  improves	
  the	
  value	
  and	
  attractiveness	
  to	
  tenants	
  as	
  well	
  as	
  reduces	
  
operating	
  costs.	
  By	
  doing	
  so,	
  our	
  tenants	
  will	
  have	
  a	
  better	
  experience	
  at	
  our	
  buildings,	
  leading	
  to	
  improved	
  tenant	
  retention,	
  
quicker	
  leasing	
  of	
  available	
  space	
  and	
  realization	
  of	
  higher	
  rental	
  rates.	
  	
  

Divesting	
  of	
  non-‐core	
  assets	
  
Dream	
  Office	
  REIT	
  has	
  an	
  established	
  presence	
  in	
  key	
  urban	
  markets	
  across	
  Canada.	
  Our	
  portfolio	
  comprises	
  high-‐quality	
  office	
  
properties	
  that	
  are	
  well-‐located	
  and	
  attractively	
  priced	
  and	
  produce	
  consistent	
  cash	
  ﬂow.	
  We	
  continuously	
  review	
  our	
  portfolio	
  
to	
   identify	
   opportunities	
   to	
   dispose	
   of	
   non-‐core	
   assets,	
   such	
   as	
   those	
   that	
   are	
   special-‐purpose,	
   peripherally	
   located	
   or	
   in	
  
declining	
   locations	
   with	
   lower	
   potential	
   for	
   long-‐term	
   income	
   growth.	
   Net	
   proceeds	
   from	
   dispositions	
   could	
   be	
   used	
   to	
   fund	
  
improvement	
  initiatives	
  or	
  property	
  acquisitions.	
  	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  6	
  

OUR	
  PROPERTIES	
  	
  
Dream	
  Office	
  REIT	
  provides	
  high-‐quality,	
  well-‐located	
  and	
  reasonably	
  priced	
  business	
  premises.	
  Our	
  portfolio	
  comprises	
  central	
  
business	
  district	
  and	
  suburban	
  office	
  properties	
  predominantly	
  located	
  in	
  major	
  urban	
  centres	
  across	
  Canada	
  including	
  Toronto,	
  
Calgary,	
  Edmonton,	
  Montréal,	
  Ottawa	
  and	
  Vancouver.	
  

At	
   December	
   31,	
   2014,	
   our	
   ownership	
   interests	
   included	
   177	
   office	
   properties	
   (207	
   buildings)	
   totalling	
   approximately	
  	
  
24.3	
   million	
   square	
   feet	
   of	
   GLA,	
   including	
   24.2	
   million	
   square	
   feet	
   of	
   office	
   properties	
   and	
   0.1	
   million	
   square	
   feet	
   of	
  
redevelopment	
  properties	
  and	
  properties	
  held	
  for	
  sale.	
  The	
  occupancy	
  rate	
  across	
  our	
  office	
  portfolio	
  remains	
  high	
  at	
  93.0%	
  at	
  
December	
   31,	
   2014,	
   well	
   ahead	
   of	
   the	
   national	
   industry	
   average	
   occupancy	
   rate	
   of	
   89.3%	
   (CBRE,	
   Canadian	
   Market	
   Statistics,	
  
Fourth	
  Quarter	
  2014).	
  Our	
  occupancy	
  rates	
  include	
  lease	
  commitments	
  for	
  space	
  that	
  is	
  currently	
  being	
  readied	
  for	
  occupancy	
  
but	
  for	
  which	
  rent	
  is	
  not	
  yet	
  being	
  recognized.	
  

Western	
  Canada	
  	
  
Calgary	
  –	
  downtown	
  

Calgary	
  –	
  suburban	
  
Toronto	
  –	
  downtown	
  

Toronto	
  –	
  suburban	
  
Eastern	
  Canada(1)	
  
Total(2)	
  

December	
  31,	
  2014	
  

September	
  30,	
  2014	
  

December	
  31,	
  2013	
  

Owned	
  GLA	
  (in	
  thousands	
  of	
  sq.	
  ft.)	
  

Total	
  	
  

	
  4,806	
  
	
  3,146	
  

	
  757	
  
	
  5,400	
  

	
  4,219	
  
	
  5,895	
  
	
  24,223	
  

%	
  	
  
20	
  
13	
  

3	
  
23	
  

17	
  
24	
  
100	
  

Total	
  	
  

	
  4,803	
  
	
  3,147	
  

	
  758	
  
	
  5,400	
  

	
  4,216	
  
	
  5,895	
  
	
  24,219	
  

%	
  	
  
20	
  
13	
  
3	
  	
  
23	
  
17	
  	
  
24	
  
100	
  

Total	
  	
  

	
  5,101	
  
	
  3,147	
  

	
  813	
  
	
  5,399	
  

	
  4,213	
  
	
  5,889	
  
	
  24,562	
  

%	
  	
  
21	
  
13	
  

3	
  
22	
  

17	
  
24	
  
100	
  

(1)	
  Includes	
  two	
  properties	
  located	
  in	
  the	
  United	
  States.	
  

(2)	
  Excludes	
  redevelopment	
  properties	
  and	
  properties	
  held	
  for	
  sale.	
  

Dream	
  Office	
  REIT	
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  Annual	
  Report	
  	
  |	
  	
  7	
  

 
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
 
 
SECTION	
  II	
  –	
  EXECUTING	
  THE	
  STRATEGY	
  

OUR	
  OPERATIONS	
  
The	
  following	
  key	
  performance	
  indicators	
  related	
  to	
  our	
  operations	
  inﬂuence	
  the	
  cash	
  generated	
  from	
  operating	
  activities.	
  

Performance	
  indicators(1)	
  
Occupancy	
  rate	
  –	
  including	
  committed	
  
Occupancy	
  rate	
  –	
  in	
  place	
  
Average	
  in-‐place	
  net	
  rental	
  rates	
  (per	
  sq.	
  ft.)	
  
Tenant	
  maturity	
  proﬁle	
  –	
  average	
  term	
  to	
  maturity	
  (years)	
  	
  

(1)	
   Excludes	
  redevelopment	
  properties	
  and	
  properties	
  held	
  for	
  sale.	
  

December	
  31,	
  2014	
  
93.0%	
  
91.4%	
  
	
  18.22	
  
	
  5.0	
  

$	
  

	
  $	
  

September	
  30,	
  2014	
  	
  
93.0%	
  
91.1%	
  
	
  18.21	
  
	
  5.0	
  

	
  $	
  

December	
  31,	
  2013	
  
94.3%	
  
92.7%	
  
	
  17.83	
  
	
  5.1	
  

As	
  at	
  December	
  31,	
  2014,	
  overall	
  in-‐place	
  occupancy	
  is	
  up	
  30	
  bps	
  to	
  91.4%,	
  when	
  compared	
  to	
  the	
  prior	
  quarter,	
  as	
  our	
  largest	
  
market,	
   Toronto	
   downtown,	
   posted	
   approximately	
   46,200	
   square	
   feet	
   of	
   positive	
   leasing	
   absorption,	
   representing	
   a	
   90	
   bps	
  
occupancy	
  increase,	
  and	
  Eastern	
  Canada	
  had	
  41,100	
  square	
  feet	
  of	
  positive	
  leasing	
  absorption,	
  representing	
  a	
  70	
  bps	
  increase.	
  
There	
  were	
  modest	
  occupancy	
  gains	
  made	
  in	
  all	
  other	
  regions	
  except	
  for	
  Calgary	
  downtown	
  and	
  Toronto	
  suburban,	
  with	
  26,700	
  
square	
  feet	
  and	
  23,200	
  square	
  feet	
  of	
  negative	
  absorption,	
  respectively.	
  	
  	
  

As	
  at	
  December	
  31,	
  2014,	
  overall	
  occupancy,	
  including	
  future	
  commitments	
  on	
  vacant	
  space,	
  is	
  93.0%,	
  flat	
  when	
  compared	
  to	
  
the	
   prior	
   quarter.	
   All	
   regions	
   remained	
   relatively	
   flat	
   with	
   the	
   exception	
   of	
   Calgary	
   suburban,	
   which	
   experienced	
   a	
   200	
   bps	
  
increase,	
  while	
  Calgary	
  downtown	
  declined	
  by	
  140	
  bps.	
  	
  

When	
  compared	
  to	
  the	
  prior	
  year,	
  overall	
  occupancy	
  and	
  in-‐place	
  occupancy,	
  including	
  future	
  commitments	
  on	
  vacant	
  space,	
  
was	
   down	
   130	
   bps	
   over	
   the	
   prior	
   year	
   with	
   declines	
   in	
   all	
   regions	
   except	
   for	
   strong	
   gains	
   in	
   our	
   largest	
   market,	
   Toronto	
  
downtown,	
  which	
  posted	
  a	
  50	
  bps	
  increase,	
  and	
  Calgary	
  suburban	
  and	
  Eastern	
  Canada,	
  where	
  occupancy	
  increased	
  250	
  bps	
  and	
  
70	
  bps,	
  respectively.	
  Despite	
  the	
  overall	
  decline	
  in	
  occupancy	
  when	
  compared	
  to	
  the	
  prior	
  year,	
  the	
  Trust	
  is	
  still	
  well	
  above	
  the	
  
industry	
  average	
  of	
  89.3%	
  (CBRE,	
  Canadian	
  Market	
  Statistics,	
  Fourth	
  Quarter	
  2014).	
  

(percentage)	
  

2014	
  

2014	
  

2013	
  

2014	
  

2014	
  

2014	
  

2013	
  

Total	
  properties(1)	
  	
  
	
   December	
  31,	
  	
   September	
  30,	
   December	
  31,	
  	
  

Comparative	
  properties(2)	
  	
  
	
   December	
  31,	
  	
   September	
  30,	
  

Comparative	
  properties(3)	
  
	
   December	
  31,	
  	
   December	
  31,	
  	
  

Office	
  
Western	
  Canada	
  
Calgary	
  –	
  downtown	
  
Calgary	
  –	
  suburban	
  
Toronto	
  –	
  downtown	
  
Toronto	
  –	
  suburban	
  
Eastern	
  Canada	
  
Total	
  occupancy	
  rate	
  –	
  including	
  

	
  91.7	
  
	
  89.5	
  
	
  89.2	
  
	
  97.3	
  
	
  89.5	
  
	
  94.8	
  

	
  91.7	
  
	
  90.9	
  
	
  87.2	
  
	
  97.0	
  
	
  89.8	
  
	
  94.4	
  

committed	
  

	
  93.0	
  

	
  93.0	
  

	
  93.0	
  
	
  95.3	
  
	
  86.7	
  
	
  96.8	
  
	
  93.7	
  
	
  94.1	
  

	
  94.3	
  

	
  91.7	
  
	
  89.5	
  
	
  89.2	
  
	
  97.3	
  
	
  89.5	
  
	
  94.8	
  

	
  93.0	
  

	
  91.7	
  
	
  90.9	
  
	
  87.2	
  
	
  97.0	
  
	
  89.8	
  
	
  94.4	
  

	
  93.0	
  

	
  91.7	
  
	
  89.5	
  
	
  89.2	
  
	
  97.3	
  
	
  89.5	
  
	
  94.8	
  

	
  93.0	
  

	
  93.2	
  
	
  95.3	
  
	
  86.7	
  
	
  96.8	
  
	
  93.7	
  
	
  94.1	
  

	
  94.4	
  

(1)  Excludes	
  redevelopment	
  properties	
  and	
  properties	
  held	
  for	
  sale.	
  
(2)  Comparative	
   properties	
   include	
   all	
   properties	
   owned	
   by	
   the	
   Trust	
   at	
   September	
   30,	
   2014,	
   excluding	
   redevelopment	
   properties,	
   properties	
   sold	
   and	
  

properties	
  held	
  for	
  sale.	
  

(3)  Comparative	
   properties	
   include	
   all	
   properties	
   owned	
   by	
   the	
   Trust	
   at	
   December	
   31,	
   2013,	
   excluding	
   redevelopment	
   properties,	
   properties	
   sold	
   and	
  

properties	
  held	
  for	
  sale.	
  

The	
  table	
  below	
  details	
  the	
  percentage	
  of	
  occupied	
  and	
  committed	
  space	
  for	
  the	
  last	
  eight	
  quarters	
  compared	
  to	
  the	
  national	
  
industry	
  average,	
  demonstrating	
  the	
  strength	
  and	
  consistency	
  of	
  our	
  leasing	
  profile	
  to	
  outperform	
  the	
  overall	
  market.	
  

(percentage)	
  	
  
Ofﬁce(1)	
  
National	
  industry	
  average(2)	
  
(1)	
  Excludes	
  redevelopment	
  properties	
  and	
  properties	
  held	
  for	
  sale.	
  

Q4	
  	
  
93.0	
  	
  
89.3	
  	
  

Q3	
  	
  
93.0	
  
89.7	
  

Q2	
  	
  
94.1	
  
89.6	
  

2014	
  

Q1	
  	
  
94.2	
  
89.7	
  

Q4	
  	
  
94.3	
  
90.3	
  

Q3	
  	
  
94.6	
  
90.9	
  

Q2	
  	
  
94.9	
  
91.3	
  

2013	
  

Q1	
  
94.7	
  
91.5	
  

(2)	
  National	
  industry	
  average	
  occupancy	
  rates	
  obtained	
  from	
  the	
  CBRE,	
  Canadian	
  Market	
  Statistics	
  quarterly	
  reports.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  8	
  

 
 
 
 
 
 
 
 
 
	
  
 
 
 
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
 
 
 
 
 
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
Occupancy	
  schedule	
  
The	
  following	
  table	
  details	
  the	
  change	
  in	
  occupancy	
  (including	
  committed)	
  for	
  the	
  three	
  months	
  and	
  year	
  ended	
  December	
  31,	
  
2014:	
  

Weighted	
   Three	
  months	
  ended	
   
average	
  rate	
   December	
  31,	
  2014	
   
in	
  sq.	
  ft.(1)	
  	
  

per	
  sq.	
  ft.	
  

As	
  a	
   
	
  %	
  of	
  total	
   
GLA(1)	
  	
  

Weighted	
  

Year	
  ended	
   
average	
  rate	
   December	
  31,	
  2014	
  
in	
  sq.	
  ft.(1)	
  	
  

per	
  sq.	
  ft.	
  

Occupancy	
  (including	
  committed)	
  at	
  

	
  beginning	
  of	
  period	
  	
  

Vacancy	
  committed	
  for	
  future	
  leases	
  	
  
Occupancy	
  in	
  place	
  at	
  beginning	
  of	
  period	
  	
  	
  
Occupancy	
  related	
  to	
  disposed	
  properties	
  
Remeasurements/reclassifications	
  
Occupancy	
  at	
  beginning	
  of	
  period	
  –	
  
	
   adjusted	
  
Expiries	
  
Early	
  terminations	
  and	
  bankruptcies	
  	
  
New	
  leases	
  	
  
Renewals	
  	
  
Occupancy	
  in	
  place	
  –	
  December	
  31,	
  2014	
  
Vacancy	
  committed	
  for	
  future	
  leases	
  	
  
Occupancy	
  (including	
  committed)	
  –	
  
	
   December	
  31,	
  2014	
  

$	
  

	
  (16.68)	
  
	
  (15.60)	
  
	
  17.39	
  
	
  16.60	
  

(1)	
  Excludes	
  redevelopment	
  properties	
  and	
  properties	
  held	
  for	
  sale.	
  

	
  22,518,232	
  
	
  (443,547)	
  
	
  22,074,685	
  
	
  -‐	
  
	
  3,178	
  

	
  22,077,863	
  
	
  (819,241)	
  
	
  (13,070)	
  
	
  365,677	
  
	
  527,762	
  
	
  22,138,991	
  
	
  382,470	
  

93.0%	
  
	
  (1.9)%	
  
91.1%	
  

91.1%	
  
	
  (3.4)%	
   $	
  
	
  (0.1)%	
  
1.6%	
  
2.2%	
  
91.4%	
  
1.6%	
  

	
  (17.74)	
  
	
  (16.53)	
  
	
  18.09	
  
	
  17.93	
  

	
  23,159,804	
  
	
  (386,783)	
  
	
  22,773,021	
  
	
  (321,752)	
  
	
  (21,333)	
  

	
  22,429,936	
  
	
  (2,982,822)	
  
	
  (145,900)	
  
	
  1,248,005	
  
	
  1,589,772	
  
	
  22,138,991	
  
	
  382,470	
  

	
  22,521,461	
  

93.0%	
  

	
  22,521,461	
  

93.0%	
  

As	
  a	
  

	
  %	
  of	
  total	
  
GLA(1)	
  

94.3%	
  
	
  (1.6)%	
  
92.7%	
  

92.6%	
  
	
  (12.3)%	
  
	
  (0.7)%	
  
5.2%	
  
6.6%	
  
91.4%	
  
1.6%	
  

During	
   the	
   quarter,	
   we	
   experienced	
   strong	
   leasing	
   activity	
   which	
   resulted	
   in	
   in-‐place	
   occupancy	
   increasing	
   by	
   30	
   bps	
   or	
  
approximately	
  61,100	
  square	
  feet.	
  The	
  activity	
  was	
  mainly	
  driven	
  by	
  increases	
  in	
  Toronto	
  downtown	
  and	
  Eastern	
  Canada,	
  which	
  
accounted	
   for	
   approximately	
   46,200	
   square	
   feet	
   and	
   41,100	
   square	
   feet,	
   respectively.	
   This	
   was	
   offset	
   with	
   a	
   decrease	
   in	
  
occupancy	
  in	
  Calgary	
  downtown	
  and	
  Toronto	
  suburban	
  of	
  26,700	
   square	
  feet	
  and	
  23,000	
   square	
  feet	
  of	
  negative	
  absorption,	
  
respectively.	
  During	
  the	
  quarter,	
  we	
  also	
  had	
  early	
  terminations	
  and	
  bankruptcies	
  totalling	
  13,100	
  square	
  feet.	
  Leasing	
  activity	
  
included	
   approximately	
   527,800	
   square	
   feet	
   of	
   renewals	
   and	
   approximately	
   365,700	
   square	
   feet	
   of	
   new	
   leases,	
   offset	
   by	
  
approximately	
  832,300	
  square	
  feet	
  of	
  lease	
  expiries,	
  early	
  terminations	
  and	
  bankruptcies.	
  	
  

At	
   December	
   31,	
   2014,	
   vacant	
   space	
   committed	
   for	
   future	
   occupancy	
   was	
   approximately	
   382,500	
   square	
   feet,	
   of	
   which	
  
approximately	
  376,400	
  square	
  feet	
  will	
  take	
  occupancy	
  in	
  2015.	
  

Three	
  months	
  ended	
  

Year	
  ended	
  

Tenant	
  retention	
  ratio	
  
Expiring	
  rents	
  on	
  renewed	
  space	
  (per	
  sq.	
  ft.)	
  
Renewal	
  to	
  expiring	
  rent	
  spread	
  (per	
  sq.	
  ft.)	
  

December	
  31,	
  2014	
  
64.4%	
  
	
  15.19	
   $	
  
	
  1.41	
   $	
  

December	
  31,	
  2014	
  
53.3%	
  
	
  16.57	
  
	
  1.36	
  

	
  $	
  
	
  $	
  

For	
  the	
  three	
  months	
  ended	
  December	
  31,	
  2014,	
  we	
  experienced	
  a	
  strong	
  tenant	
  retention	
  ratio	
  of	
  over	
  64%,	
  with	
  renewals	
  
completed	
  at	
  $16.60	
  per	
  square	
  foot	
  compared	
  to	
  expiring	
  rents	
  at	
  $15.19	
  per	
  square	
  foot,	
  for	
  an	
  increase	
  of	
  $1.41	
  per	
  square	
  
foot,	
  or	
  9.3%.	
  For	
  the	
  year	
  ended	
  December	
  31,	
  2014,	
  our	
  tenant	
  retention	
  ratio	
  was	
  over	
  50%	
  and	
  we	
  completed	
  renewals	
  at	
  
$17.93	
  per	
  square	
  foot	
  compared	
  to	
  expiring	
  rents	
  at	
  $16.57	
  per	
  square	
  foot,	
  for	
  an	
  increase	
  of	
  $1.36	
  per	
  square	
  foot,	
  or	
  8.2%.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  9	
  

   
 
   
 
 
	
  
	
  
	
  
	
   
     
   
 
 
     
 
 
	
  
 
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
   
   
 
 
     
 
 
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
 
   
     
	
  
	
  
 
	
  
 
   
     
	
  
	
  
 
 
	
  
	
  
	
     
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
     
	
  
	
  
	
  
	
  
	
     
	
  
	
  
In-‐place	
  net	
  rental	
  rates	
  	
  
Average	
  in-‐place	
  net	
  rents	
  across	
  our	
  total	
  portfolio	
  at	
  December	
  31,	
  2014	
  increased	
  to	
  $18.22	
  per	
  square	
  foot	
  from	
  $17.83	
  per	
  
square	
  foot	
  at	
  December	
  31,	
  2013,	
  reflecting	
  rent	
  uplifts	
  in	
  all	
  regions	
  except	
  for	
  Calgary	
  downtown.	
  Average	
  in-‐place	
  net	
  rents	
  
across	
   our	
   total	
   portfolio	
   at	
   December	
   31,	
   2014	
   was	
   up	
   slightly	
   from	
   $18.21	
   per	
   square	
   foot	
   at	
   September	
   30,	
   2014,	
   mainly	
  
driven	
  by	
  higher	
  rents	
  in	
  Calgary	
  suburban	
  and	
  Toronto	
  downtown.	
  

We	
   estimate	
   market	
   rents	
   with	
   reference	
   to	
   recent	
   leasing	
   activity	
   and	
   external	
   market	
   data.	
   We	
   believe	
   estimated	
   market	
  
rents	
  are	
  approximately	
  8%	
  higher	
  than	
  our	
  portfolio	
  average	
  in-‐place	
  net	
  rents.	
  	
  

December	
  31,	
  2014(1)	
  	
  
Market	
  rent/	
  

Market	
  	
  

rent	
  	
  

average	
  

in-‐place	
  

net	
  rent	
  

Average	
  	
  

in-‐place	
  

net	
  rent	
  

September	
  30,	
  2014(1)	
  
	
   Market	
  rent/	
  

December	
  31,	
  2013(1)	
  
	
   Market	
  rent/	
  

Average	
   	
  	
  

in-‐place	
   	
  

Market	
  	
  

net	
  rent	
   	
  

rent	
  	
  

average	
  

in-‐place	
  

net	
  rent	
  

Average	
  	
  

in-‐place	
  

net	
  rent	
  

Market	
  	
  

rent	
  	
  

Total	
  office	
  portfolio	
  

(per	
  square	
  foot)	
  

Ofﬁce	
  	
  
Western	
  Canada	
  	
  
Calgary	
  –	
  downtown	
  
Calgary	
  –	
  suburban	
  
Toronto	
  –	
  downtown	
  
Toronto	
  –	
  suburban	
  
Eastern	
  Canada	
  	
  
Total	
  

(per	
  sq.	
  ft.)	
   (per	
  sq.	
  ft.)	
  

	
  (%)	
  

(per	
  sq.	
  ft.)	
   	
  

(per	
  sq.	
  ft.)	
  

	
  (%)	
  

	
   (per	
  sq.	
  ft.)	
  

(per	
  sq.	
  ft.)	
  

$	
  

$	
  

	
  19.80	
   $	
   21.01	
  
	
   24.41	
  
	
  21.28	
  
	
   17.82	
  
	
  17.18	
  
	
   26.36	
  
	
  23.95	
  
	
  14.53	
  
	
   15.02	
  
	
   13.19	
  
	
  12.68	
  
	
  18.22	
   $	
   19.64	
  

6.1	
  
14.7	
  
3.7	
  
10.1	
  
3.4	
  
4.0	
  
7.8	
  

	
  $	
  

	
  $	
  

	
  19.81	
   	
  $	
  
	
  21.37	
   	
  	
  
	
  16.82	
   	
  	
  
	
  23.84	
   	
  	
  
	
  14.48	
   	
  	
  
	
  12.73	
   	
  	
  
	
  18.21	
   	
  $	
  

	
  21.08	
  
	
  25.07	
  
	
  18.19	
  
	
  26.10	
  
	
  15.10	
  
	
  13.12	
  
	
  19.70	
  

	
  6.4	
  
	
  17.3	
  
	
  8.1	
  
	
  9.5	
  
	
  4.3	
  
	
  3.1	
  
	
  8.2	
  

	
  $	
  

	
  $	
  

	
  18.65	
   $	
  
	
  21.81	
  
	
  16.31	
  
	
  23.23	
  
	
  14.42	
  
	
  12.52	
  
	
  17.83	
   $	
  

	
  20.60	
  
	
  25.65	
  
	
  17.93	
  
	
  25.26	
  
	
  14.79	
  
	
  13.03	
  
	
  19.42	
  

average	
  

in-‐place	
  

net	
  rent	
  

	
  (%)	
  

	
  10.5	
  
	
  17.6	
  
	
  9.9	
  
	
  8.7	
  
	
  2.6	
  
	
  4.1	
  
	
  8.9	
  

(1)	
  Excludes	
  redevelopment	
  properties	
  and	
  properties	
  held	
  for	
  sale.	
  

Market	
  rent	
  estimates	
  for	
  occupied	
  space	
  across	
  our	
  total	
  portfolio	
  at	
  December	
  31,	
  2014	
  increased	
  to	
  $19.64	
  per	
  square	
  foot	
  
from	
   $19.42	
   per	
   square	
   foot	
   in	
   Q4	
   2013,	
   primarily	
   driven	
   by	
   higher	
   occupancy	
   in	
   our	
   higher	
   rent	
   properties.	
   Market	
   rent	
  
estimates	
  for	
  occupied	
  space	
  across	
  our	
  total	
  portfolio	
  at	
  December	
  31,	
  2014	
  decreased	
  $0.06	
  from	
  $19.70	
  per	
  square	
  foot	
  in	
  
Q3	
  2014,	
  primarily	
  as	
  a	
  result	
  of	
  decreases	
  in	
  estimates	
  noted	
  in	
  downtown	
  Calgary,	
  where	
  market	
  rents	
  are	
  still	
  approximately	
  
15%	
  above	
  in-‐place	
  net	
  rent.	
  

Leasing	
  and	
  tenant	
  proﬁle	
  	
  
The	
   average	
   remaining	
   lease	
   term	
   and	
   other	
   portfolio	
   information	
   are	
   detailed	
   in	
   the	
   following	
   table.	
   The	
   portfolio	
   average	
  
remaining	
  lease	
  term	
  at	
  December	
  31,	
  2014	
  is	
  5.0	
  years	
  and	
  is	
  stable	
  when	
  compared	
  to	
  September	
  30,	
  2014	
  and	
  down	
  slightly	
  
from	
  5.1	
  years	
  at	
  December	
  31,	
  2013,	
  largely	
  reflecting	
  the	
  impact	
  of	
  leases	
  rolling	
  off	
  year-‐over-‐year.	
  

Average	
  

December	
  31,	
  2014(1)	
  
	
   Average	
  	
  
Average	
  

Average	
  

	
   remaining	
  

tenant	
  

in-‐place	
  	
  

remaining	
  

lease	
  term	
  

size	
  	
  

net	
  rent	
  	
  

lease	
  term	
  

(years)	
  
	
  3.7	
  
	
  3.8	
  
	
  3.8	
  
	
  5.8	
  
	
  3.9	
  
	
  6.7	
  
	
  5.0	
  

(sq.	
  ft.)	
  
	
  10,266	
   $	
  
	
  10,857	
   	
  
	
  7,067	
   	
  
	
  10,519	
   	
  
	
  11,071	
   	
  
	
  17,941	
   	
  
	
  11,592	
   $	
  

(per	
  sq.	
  ft.)	
  	
  	
  	
  
	
  19.80	
  
	
  21.28	
  
	
  17.18	
  
	
  23.95	
  
	
  14.53	
  
	
  12.68	
  
	
  18.22	
  

(years)	
  
	
  3.7	
  
	
  3.6	
  
	
  3.5	
  
	
  5.9	
  
	
  3.9	
  
	
  6.9	
  
	
  5.0	
  

September	
  30,	
  2014(1)	
  
	
   Average	
  	
  
Average	
  

tenant	
  

size	
  	
  

in-‐place	
  	
  

net	
  rent	
  	
  

(sq.	
  ft.)	
  
	
  10,238	
   $	
  
	
  10,965	
   	
  
	
  7,187	
   	
  
	
  10,537	
   	
  
	
  11,006	
   	
  
	
  17,871	
   	
  
	
  11,593	
   $	
  

(per	
  sq.	
  ft.)	
  	
  	
  	
  
	
  19.81	
  
	
  21.37	
  
	
  16.82	
  
	
  23.84	
  
	
  14.48	
  
	
  12.73	
  
	
  18.21	
  

Average	
  

remaining	
  

lease	
  term	
  

(years)	
  
	
  3.8	
  
	
  3.8	
  
	
  3.9	
  
	
  6.3	
  
	
  3.8	
  
	
  7.0	
  
	
  5.1	
  

December	
  31,	
  2013(1)	
  
Average	
  
Average	
  	
  

tenant	
  

size	
  	
  

in-‐place	
  

net	
  rent	
  

(sq.	
  ft.)	
  
	
  10,043	
   $	
  
	
  11,243	
   	
  
	
  6,410	
   	
  
	
  10,491	
   	
  
	
  11,192	
   	
  
	
  17,541	
   	
  
	
  11,461	
   $	
  

(per	
  sq.	
  ft.)	
  	
  	
  
	
  18.65	
  
	
  21.81	
  
	
  16.31	
  
	
  23.23	
  
	
  14.42	
  
	
  12.52	
  
	
  17.83	
  

Western	
  Canada	
  	
  
Calgary	
  –	
  downtown	
  
Calgary	
  –	
  suburban	
  
Toronto	
  –	
  downtown	
  
Toronto	
  –	
  suburban	
  
Eastern	
  Canada	
  	
  
Total	
  

(1)	
  Excludes	
  redevelopment	
  properties	
  and	
  properties	
  held	
  for	
  sale.	
  

The	
   following	
   table	
   details	
   our	
   lease	
   maturity	
   proﬁle	
   by	
   geographic	
   segment	
   at	
   December	
   31,	
   2014.	
   The	
   table	
   distinguishes	
  
between	
  lease	
  maturities	
  that	
  have	
  yet	
  to	
  be	
  renewed	
  or	
  re-‐leased	
  and	
  maturities	
  for	
  which	
  we	
  have	
  a	
  leasing	
  commitment.	
  
The	
  “Expiries,	
  net	
  of	
  committed	
  occupancy”	
  line	
  in	
  the	
  respective	
  regions	
  should	
  be	
  referenced	
  when	
  considering	
  future	
  leasing	
  
risks	
  or	
  opportunities,	
  and	
  the	
  “Vacancy	
  committed	
  for	
  new	
  leases”	
  line	
  in	
  the	
  respective	
  regions	
  should	
  be	
  referenced	
  when	
  
considering	
  the	
  impact	
  of	
  leasing	
  activity.	
  	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  10	
  

	
  
	
  
	
  
	
  	
  
	
   	
  	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
   	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
 	
  
 
  
  
   
 
  
  
  
 
 
 
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
Our	
   lease	
   maturity	
   profile	
   remains	
   staggered.	
   Lease	
   expiries	
   (net	
   of	
   committed	
   occupancy)	
   as	
   a	
   percentage	
   of	
   total	
   in-‐place	
  
occupancy	
  are	
  8%	
  for	
  2015,	
  13%	
  for	
  2016,	
  18%	
  for	
  2017,	
  13%	
  for	
  2018	
  and	
  10%	
  for	
  2019.	
  

(in	
  square	
  feet)	
  

Western	
  Canada	
  
Expiries(1)
Expiries	
  committed	
  for	
  occupancy(2)

Current	
     

monthly/	
     

short-‐term	
   

tenancies	
   

2015	
   

2016	
   

2017	
   

2018	
   

2019	
   

2020+	
   	
  

Total	
  

	
  (1,184)	
   

	
  (553,281)	
   

	
  (875,441)	
   

	
  (807,274)	
   

	
  (794,162)	
   

	
  (513,974)	
   

	
  (1,163,316)	
  	
  

	
  (4,708,632)	
  

	
  -‐	
    

	
  195,948	
    

	
  91,553	
   

	
  3,096	
    

	
  9,431	
    

	
  -‐	
    

	
  -‐	
  	
  

	
  300,028	
  

Expiries,	
  net	
  of	
  committed	
  renewals	
  

	
  (1,184)	
   

	
  (357,333)	
   

	
  (783,888)	
   

	
  (804,178)	
   

	
  (784,731)	
   

	
  (513,974)	
   

	
  (1,163,316)	
  	
  

	
  (4,408,604)	
  

Vacancies	
  committed	
  for	
  new	
  leases	
  
Expiries,	
  net	
  of	
  commitments	
  obtained	
     

Calgary	
  downtown	
  
Expiries(1)
Expiries	
  committed	
  for	
  occupancy(2)

Expiries,	
  net	
  of	
  committed	
  renewals	
  

Vacancies	
  committed	
  for	
  new	
  leases	
  
Expiries,	
  net	
  of	
  commitments	
  obtained	
     

Calgary	
  suburban	
  
Expiries(1)
Expiries	
  committed	
  for	
  occupancy(2)

Expiries,	
  net	
  of	
  committed	
  renewals	
  

Vacancies	
  committed	
  for	
  new	
  leases	
  
Expiries,	
  net	
  of	
  commitments	
  obtained	
     

Toronto	
  downtown	
  
Expiries(1)
Expiries	
  committed	
  for	
  occupancy(2)

	
  -‐	
    

	
  64,208	
    

	
  -‐	
   

	
  -‐	
    

	
  -‐	
    

	
  -‐	
    

	
  -‐	
  

	
  64,208	
  

	
  (1,184)	
   

	
  (293,125)	
   

	
  (783,888)	
   

	
  (804,178)	
   

	
  (784,731)	
   

	
  (513,974)	
   

	
  (1,163,316)	
  	
  

	
  (4,344,396)	
  

	
  -‐	
    

	
  -‐	
    

	
  -‐	
    

	
  -‐	
    

	
  -‐	
    

	
  -‐	
    

	
  -‐	
    

	
  -‐	
    

	
  -‐	
    

	
  -‐	
    

	
  (354,202)	
   

	
  (779,775)	
   

	
  (382,935)	
   

	
  (422,095)	
   

	
  (627,265)	
   

	
  (604,293)	
  	
  

	
  (3,170,565)	
  

	
  113,508	
    

	
  188,947	
   

	
  43,047	
    

	
  8,270	
    

	
  -‐	
    

	
  -‐	
  	
  

	
  353,772	
  

	
  (240,694)	
   

	
  (590,828)	
   

	
  (339,888)	
   

	
  (413,825)	
   

	
  (627,265)	
   

	
  (604,293)	
  	
  

	
  (2,816,793)	
  

	
  28,615	
    

	
  -‐	
   

	
  4,104	
    

	
  -‐	
    

	
  -‐	
    

	
  -‐	
  

	
  32,719	
  

	
  (212,079)	
   

	
  (590,828)	
   

	
  (335,784)	
   

	
  (413,825)	
   

	
  (627,265)	
   

	
  (604,293)	
  	
  

	
  (2,784,074)	
  

	
  (78,824)	
   

	
  (111,291)	
   

	
  (172,348)	
   

	
  (143,317)	
   

	
  (49,776)	
   

	
  (214,371)	
  	
  

	
  (769,927)	
  

	
  17,715	
    

	
  2,717	
   

	
  73,947	
    

	
  -‐	
    

	
  -‐	
    

	
  -‐	
  	
  

	
  94,379	
  

	
  (61,109)	
   

	
  (108,574)	
   

	
  (98,401)	
   

	
  (143,317)	
   

	
  (49,776)	
   

	
  (214,371)	
  	
  

	
  (675,548)	
  

	
  23,374	
    

	
  -‐	
   

	
  -‐	
    

	
  -‐	
    

	
  -‐	
    

	
  -‐	
  

	
  23,374	
  

	
  (37,735)	
   

	
  (108,574)	
   

	
  (98,401)	
   

	
  (143,317)	
   

	
  (49,776)	
   

	
  (214,371)	
  	
  

	
  (652,174)	
  

	
  (2,496)	
   

	
  (548,111)	
   

	
  (812,289)	
   

	
  (908,716)	
   

	
  (652,279)	
   

	
  (323,002)	
   

	
  (2,547,125)	
  	
  

	
  (5,794,018)	
  

	
  -‐	
    

	
  281,513	
    

	
  205,069	
   

	
  11,953	
    

	
  16,420	
    

	
  -‐	
    

	
  24,813	
   	
  

	
  539,768	
  

Expiries,	
  net	
  of	
  committed	
  renewals	
  

	
  (2,496)	
   

	
  (266,598)	
   

	
  (607,220)	
   

	
  (896,763)	
   

	
  (635,859)	
   

	
  (323,002)	
   

	
  (2,522,312)	
  	
  

	
  (5,254,250)	
  

Vacancies	
  committed	
  for	
  new	
  leases	
  
Expiries,	
  net	
  of	
  commitments	
  obtained	
     

Toronto	
  suburban	
  
Expiries(1)
Expiries	
  committed	
  for	
  occupancy(2)

	
  -‐	
    

	
  40,887	
    

	
  -‐	
   

	
  -‐	
    

	
  -‐	
    

	
  -‐	
    

	
  -‐	
  

	
  40,887	
  

	
  (2,496)	
   

	
  (225,711)	
   

	
  (607,220)	
   

	
  (896,763)	
   

	
  (635,859)	
   

	
  (323,002)	
   

	
  (2,522,312)	
  	
  

	
  (5,213,363)	
  

	
  (674)	
   

	
  (615,134)	
   

	
  (815,225)	
   

	
  (957,559)	
   

	
  (352,643)	
   

	
  (295,514)	
   

	
  (1,248,968)	
  	
  

	
  (4,285,717)	
  

	
  -‐	
    

	
  100,419	
    

	
  410,147	
   

	
  -‐	
    

	
  -‐	
    

	
  -‐	
    

	
  -‐	
  	
  

	
  510,566	
  

Expiries,	
  net	
  of	
  committed	
  renewals	
  

	
  (674)	
   

	
  (514,715)	
   

	
  (405,078)	
   

	
  (957,559)	
   

	
  (352,643)	
   

	
  (295,514)	
   

	
  (1,248,968)	
  	
  

	
  (3,775,151)	
  

Vacancies	
  committed	
  for	
  new	
  leases	
  
Expiries,	
  net	
  of	
  commitments	
  obtained	
     

Eastern	
  Canada	
  
Expiries(1)
Expiries	
  committed	
  for	
  occupancy(2)

Expiries,	
  net	
  of	
  committed	
  renewals	
  

Vacancies	
  committed	
  for	
  new	
  leases	
  

Expiries,	
  net	
  of	
  committed	
  occupancy	
  

Total	
  portfolio	
  
Expiries(1)
Expiries	
  committed	
  for	
  occupancy(2)

	
  -‐	
    

	
  102,078	
    

	
  1,194	
   

	
  -‐	
    

	
  -‐	
    

	
  -‐	
    

	
  -‐	
  

	
  103,272	
  

	
  (674)	
   

	
  (412,637)	
   

	
  (403,884)	
   

	
  (957,559)	
   

	
  (352,643)	
   

	
  (295,514)	
   

	
  (1,248,968)	
  	
  

	
  (3,671,879)	
  

	
  -‐	
    

	
  -‐	
    

	
  -‐	
    

	
  -‐	
    

	
  -‐	
    

	
  (498,344)	
   

	
  (518,719)	
   

	
  (832,701)	
   

	
  (719,158)	
   

	
  (340,812)	
   

	
  (3,153,115)	
  	
  

	
  (6,062,849)	
  

	
  205,304	
    

	
  98,542	
   

	
  1,094	
    

	
  166,794	
    

	
  -‐	
    

	
  -‐	
  	
  

	
  471,734	
  

	
  (293,040)	
   

	
  (420,177)	
   

	
  (831,607)	
   

	
  (552,364)	
   

	
  (340,812)	
   

	
  (3,153,115)	
  	
  

	
  (5,591,115)	
  

	
  117,210	
    

	
  800	
   

	
  -‐	
    

	
  -‐	
    

	
  -‐	
    

	
  -‐	
  

	
  118,010	
  

	
  (175,830)	
   

	
  (419,377)	
   

	
  (831,607)	
   

	
  (552,364)	
   

	
  (340,812)	
   

	
  (3,153,115)	
  	
  

	
  (5,473,105)	
  

	
  (4,354)	
   

	
  (2,647,896)	
   

	
  (3,912,740)	
   

	
  (4,061,533)	
   

	
  (3,083,654)	
   

	
  (2,150,343)	
   

	
  (8,931,188)	
  	
  

	
  (24,791,708)	
  

	
  -‐	
    

	
  914,407	
    

	
  996,975	
   

	
  133,137	
    

	
  200,915	
    

	
  -‐	
    

	
  24,813	
   	
  

	
  2,270,247	
  

Expiries,	
  net	
  of	
  committed	
  renewals	
  

	
  (4,354)	
   

	
  (1,733,489)	
   

	
  (2,915,765)	
   

	
  (3,928,396)	
   

	
  (2,882,739)	
   

	
  (2,150,343)	
   

	
  (8,906,375)	
  	
  

	
  (22,521,461)	
  

Vacancies	
  committed	
  for	
  new	
  leases	
  

	
  -‐	
    

	
  376,372	
    

	
  1,994	
   

	
  4,104	
    

	
  -‐	
    

	
  -‐	
    

	
  -‐	
  

	
  382,470	
  

Expiries,	
  net	
  of	
  committed	
  occupancy	
  
(1)	
  Expiries	
  includes	
  current	
  in-‐place	
  expiries	
  and	
  future	
  expiries	
  committed	
  for	
  renewals.	
  

	
  (1,357,117)	
   

	
  (2,913,771)	
   

	
  (4,354)	
   

	
  (3,924,292)	
   

(2)	
  Expiries	
  committed	
  for	
  occupancy	
  includes	
  renewals,	
  new	
  leasing	
  and	
  relocation	
  of	
  tenants.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  11	
  

	
  (2,882,739)	
   

	
  (2,150,343)	
   

	
  (8,906,375)	
  	
  

	
  (22,138,991)	
  

 
  
   
   
   
   
   
   
 
  
   
   
   
   
   
   
 
  
	
     
   
   
   
   
   
  
   
  	
  
  	
  
  	
  
  	
  
  	
  
  	
  
	
   	
  
	
  
  
	
  
  
  
  
	
  
   
  	
  
  	
  
  	
  
  	
  
  	
  
  	
  
	
   	
  
	
  
  
	
  
  
  
  
	
  
   
  	
  
  	
  
  	
  
  	
  
  	
  
  	
  
	
   	
  
	
  
  
	
  
  
  
  
	
  
   
  	
  
  	
  
  	
  
  	
  
  	
  
  	
  
	
   	
  
	
  
  
	
  
  
  
  
	
  
   
  	
  
  	
  
  	
  
  	
  
  	
  
  	
  
	
   	
  
	
  
  
	
  
  
  
  
	
  
   
  	
  
  	
  
  	
  
  	
  
  	
  
  	
  
	
   	
  
	
  
  
	
  
  
  
  
	
  
  
   
  	
  
  	
  
  	
  
  	
  
  	
  
  	
  
	
   	
  
	
  
  
	
  
  
  
  
	
  
  
	
   	
  
	
   	
  
The	
   following	
   table	
   details	
   expiring	
   rents	
   across	
   our	
   portfolio	
   as	
   well	
   as	
   our	
   own	
   estimate	
   of	
   average	
   market	
   rents	
   based	
   on	
  
current	
  leasing	
  activity	
  in	
  similar	
  properties	
  at	
  December	
  31,	
  2014.	
  Expiring	
  rents	
  and	
  market	
  rents	
  represent	
  base	
  rents	
  and	
  do	
  
not	
  include	
  the	
  impact	
  of	
  lease	
  incentives.	
  	
  

2015	
  

2016	
  

2017	
  

2018	
  

2019	
  

	
   $	
  

	
   $	
  

	
   $	
  

	
   $	
  

	
   $	
  

	
  17.68	
  
	
  21.21	
  
	
  13.82	
  
	
  21.65	
  
	
  17.15	
  
	
  16.37	
  
	
  18.82	
  

	
  17.65	
  
	
  14.91	
  
	
  20.62	
  
	
  22.10	
  
	
  13.22	
  
	
  15.01	
  
	
  16.30	
  

Expiring	
  rents	
  
Western	
  Canada	
  
Calgary	
  –	
  downtown	
  
Calgary	
  –	
  suburban	
  
Toronto	
  –	
  downtown	
  
Toronto	
  –	
  suburban	
  
Eastern	
  Canada	
  
Portfolio	
  average	
  
Market	
  rents(1)	
  
Western	
  Canada	
  
Calgary	
  –	
  downtown	
  
Calgary	
  –	
  suburban	
  
Toronto	
  –	
  downtown	
  
Toronto	
  –	
  suburban	
  
Eastern	
  Canada	
  
Market	
  rent	
  average	
  
%	
  below	
  expiring	
  rent	
  
(1)	
  Estimate	
  only;	
  based	
  on	
  current	
  market	
  rents	
  with	
  no	
  allowance	
  for	
  increases	
  in	
  future	
  years.	
  Subject	
  to	
  changes	
  based	
  on	
  market	
  conditions.	
  	
  	
  

	
  21.51	
  
	
  26.92	
  
	
  19.54	
  
	
  22.09	
  
	
  14.96	
  
	
  16.07	
  
	
  20.47	
  
2.9%	
   

	
  18.25	
  
	
  26.69	
  
	
  16.49	
  
	
  24.05	
  
	
  17.35	
  
	
  14.21	
  
	
  20.39	
  
8.3%	
   

	
  20.09	
  
	
  23.36	
  
	
  15.86	
  
	
  25.28	
  
	
  14.72	
  
	
  14.76	
  
	
  19.01	
  
1.8%	
   

	
  18.97	
  
	
  21.59	
  
	
  19.42	
  
	
  25.45	
  
	
  13.56	
  
	
  13.57	
  
	
  17.83	
  
9.4%	
   

	
  21.31	
  
	
  22.17	
  
	
  16.45	
  
	
  22.54	
  
	
  15.09	
  
	
  14.89	
  
	
  18.67	
  

	
  18.39	
  
	
  25.07	
  
	
  20.24	
  
	
  24.23	
  
	
  15.35	
  
	
  15.99	
  
	
  19.90	
  

	
   $	
  

	
   $	
  

	
   $	
  

	
   $	
  

	
   $	
  

	
   $	
  

	
   $	
  

	
   $	
  

	
   $	
  

	
   $	
  

	
   $	
  

	
   $	
  

	
   $	
  

	
   $	
  

	
   $	
  

	
  20.64	
  
	
  24.47	
  
	
  19.13	
  
	
  24.50	
  
	
  13.00	
  
	
  13.60	
  
	
  20.14	
  

	
  19.74	
  
	
  24.25	
  
	
  17.35	
  
	
  23.80	
  
	
  13.24	
  
	
  13.36	
  
	
  19.70	
  
	
  (2.2)%	
  

Initial	
  direct	
  leasing	
  costs	
  and	
  lease	
  incentives	
  	
  
Initial	
  direct	
  leasing	
  costs	
  include	
  leasing	
  fees	
  and	
  related	
  costs	
  and	
  broker	
  commissions	
  incurred	
  in	
  negotiating	
  and	
  arranging	
  
tenant	
  leases.	
  Lease	
  incentives	
  include	
  costs	
  incurred	
  to	
  make	
  leasehold	
  improvements	
  to	
  tenant	
  spaces	
  and	
  cash	
  allowances.	
  
Initial	
  direct	
  leasing	
  costs	
  and	
  lease	
  incentives	
  are	
  dependent	
  upon	
  asset	
  type,	
  lease	
  terminations	
  and	
  expiries,	
  the	
  mix	
  of	
  new	
  
leasing	
  activity	
  compared	
  to	
  renewals,	
  portfolio	
  growth	
  and	
  general	
  market	
  conditions.	
  Short-‐term	
  leases	
  generally	
  have	
  lower	
  
costs	
  than	
  long-‐term	
  leases,	
  and	
  leasing	
  costs	
  associated	
  with	
  ofﬁce	
  space	
  are	
  generally	
  higher	
  than	
  costs	
  associated	
  with	
  flex	
  
office	
  and	
  industrial	
  space.	
  

For	
   the	
   three	
   and	
   twelve	
   months	
   ended	
   December	
   31,	
   2014,	
   approximately	
   $14.6	
   million	
   and	
   $41.6	
   million,	
   respectively,	
   of	
  
leasing	
  costs	
  and	
  lease	
  incentives	
  were	
  attributable	
  to	
  leases	
  that	
  commenced	
  during	
  the	
  periods,	
  representing	
  an	
  average	
  cost	
  
of	
  $16.31	
  per	
  square	
  foot	
  and	
  $14.66	
  per	
  square	
  foot,	
  respectively.	
  

Average	
   initial	
   direct	
   leasing	
   costs	
   and	
   lease	
   incentives	
   for	
   the	
   quarter	
   increased	
   to	
   $16.31	
   per	
   square	
   foot	
   from	
   $15.66	
   per	
  
square	
   foot	
   for	
   the	
   previous	
   quarter,	
   mainly	
   due	
   to	
   certain	
   higher	
   quality	
   tenants	
   that	
   took	
   occupancy	
   of	
   space	
   during	
   the	
  
quarter	
  with	
  longer	
  than	
  average	
  lease	
  terms	
  and	
  higher	
  lease	
  incentives.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  12	
  

	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
  
 
 
 
 
 
Performance	
  indicators	
  	
  
Operating	
  activities	
  (continuing	
  portfolio)(1)	
  
Portfolio	
  size	
  (sq.	
  ft.)	
  
Occupied	
  and	
  committed	
  occupancy	
  
Number	
  of	
  lease	
  deals	
  committed	
  
Leases	
  that	
  commenced	
  during	
  the	
  period	
  (sq.	
  ft.)	
  	
  
Average	
  lease	
  term	
  for	
  leases	
  that	
  commenced	
  during	
  the	
  period	
  (years)	
  
Initial	
  direct	
  leasing	
  costs	
  and	
  lease	
  incentives	
  attributable	
  to	
  leases	
  that	
  commenced	
  
	
  	
  	
  	
  	
  during	
  the	
  period	
  (in	
  thousands)	
  
Initial	
  direct	
  leasing	
  costs	
  and	
  lease	
  incentives	
  attributable	
  to	
  leases	
  that	
  commenced	
  	
  
	
  	
  	
  	
  during	
  the	
  period	
  (per	
  sq.	
  ft.)	
  
(1)	
  Excludes	
  redevelopment	
  properties	
  and	
  properties	
  held	
  for	
  sale.	
  

Three	
  months	
  ended	
  

Year	
  ended	
  

December	
  31,	
  2014	
  

	
   December	
  31,	
  2014	
  

	
  24,222,661	
   	
  
93.0%	
  	
  
	
  167	
   	
  
	
  893,439	
   	
  
	
  5.1	
   	
  

	
  24,222,661	
  
93.0%	
  
	
  573	
  
	
  2,837,777	
  
	
  5.4	
  

	
   $	
  

	
   $	
  

	
  14,561	
   $	
  

	
  41,582	
  

	
  16.31	
   $	
  

	
  14.66	
  

Tenant	
  base	
  proﬁle	
  	
  
Our	
   tenant	
   base	
   includes	
   municipal,	
   provincial	
   and	
   federal	
   governments	
   as	
   well	
   as	
   a	
   wide	
   range	
   of	
   high-‐quality	
   large	
  
international	
  corporations,	
  including	
  Canada’s	
  major	
  banks	
  and	
  three	
  of	
  Canada’s	
  prominent	
  law	
  firms,	
  and	
  small	
  to	
  medium-‐
sized	
  businesses	
  across	
  Canada.	
  With	
  over	
  2,200	
  tenants,	
  our	
  risk	
  of	
  exposure	
  to	
  any	
  single	
  large	
  lease	
  or	
  tenant	
  is	
  mitigated.	
  
The	
  average	
  size	
  of	
  our	
  ofﬁce	
  tenants	
  is	
  approximately	
  11,600	
  square	
  feet.	
  Effectively	
  managing	
  this	
  diverse	
  tenant	
  base	
  is	
  one	
  
of	
  our	
  key	
  strengths	
  and	
  has	
  helped	
  us	
  to	
  maintain	
  consistently	
  high	
  occupancy	
  levels	
  and	
  to	
  continually	
  capitalize	
  on	
  rental	
  rate	
  
increases.	
  	
  

The	
  stability	
  and	
  quality	
  of	
  our	
  cash	
  ﬂow	
  is	
  further	
  enhanced	
  by	
  the	
  fact	
  that	
  rental	
  revenue	
  from	
  government	
  and	
  government	
  
agencies	
  comprises	
  approximately	
  17.5%	
  of	
  our	
  total	
  rental	
  revenue.	
  The	
  list	
  of	
  our	
  20	
  largest	
  tenants	
  includes	
  both	
  federal	
  and	
  
provincial	
   governments	
   as	
   well	
   as	
   other	
   nationally	
   and	
   internationally	
   recognizable	
   high-‐quality	
   corporations	
   and	
   businesses.	
  
The	
  following	
  table	
  outlines	
  their	
  contributions	
  to	
  our	
  total	
  rental	
  revenue.	
  

Owned	
  area	
  

	
   Owned	
  area	
  

revenue	
  

remaining	
  lease	
  term	
  

	
   Gross	
  rental	
  

Weighted	
  average	
  

Tenant	
  	
  
Bank	
  of	
  Nova	
  Scotia	
  
Government	
  of	
  Canada	
  
Government	
  of	
  Ontario	
  
Bell	
  Canada	
  
Government	
  of	
  Québec	
  
Telus	
  
Enbridge	
  Pipelines	
  Inc.	
  
State	
  Street	
  Trust	
  Company	
  
Government	
  of	
  Saskatchewan	
  
Government	
  of	
  British	
  Columbia	
  
Government	
  of	
  Alberta	
  
Newalta	
  Corporation	
  
Aviva	
  Canada	
  Inc.	
  
Borell	
  Management	
  
Loyalty	
  Management	
  
SNC-‐Lavalin	
  Inc.	
  
Miller	
  Thomson	
  
Government	
  of	
  NW	
  Territories	
  
Cenovus	
  Energy	
  
Winners	
  Merchants	
  International	
  
Total	
  	
  
(1)	
  Credit	
  ratings	
  obtained	
  from	
  Standard	
  &	
  Poorʼs	
  and	
  may	
  reflect	
  the	
  parentʼs	
  or	
  a	
  guarantorʼs	
  credit	
  rating.	
  	
  	
  

(sq.	
  ft.)	
  
	
  984,404	
   	
  
	
  1,423,259	
   	
  
	
  670,003	
   	
  
	
  376,694	
   	
  
	
  663,922	
   	
  
	
  287,803	
   	
  
	
  248,577	
   	
  
	
  244,936	
   	
  
	
  343,001	
   	
  
	
  287,747	
   	
  
	
  304,079	
   	
  
	
  187,297	
   	
  
	
  335,900	
   	
  
	
  124,795	
   	
  
	
  194,018	
   	
  
	
  207,351	
   	
  
	
  137,149	
   	
  
	
  142,202	
   	
  
	
  140,605	
   	
  
	
  219,685	
   	
  
	
  7,523,427	
   	
  

(%)	
  
4.1	
   	
  
5.9	
   	
  
2.8	
   	
  
1.6	
   	
  
2.7	
   	
  
1.2	
   	
  
1.0	
   	
  
1.0	
   	
  
1.4	
   	
  
1.2	
   	
  
1.3	
   	
  
0.8	
   	
  
1.4	
   	
  
0.5	
   	
  
0.8	
   	
  
0.9	
   	
  
0.6	
   	
  
0.6	
   	
  
0.6	
   	
  
0.9	
   	
  
31.3	
   	
  

(%)	
  
	
  7.3	
   	
  
	
  6.1	
   	
  
	
  3.3	
   	
  
	
  1.8	
   	
  
	
  1.7	
   	
  
	
  1.5	
   	
  
	
  1.5	
   	
  
	
  1.4	
   	
  
	
  1.3	
   	
  
	
  1.2	
   	
  
	
  1.2	
   	
  
	
  1.1	
   	
  
	
  1.1	
   	
  
	
  1.0	
   	
  
	
  1.0	
   	
  
	
  0.8	
   	
  
	
  0.8	
   	
  
	
  0.8	
   	
  
	
  0.8	
   	
  
	
  0.8	
   	
  
	
  36.5	
   	
  

N/A	
  –	
  not	
  applicable	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  13	
  

(years)	
  
	
  9.7	
   	
  
	
  3.1	
   	
  
	
  4.6	
   	
  
	
  3.3	
   	
  
	
  12.2	
   	
  
	
  2.1	
   	
  
	
  4.1	
   	
  
	
  7.3	
   	
  
	
  2.2	
   	
  
	
  4.6	
   	
  
	
  3.0	
   	
  
	
  4.8	
   	
  
	
  3.1	
   	
  
	
  2.0	
   	
  
	
  2.8	
   	
  
	
  5.4	
   	
  
	
  8.7	
   	
  
	
  6.9	
   	
  
	
  8.5	
   	
  
	
  1.2	
   	
  
	
  5.3	
   	
  

Credit	
  
rating(1)	
  
A+/A-‐/A-‐1	
  
AAA	
  
AA-‐/A-‐1+	
  
BBB+	
  
A+/A-‐1+	
  
BBB+	
  
A-‐/A-‐1	
  
AA-‐/A+/A-‐1+	
  
AAA/A-‐1+	
  
AAA/A-‐1+	
  
AAA/A-‐1+	
  
N/A	
  
A+	
  
N/A	
  
N/A	
  
BBB	
  
N/A	
  
N/A	
  
A-‐1/BBB+	
  
N/A	
  

 
 
 
 
 
 
 
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
  	
  	
  
  	
  	
  
	
  
	
  
 
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  	
  
 
 
 
 
	
  
	
  
	
  
	
  
	
  
 
 
 
 
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
 
	
  
 
	
  
 
	
  
 
	
  
 
	
  
 
	
  
 
	
  
 
	
  
 
	
  
 
	
  
 
	
  
 
	
  
 
	
  
 
	
  
 
	
  
 
	
  
 
	
  
 
	
  
 
	
  
 
	
  
	
  
	
  
	
  
OUR	
  RESOURCES	
  AND	
  FINANCIAL	
  CONDITION	
  
Investment	
  properties	
  	
  
As	
   at	
   December	
   31,	
   2014,	
   the	
   value	
   of	
   our	
   investment	
   property	
   comparative	
   portfolio,	
   which	
   includes	
   investment	
   in	
   joint	
  
ventures	
  and	
  excludes	
  redevelopment	
  properties,	
  properties	
  sold	
  and	
  assets	
  held	
  for	
  sale,	
  was	
  $7,192	
  million	
  (September	
  30,	
  
2014	
  –	
  $7,226	
  million;	
  December	
  31,	
  2013	
  –	
  $7,238	
  million).	
  

Fair	
   values	
   were	
   determined	
   using	
   the	
   direct	
   capitalization	
   method.	
   The	
   direct	
   capitalization	
   method	
   applies	
   a	
   capitalization	
  
rate	
   (“cap	
   rate”)	
   to	
   stabilized	
   NOI	
   (non-‐GAAP	
   measure)	
   and	
   incorporates	
   allowances	
   for	
   vacancy	
   and	
   management	
   fees.	
   The	
  
resulting	
   capitalized	
   value	
   is	
   further	
   adjusted	
   for	
   non-‐recurring	
   costs	
   to	
   stabilize	
   income	
   and	
   non-‐recoverable	
   capital	
  
expenditures,	
  where	
  applicable.	
  Individual	
  properties	
  across	
  our	
  comparative	
  portfolio	
  were	
  valued	
  using	
  weighted	
  average	
  cap	
  
rates	
  in	
  the	
  range	
  of	
  5.15%	
  to	
  8.75%	
  as	
  at	
  December	
  31,	
  2014.	
  	
  

The	
  fair	
  value	
  of	
  our	
  investment	
  properties,	
  including	
  investment	
  in	
  joint	
  ventures,	
  is	
  set	
  out	
  below:	
  

Western	
  Canada	
  	
  
Calgary	
  –	
  downtown	
  
Calgary	
  –	
  suburban	
  
Toronto	
  –	
  downtown	
  
Toronto	
  –	
  suburban	
  
Eastern	
  Canada	
  	
  
Total	
  comparative	
  portfolio(1)	
  
Add:	
  
	
   Redevelopment	
  properties	
  
	
   Assets	
  held	
  for	
  sale/sold	
  properties	
  
Total	
  portfolio	
  	
  
Less:	
  

Investment	
  in	
  joint	
  ventures	
  

	
   Assets	
  held	
  for	
  sale	
  –	
  joint	
  ventures	
  
Total	
  per	
  consolidated	
  balance	
  sheets	
  
(1)	
  Comparative	
  figures	
  have	
  been	
  reclassified	
  to	
  exclude	
  sold	
  properties.	
  

December	
  31,	
  	
  

2014	
  
	
  1,395,943	
  
	
  1,162,981	
  
	
  183,969	
  
	
  2,409,667	
  
	
  962,942	
  
	
  1,076,344	
  
	
  7,191,846	
  

	
  10,000	
  
	
  2,750	
  
	
  7,204,596	
  

	
  1,062,776	
  
	
  2,750	
  
	
  6,139,070	
  

	
  $	
  

	
  $	
  

	
  $	
  

	
  $	
  

September	
  30,	
  
2014(1)	
  	
  
	
  1,412,491	
  
	
  1,193,046	
  
	
  184,830	
  
	
  2,398,996	
  
	
  961,250	
  
	
  1,075,837	
  
	
  7,226,450	
  

	
  10,000	
  
	
  2,750	
  
	
  7,239,200	
  

	
  1,062,212	
  
	
  2,750	
  
	
  6,174,238	
  

	
  $	
  

	
  $	
  

$	
  

$	
  

$	
  

Total	
  portfolio	
  

December	
  31,	
  	
  
2013(1)	
  	
  
	
  1,445,127	
  
	
  1,203,684	
  
	
  183,927	
  
	
  2,365,230	
  
	
  967,882	
  
	
  1,072,085	
  
	
  7,237,935	
  

	
  10,000	
  
	
  75,667	
  
	
  7,323,602	
  

	
  1,061,436	
  
	
  20,481	
  
	
  6,241,685	
  

The	
   carrying	
   value	
   of	
   our	
   total	
   portfolio	
   decreased	
   by	
   approximately	
   $34.6	
   million	
   during	
   the	
   quarter,	
   mainly	
   due	
   to	
   a	
  	
  
$67.3	
   million	
   decrease	
   in	
   fair	
   value,	
   offset	
   by	
   $32.2	
   million	
   of	
   building	
   improvements,	
   initial	
   direct	
   leasing	
   costs	
   and	
   lease	
  
incentive	
  additions,	
  and	
  $0.5	
  million	
  related	
  to	
  the	
  amortization	
  of	
  lease	
  incentives,	
  foreign	
  exchange	
  and	
  other	
  adjustments.	
  	
  	
  

The	
  $67.3	
  million	
  fair	
  value	
  loss	
  recognized	
  during	
  the	
  quarter	
  was	
  mainly	
  driven	
  by	
  externally	
  appraised	
  properties	
  in	
  Western	
  
Canada	
  and	
  Calgary,	
  where	
  the	
  external	
  appraisers	
  assumed	
  lowered	
  market	
  rents	
  and	
  increased	
  downtimes	
  in	
  selected	
  assets.	
  	
  
Other	
   factors	
   which	
   contributed	
   to	
   the	
   fair	
   value	
   decline	
   included	
   changes	
   in	
   rental	
   rates	
   and	
   leasing	
   assumptions,	
   mainly	
   in	
  
Western	
  Canada	
  and	
  Calgary	
  downtown	
  properties	
  with	
  previously	
  identified	
  future	
  tenant	
  vacancies.	
  

The	
   weighted	
   average	
   cap	
   rate	
   across	
   our	
   total	
   comparative	
   portfolio	
   compressed	
   by	
   2	
   bps	
   to	
   6.16%	
   when	
   compared	
   to	
  
September	
  30,	
  2014	
  and	
  December	
  31,	
  2013.	
  	
  The	
  overall	
  decrease	
  in	
  cap	
  rates	
  was	
  mainly	
  experienced	
  in	
  Toronto	
  downtown	
  
and	
  Eastern	
  Canada,	
  offset	
  by	
  modest	
  increases	
  in	
  the	
  other	
  regions.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  14	
  

	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
Changes	
  in	
  the	
  value	
  of	
  our	
  investment	
  properties	
  by	
  region	
  for	
  the	
  three	
  months	
  ended	
  December	
  31,	
  2014	
  are	
  summarized	
  in	
  
the	
  table	
  below	
  as	
  follows:	
  

Initial	
  direct	
  

leasing	
  costs	
  

	
   Amortization	
  of	
  

lease	
  incentives,	
  

	
   foreign	
  exchange	
  

Three	
  months	
  ended	
  

Building	
  	
  

and	
  lease	
  

Fair	
  value	
  

	
  and	
  other	
  

	
   December	
  31,	
  	
  

improvements	
  

incentives	
  

	
   adjustments	
  

adjustments	
  

	
  3,123	
   $	
  
	
  2,340	
  
	
  569	
  
	
  3,711	
  
	
  1,617	
  
	
  2,807	
  
	
  14,167	
  

	
  -‐	
  
	
  -‐	
  

	
  14,167	
   $	
  

	
  2,849	
   $	
  
	
  4,667	
  
	
  296	
  
	
  3,236	
  
	
  3,483	
  
	
  3,450	
  
	
  17,981	
  

	
  -‐	
  
	
  15	
  
	
  17,996	
   $	
  

	
  (22,000)	
   $	
  
	
  (36,300)	
  
	
  (1,600)	
  
	
  4,200	
  
	
  (2,900)	
  
	
  (8,700)	
  
	
  (67,300)	
  

	
  -‐	
  
	
  -‐	
  

	
  (67,300)	
   $	
  

	
  (520)	
   $	
  
	
  (772)	
  
	
  (126)	
  
	
  (476)	
  
	
  (508)	
  
	
  2,950	
  
	
  548	
  

2014	
  
	
  1,395,943	
  
	
  1,162,981	
  
	
  183,969	
  
	
  2,409,667	
  
	
  962,942	
  
	
  1,076,344	
  
	
  7,191,846	
  

	
  -‐	
  
	
  (15)	
  
	
  533	
   $	
  

	
  10,000	
  
	
  2,750	
  
	
  7,204,596	
  

$	
  

	
  	
   September	
  30,	
  
2014(1)	
  
	
  1,412,491	
   $	
  
	
  1,193,046	
  
	
  184,830	
  
	
  2,398,996	
  
	
  961,250	
  
	
  1,075,837	
  
	
  7,226,450	
  

	
  10,000	
  
	
  2,750	
  
	
  7,239,200	
   $	
  

$	
  

	
  1,062,212	
  
	
  2,750	
  

	
  459	
  
	
  -‐	
  

	
  345	
  
	
  6	
  

	
  (200)	
  
	
  -‐	
  

	
  (40)	
  
	
  (6)	
  

	
  1,062,776	
  
	
  2,750	
  

Western	
  Canada	
  	
  
Calgary	
  –	
  downtown	
  
Calgary	
  –	
  suburban	
  
Toronto	
  –	
  downtown	
  
Toronto	
  –	
  suburban	
  
Eastern	
  Canada	
  	
  
Total	
  comparative	
  portfolio(1)	
  
Add:	
  
	
   Redevelopment	
  properties	
  
	
   Assets	
  held	
  for	
  sale/sold	
  properties	
  
Total	
  portfolio	
  	
  
Less:	
  

Investment	
  in	
  joint	
  ventures	
  

	
   Assets	
  held	
  for	
  sale	
  
Total	
  investment	
  properties	
  

	
  	
  (per	
  consolidated	
  balance	
  sheet)	
  

	
  6,174,238	
   $	
  
(1)	
  Opening	
  balances	
  have	
  been	
  reclassified	
  to	
  exclude	
  sold	
  properties.	
  

$	
  

	
  13,708	
   $	
  

	
  17,645	
   $	
  

	
  (67,100)	
   $	
  

	
  579	
   $	
  

	
  6,139,070	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  15	
  

	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
 
Changes	
  in	
  the	
  value	
  of	
  our	
  investment	
  properties	
  by	
  region	
  for	
  the	
  year	
  ended	
  December	
  31,	
  2014	
  are	
  summarized	
  in	
  the	
  table	
  
below	
  as	
  follows:	
  

Initial	
  direct	
  

leasing	
  costs	
  

Amortization	
  of	
  

lease	
  incentives,	
  

	
   foreign	
  exchange	
  

Year	
  ended	
  

Property	
  	
  

Building	
  	
  

and	
  lease	
  	
  

Fair	
  value	
  	
  

	
  and	
  other	
  	
   December	
  31,	
  	
  

dispositions	
  	
  

improvements	
  

incentives	
  	
  

adjustments	
  	
  

	
  7,118	
   $	
  
	
  8,194	
  
	
  930	
  
	
  6,841	
  
	
  3,484	
  
	
  7,346	
  
	
  33,913	
  

	
  6,071	
   $	
  
	
  9,491	
  
	
  1,202	
  
	
  10,233	
  
	
  11,008	
  
	
  10,127	
  
	
  48,132	
  

	
  (60,444)	
   $	
  
	
  (55,247)	
  
	
  (1,595)	
  
	
  28,868	
  
	
  (17,579)	
  
	
  (20,206)	
  
	
  (126,203)	
  

adjustments	
  	
  

2014	
  
	
  (1,929)	
   $	
   	
  1,395,943	
  
	
   	
  1,162,981	
  
	
  (3,141)	
  
	
  183,969	
  
	
  (495)	
  
	
   	
  2,409,667	
  
	
  (1,505)	
  
	
  962,942	
  
	
  (1,853)	
  
	
   	
  1,076,344	
  
	
  6,992	
  
	
   	
  7,191,846	
  
	
  (1,931)	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  10,000	
  

$	
  

Western	
  Canada	
  	
  
Calgary	
  –	
  downtown	
  
Calgary	
  –	
  suburban	
  
Toronto	
  –	
  downtown	
  
Toronto	
  –	
  suburban	
  
Eastern	
  Canada	
  	
  
Total	
  comparative	
  portfolio(1)	
  
Add:	
  
	
   Redevelopment	
  properties	
  
	
   Assets	
  held	
  for	
  sale/sold	
  

January	
  1,	
  	
  
2014(1)	
  	
  
	
  1,445,127	
   $	
  
	
  1,203,684	
  
	
  183,927	
  
	
  2,365,230	
  
	
  967,882	
  
	
  1,072,085	
  
	
  7,237,935	
  

	
  10,000	
  

	
  -‐	
   $	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  

	
  -‐	
  

	
  	
  	
  	
  properties	
  
Total	
  portfolio	
  	
  
Less:	
  

Investment	
  in	
  joint	
  
	
  	
  	
  ventures	
  

	
   Assets	
  held	
  for	
  sale	
  
Total	
  investment	
  properties	
  
(per	
  consolidated	
  balance	
  

	
  75,667	
  
	
  7,323,602	
   $	
  

	
  (71,780)	
  
	
  (71,780)	
  $	
  

$	
  

	
  45	
  
	
  33,958	
   $	
  

	
  1,110	
  
	
  49,242	
   $	
  

	
  (2,253)	
  
	
  (128,456)	
   $	
  

	
  (39)	
  

	
  2,750	
  
	
  (1,970)	
   $	
   	
  7,204,596	
  

	
  1,061,436	
  
	
  20,481	
  

	
  -‐	
  
	
  (17,833)	
  

	
  3,934	
  
	
  45	
  

	
  1,154	
  
	
  674	
  

	
  (3,596)	
  
	
  (557)	
  

	
  (152)	
  
	
  (60)	
  

	
   	
  1,062,776	
  
	
  2,750	
  

$	
  
	
   sheet)	
  
(1)	
  Opening	
  balances	
  have	
  been	
  reclassified	
  to	
  exclude	
  sold	
  properties.	
  

	
  6,241,685	
   $	
  

	
  (53,947)	
  $	
  

	
  29,979	
   $	
  

	
  47,414	
   $	
  

	
  (124,303)	
   $	
  

	
  (1,758)	
   $	
   	
  6,139,070	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  16	
  

	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
Cap	
  rates	
  are	
  a	
  key	
  metric	
  used	
  to	
  value	
  our	
  investment	
  properties,	
  and	
  are	
  set	
  out	
  in	
  the	
  table	
  below	
  by	
  region:	
  

December	
  31,	
  2014	
  

September	
  30,	
  2014(1)	
  

Capitalization	
  rates	
  	
  

Total	
  portfolio	
  
December	
  31,	
  2013(1)	
  

Western	
  Canada	
  
Calgary	
  –	
  downtown	
  
Calgary	
  –	
  suburban	
  
Toronto	
  –	
  downtown	
  
Toronto	
  –	
  suburban	
  
Eastern	
  Canada	
  
Total	
  before	
  redevelopment	
  
	
  	
  	
  properties	
  and	
  assets	
  
	
  	
  	
  held	
  for	
  sale/sold	
  properties	
  

Range	
  (%)	
  
5.75–8.75	
  
5.50–7.50	
  
6.25–7.25	
  
5.15–7.00	
  
5.75–7.50	
  
5.75–8.50	
  

5.15–8.75	
  

Redevelopment	
  properties	
  
Assets	
  held	
  for	
  sale/sold	
  properties	
   	
  
Total	
  portfolio	
  
(1)	
  Comparative	
  figures	
  have	
  been	
  reclassified	
  to	
  exclude	
  sold	
  properties.	
  
	
  N/A	
  –	
  not	
  applicable	
  

N/A	
  
N/A	
  
5.15–9.00	
  

Investing	
  activities	
  
Our	
  investing	
  activities	
  are	
  summarized	
  as	
  follows:	
  

Investing	
  activities(1)	
  
Acquisition	
  of	
  investment	
  properties(2)	
  
Building	
  improvements	
  
(1)	
  Includes	
  investments	
  in	
  joint	
  ventures	
  and	
  properties	
  held	
  for	
  sale.	
  

	
  $	
  

(2)	
  Amount	
  represents	
  purchase	
  price	
  including	
  transaction	
  costs.	
  

Weighted	
  
average	
  (%)	
  
6.66	
  
6.16	
  
6.81	
  
5.42	
  
6.55	
  
6.72	
  

6.16	
  

9.00	
  
8.00	
  
6.17	
  

Range	
  (%)	
  
5.75–8.75	
  
5.50–7.50	
  
6.25–7.25	
  
5.15–7.00	
  
5.75–7.50	
  
5.75–9.00	
  

5.15–9.00	
  

N/A	
  
N/A	
  
5.15–9.00	
  

Weighted	
  
average	
  (%)	
  
6.63	
  
6.16	
  
6.81	
  
5.43	
  
6.55	
  
6.80	
  

6.18	
  	
  

9.00	
  
8.00	
  
6.18	
  

Range	
  (%)	
  
5.75–8.75	
  
5.50–7.50	
  
6.25–7.25	
  
5.15–7.00	
  
5.75–7.25	
  
6.00–9.00	
  

5.15–9.00	
  

N/A	
  
6.25–8.00	
  
5.15–9.00	
  

Weighted	
  
average	
  (%)	
  
6.56	
  
6.13	
  
6.78	
  
5.53	
  
6.46	
  
6.77	
  

6.18	
  

9.00	
  
6.92	
  
6.19	
  

Three	
  months	
  ended	
  December	
  31,	
  	
  	
  

Year	
  ended	
  December	
  31,	
  	
   	
  

2014	
  

2013	
  	
  

2014	
  

2013	
  

	
  -‐	
  
	
  14,167	
   	
  

	
   $	
  

	
  8,481	
  	
   $	
  
	
  11,737	
   	
  

	
  -‐	
   	
  
	
  33,958	
  

$	
  

	
  604,931	
   	
  
	
  36,229	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  17	
  

	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
Acquisitions	
  
For	
   the	
   year	
   ended	
   December	
   31,	
   2014,	
   there	
   were	
   no	
   acquisitions	
   completed.	
   For	
   the	
   year	
   ended	
   December	
   31,	
   2013,	
   the	
  
following	
  acquisitions	
  were	
  completed:	
  

Broadmoor	
  Plaza,	
  Edmonton	
  
887	
  Great	
  Northern	
  Way,	
  Vancouver	
  	
  

(Discovery	
  Parks)	
  

Interest	
   	
  

Acquired	
   	
  

Occupancy	
  	
  	
  

	
   	
   acquired	
   	
  

GLA	
   	
   on	
  acquisition	
  	
  	
  

Property	
  type	
  	
  
office	
  	
  

(%)	
  
	
  100.0	
   	
  

(sq.	
  ft.)	
   	
  

	
  371,561	
  

(%)	
  	
  
	
  98.5	
   	
  $	
  

Purchase	
  	
   	
  
price(1)	
  	
  
	
  84,892	
    	
  

Date	
  acquired	
  	
  
March	
  15,	
  2013	
  

office	
  	
  

	
  100.0	
   	
  

	
  164,364	
  

	
  100.0	
   	
  	
  

	
  68,068	
    	
  

April	
  8,	
  2013	
  

340–350	
  3rd	
  Avenue	
  North,	
  Saskatoon	
  	
  

(T&T	
  Towers)	
  and	
  14505–14555	
  Bannister	
  Road,	
  

	
   Calgary	
  (Parke	
  at	
  Fish	
  Creek)	
  
20	
  Toronto	
  Street	
  and	
  137	
  Yonge	
  Street,	
  Toronto	
   	
  
212	
  King	
  Street	
  West,	
  Toronto	
  
100	
  Yonge	
  Street,	
  Toronto	
  
IBM	
  Corporate	
  Park,	
  Calgary	
  
4561	
  Parliament	
  Avenue,	
  Regina	
  

(Harbour	
  Landing	
  Business	
  Park)	
  

83	
  Yonge	
  Street,	
  Toronto	
  
Total	
  	
  
(1)	
  Includes	
  $14.7	
  million	
  in	
  transaction	
  costs.	
  

office	
  	
  
office	
  	
  
office	
  	
  
office	
  	
  
office	
  	
  

	
  100.0	
   	
  
	
  100.0	
   	
  
	
  100.0	
   	
  
	
  66.7	
   	
  
	
  66.7	
   	
  

	
  191,147	
  
	
  422,990	
  
	
  73,277	
  
	
  161,525	
  
	
  238,171	
  

	
  99.1	
   	
  	
  
	
  99.4	
   	
  	
  
	
  100.0	
   	
  	
  
	
  99.4	
   	
  	
  
	
  98.1	
   	
  	
  

	
  62,610	
    	
  
	
  145,983	
    	
  
	
  38,730	
    	
  
	
  56,273	
  	
   	
  

	
  124,377	
  

April	
  12,	
  2013	
  
April	
  30,	
  2013	
  
May	
  24,	
  2013	
  
June	
  26,	
  2013	
  
August	
  13,	
  2013	
  

office	
  	
  
office	
  	
  

	
  100.0	
   	
  
	
  100.0	
   	
  

	
  38,975	
  
	
  11,521	
  
	
  1,673,531	
  

	
  100.0	
   	
  	
  
	
  71.2	
   	
  	
  
98.9	
   	
  $	
  

	
  15,517	
  
	
  8,481	
  
	
  604,931	
   	
  	
  

September	
  16,	
  2013	
  
December	
  2,	
  2013	
  

Building	
  improvements	
  
Building	
  improvements	
  represent	
  investments	
  made	
  to	
  ensure	
  optimal	
  building	
  performance.	
  For	
  the	
  three	
  and	
  twelve	
  months	
  
ended	
   December	
   31,	
   2014,	
   we	
   incurred	
   $14.2	
   million	
   and	
   $34.0	
   million,	
   respectively,	
   in	
   expenditures	
   related	
   to	
   building	
  
improvements,	
  substantially	
  all	
  of	
  which	
  are	
  recoverable	
  from	
  tenants.	
  	
  

Recurring	
  recoverable	
  building	
  improvements	
  for	
  the	
  three	
  and	
  twelve	
  months	
  ended	
  December	
  31,	
  2014	
  were	
  $6.9	
  million	
  and	
  
$13.3	
   million,	
   respectively,	
   and	
   included	
   elevator,	
   roof	
   and	
   heating,	
   ventilation	
   and	
   air	
   conditioning	
   replacements	
   as	
   well	
   as	
  
parking	
   upgrades.	
   Recurring	
   recoverable	
   enhancement	
   projects	
   include	
   lobby	
   and	
   common	
   area	
   upgrades	
   and	
   exterior	
  
enhancements.	
  For	
  the	
  three	
  and	
  twelve	
  months	
  ended	
  December	
  31,	
  2014,	
  recurring	
  recoverable	
  enhancement	
  projects	
  were	
  
$4.6	
   million	
   and	
   $11.1	
   million,	
   respectively.	
   For	
   the	
   three	
   and	
   twelve	
   months	
   ended	
   December	
   31,	
   2014,	
   approximately	
  	
  
$1.1	
  million	
  and	
  $1.8	
  million,	
  respectively,	
  were	
  spent	
  on	
  sustainability	
  and	
  environmental	
  initiatives,	
  substantially	
  all	
  of	
  which	
  
are	
   recovered	
   from	
   tenants.	
   Non-‐recurring	
   building	
   improvements	
   included	
   capital	
   expenditures	
   that	
   generally	
   would	
   not	
   be	
  
expected	
  to	
  recur	
  over	
  the	
  useful	
  life	
  of	
  the	
  building.	
  

The	
  table	
  below	
  represents	
  amounts	
  either	
  paid	
  or	
  accrued	
  during	
  the	
  period:	
  

Building	
  improvements(1)	
  
Recurring	
  recoverable	
  
Recurring	
  recoverable	
  enhancement	
  projects	
  
Sustainability	
  and	
  environmental	
  initiatives	
  
Recoverable	
  –	
  identified	
  upon	
  acquisition	
  
Recurring	
  non-‐recoverable	
  
Non-‐recurring	
  and	
  non-‐recoverable	
  
Total	
  

Three	
  months	
  ended	
  December	
  31,	
  	
   
2013	
  

2014	
  

Year	
  ended	
  December	
  31,	
  

2014	
  

2013	
  

$	
  

$	
  

	
  6,912	
  
	
  4,558	
  
	
  1,120	
  
	
  866	
  
	
  654	
  
	
  57	
  
	
  14,167	
  

	
  $	
  

	
  $	
  

	
  2,429	
  
	
  8,088	
  
	
  906	
  
	
  202	
  
	
  78	
  
	
  34	
  
	
  11,737	
  

	
  $	
  

	
  $	
  

	
  13,286	
  
	
  11,056	
  
	
  1,760	
  
	
  5,402	
  
	
  1,182	
  
	
  1,272	
  
	
  33,958	
  

	
  $	
  

	
  $	
  

	
  10,190	
  
	
  14,023	
  
	
  4,124	
  
	
  6,005	
  
	
  1,344	
  
	
  543	
  
	
  36,229	
  

(1)	
  	
  Includes	
  investment	
  in	
  joint	
  ventures	
  that	
  are	
  equity	
  accounted	
  and	
  properties	
  held	
  for	
  sale.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  18	
  

	
  
	
  
	
  
	
   	
  
	
  	
   	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
 
  
  
   
  
 
	
   	
  
 
	
  
	
  
	
  
	
  
 
  
  
   
  
 
   
 
	
  
 
  
  
   
  
 
   
 
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
   	
  
	
  	
  	
  
	
  	
   	
  
	
  
 
	
  
	
  
	
  
	
  
	
  
 	
  
	
  	
  
	
  
 
 
 
 
 
	
  
 
	
   
	
   
	
   
	
  
   	
  
   	
  
   	
  
 
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
Dispositions	
  
Pursuant	
   to	
   our	
   strategy	
   of	
   divesting	
   non-‐core	
   assets,	
   we	
   completed	
   the	
   following	
   dispositions	
   for	
   the	
   year	
   ended	
  	
  
December	
  31,	
  2014:	
  

Riverbend	
  Atrium,	
  	
  
	
  	
  	
  	
  Calgary(3)	
  
Stockman	
  Centre,	
  
	
  	
  	
  	
  Calgary(3)	
  
Plaza	
  124,	
  Edmonton(3)	
  
9705	
  Horton	
  Road,	
  	
  
	
  	
  	
  	
  Calgary	
  
26229	
  Township	
  Road	
  531,	
  
	
  	
  	
  	
  Edmonton(4)	
  
11404	
  Winterburn	
  Rd	
  NW,	
  
	
  	
  	
  	
  Edmonton(4)	
  
16134	
  -‐	
  114th	
  Avenue	
  NW,	
  
	
  	
  	
  	
  Edmonton(4)	
  
16104	
  -‐	
  114th	
  Avenue	
  NW,	
  
	
  	
  	
  	
  Edmonton(4)	
  
St.	
  Albert	
  Trail	
  Centre,	
  
	
  	
  	
  	
  Edmonton	
  
Total	
  	
  

Disposed	
  	
  

Property	
   Ownership	
  

GLA	
  	
  

type	
  

(%)	
  

(sq.	
  ft.)	
  

Gross	
  
	
  proceeds(1)	
   

	
   Carrying	
  

value	
  

	
   Cost	
  of	
  	
  
sales(2)	
  

Loss	
  

	
   Mortgages	
  	
  	
  

on	
  sale	
   

discharged	
  

Date	
  disposed	
  

office	
  

25%	
  

	
  22,055	
   $	
  

	
  4,850	
  $	
  

	
  5,009	
   $	
  

	
  89	
  $	
  

	
  (248)	
  $	
  

	
  1,173	
  

June	
  3,	
  2014	
  

office	
  
office	
  

25%	
  
25%	
  

	
  15,656	
  
	
  38,590	
  

	
  3,375	
   
	
  9,275	
   

	
  3,324	
    
	
  9,601	
    

	
  63	
  
	
  172	
  

	
  (12)	
   
	
  (498)	
   

	
  577	
  
	
  3,569	
  

June	
  3,	
  2014	
  
June	
  3,	
  2014	
  

office	
  

100%	
  

	
  55,363	
   	
  

	
  9,150	
  	
  

	
  9,022	
   	
  

	
  301	
  	
  

	
  (173)	
  	
  

	
  5,919	
  

June	
  12,	
  2014	
  

flex	
  

100%	
  

	
  89,165	
   	
  

	
  12,084	
  	
  

	
  12,144	
   	
  

	
  8	
  	
  

	
  (68)	
  	
  

	
  5,529	
  

September	
  9,	
  2014	
  

flex	
  

100%	
  

	
  81,917	
   	
  

	
  10,489	
  	
  

	
  10,489	
   	
  

	
  24	
  	
  

	
  (24)	
  	
  

	
  5,599	
  

September	
  9,	
  2014	
  

flex	
  

100%	
  

	
  48,353	
   	
  

	
  3,938	
  	
  

	
  3,938	
   	
  

	
  44	
  	
  

	
  (44)	
  	
  

	
  2,651	
  

September	
  9,	
  2014	
  

flex	
  

100%	
  

	
  28,759	
   	
  

	
  6,281	
  	
  

	
  6,281	
   	
  

	
  5	
  	
  

	
  (5)	
  	
  

	
  2,030	
  

September	
  9,	
  2014	
  

office	
  

50%	
  

	
  48,402	
   	
  
	
  428,260	
   $	
  

	
  12,073	
   	
  

	
  12,075	
  	
  
	
  71,517	
  $	
   	
  71,881	
   $	
  

	
  426	
  	
  

	
  (424)	
  	
  

	
  1,132	
  $	
  	
  (1,496)	
  $	
  

	
  6,389	
  
	
  33,436	
  

September	
  15,	
  2014	
  

(1)  Gross	
  proceeds	
  before	
  transaction	
  costs.	
  
(2)  Cost	
   of	
   sales	
   includes	
   mainly	
   the	
   write-‐off	
   of	
   financing	
   costs	
   and	
   fair	
   value	
   adjustments	
   associated	
   with	
   the	
   debt	
   discharged,	
   transaction	
   costs	
   and	
   the	
  

write-‐off	
  of	
  goodwill	
  associated	
  with	
  the	
  cash-‐generating	
  unit.	
  

(3)  The	
  Trust	
  held	
  a	
  25%	
  interest	
  in	
  the	
  property	
  through	
  a	
  partnership	
  interest	
  and	
  accounted	
  for	
  this	
  as	
  a	
  joint	
  venture.	
  
(4)  These	
  investment	
  properties	
  were	
  sold	
  to	
  Dream	
  Industrial	
  REIT.	
  

On	
  September	
  9,	
  2014,	
  the	
  Trust	
  completed	
  the	
  sale	
  of	
  four	
  investment	
  properties	
  to	
  Dream	
  Industrial	
  REIT	
  for	
  a	
  sale	
  price	
  of	
  
$33	
  million,	
  net	
  of	
  mark-‐to-‐market	
  adjustments	
  on	
  mortgages	
  assumed	
  by	
  Dream	
  Industrial	
  REIT.	
  The	
  sale	
  price	
  was	
  satisfied	
  by	
  
receipt	
   of	
   2,269,759	
   Class	
   B	
   limited	
   partnership	
   units	
   of	
   Dream	
   Industrial	
   LP	
   (a	
   subsidiary	
   of	
   Dream	
   Industrial	
   REIT)	
   at	
  	
  
$9.40	
  per	
  unit,	
  which	
  are	
  exchangeable	
  for	
  units	
  of	
  Dream	
  Industrial	
  REIT,	
  offset	
  by	
  mortgages	
  assumed	
  on	
  disposition.	
  	
  	
  

We	
  completed	
  the	
  following	
  dispositions	
  of	
  non-‐core	
  assets	
  for	
  the	
  year	
  ended	
  December	
  31,	
  2013:	
  

Disposed	
  

625	
  University	
  Park	
  Drive,	
  Regina	
  
2640,	
  2510–2550	
  Quance	
  Street,	
  Regina	
  
Total	
  	
  
(1)  Gross	
  proceeds	
  before	
  transaction	
  costs.	
  
(2)  Loss	
  on	
  sales	
  includes	
  mainly	
  the	
  write-‐off	
  of	
  financing	
  costs	
  and	
  fair	
  value	
  adjustments	
  associated	
  with	
  the	
  debt	
  discharged,	
  transaction	
  costs	
  and	
  the	
  

	
  $	
  

	
  $	
  

	
  $	
  

	
  $	
  

	
  $	
  

	
  $	
  

Property	
  	
  

type	
  
office	
  
office	
  

GLA	
  
(sq.	
  ft.)	
   
	
  17,145	
  
	
  69,554	
  
    	
  86,699	
  

Gross	
  
proceeds(1)	
   
	
  5,182	
  
	
  16,300	
  
	
  21,482	
  

Loss	
  	
  
on	
  sale(2)	
   
	
  (68)	
  
	
  (215)	
  
	
  (283)	
  

Mortgages	
  

discharged	
  
	
  -‐	
  
	
  8,767	
  
	
  8,767	
  

Date	
  disposed	
  
January	
  31,	
  2013	
  
January	
  31,	
  2013	
  

write-‐off	
  of	
  goodwill	
  associated	
  with	
  the	
  cash-‐generating	
  unit.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  19	
  

	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
 
	
  
	
  
	
  
	
   
 
 
 
 
	
  
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
   
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
   
	
   
	
  
	
  
	
   
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
 
 
	
  
	
   
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
 
	
  
	
  
 
OUR	
  FINANCING	
  	
  
Liquidity	
  and	
  capital	
  resources	
  	
  
Dream	
  Office	
  REIT’s	
  primary	
  sources	
  of	
  capital	
  are	
  cash	
  generated	
  from	
  operating	
  activities,	
  credit	
  facilities,	
  mortgage	
  ﬁnancing	
  
and	
   reﬁnancing,	
   and	
   equity	
   and	
   debt	
   issuances.	
   Our	
   primary	
   uses	
   of	
   capital	
   include	
   the	
   payment	
   of	
   distributions,	
   costs	
   of	
  
attracting	
   and	
   retaining	
   tenants,	
   recurring	
   property	
   maintenance,	
   major	
   property	
   improvements,	
   debt	
   principal	
   repayments,	
  
interest	
   payments	
   and	
   property	
   acquisitions.	
   We	
   expect	
   to	
   meet	
   all	
   of	
   our	
   ongoing	
   obligations	
   with	
   current	
   cash	
   and	
   cash	
  
equivalents,	
  cash	
  ﬂows	
  generated	
  from	
  operations,	
  credit	
  facilities,	
  conventional	
  mortgage	
  reﬁnancing	
  and,	
  as	
  growth	
  requires	
  
and	
  when	
  appropriate,	
  new	
  equity	
  or	
  debt	
  issuances.	
  	
  

In	
   our	
   consolidated	
   financial	
   statements,	
   our	
   current	
   liabilities	
   exceeded	
   our	
   current	
   assets	
   by	
   $424.3	
   million.	
   Typically,	
   real	
  
estate	
  entities	
  seek	
  to	
  address	
  liquidity	
  needs	
  by	
  having	
  a	
  balanced	
  debt	
  maturity	
  schedule,	
  undrawn	
  credit	
  facilities,	
  and	
  a	
  pool	
  
of	
  unencumbered	
  assets.	
  We	
  are	
  able	
  to	
  use	
  our	
  credit	
  facilities	
  on	
  short	
  notice	
  which	
  eliminates	
  the	
  need	
  to	
  hold	
  significant	
  
amounts	
  of	
  cash	
  and	
  cash	
  equivalents	
  on	
  hand.	
  Working	
  capital	
  balances	
  fluctuate	
  significantly	
  from	
  period	
  to	
  period	
  depending	
  
on	
  the	
  timing	
  of	
  receipts	
  and	
  payments.	
  Debt	
  obligations	
  that	
  are	
  due	
  within	
  one	
  year	
  include	
  debt	
  maturities	
  of	
  $365.9	
  million	
  
(excluding	
   debt	
   related	
   to	
   investment	
   in	
   joint	
   ventures	
   which	
   are	
   equity	
   accounted),	
   which	
   we	
   typically	
   refinance	
   with	
  
mortgages	
  and	
  debt	
  issuances	
  of	
  terms	
  between	
  five	
  and	
  ten	
  years.	
  Amounts	
  payable	
  balance	
  outstanding	
  at	
  the	
  end	
  of	
  any	
  
reporting	
   period	
   depends	
   primarily	
   on	
   the	
   timing	
   of	
   leasing	
   costs,	
   capital	
   expenditures	
   incurred,	
   as	
   well	
   as	
   the	
   impact	
   of	
  
transaction	
   costs	
   incurred	
   on	
   any	
   acquisitions	
   completed	
   during	
   the	
   reporting	
   period.	
   Our	
   unencumbered	
   assets	
   pool	
   as	
   at	
  
December	
  31,	
  2014	
  is	
  approximately	
  $796	
  million.	
  	
  

We	
  endeavour	
   to	
   maintain	
  high	
   levels	
  of	
  liquidity	
  to	
  ensure	
   that	
  we	
  can	
  meet	
  distribution	
   requirements	
  and	
  react	
   quickly	
  to	
  
potential	
  investment	
  opportunities.	
  	
  	
  

Our	
   discussion	
   of	
   ﬁnancing	
   activities	
   will	
   be	
   based	
   on	
   the	
   debt	
   balances,	
   which	
   include	
   debt	
   related	
   to	
   investment	
   in	
   joint	
  
ventures	
  that	
  are	
  equity	
  accounted,	
  at	
  our	
  proportionate	
  ownership,	
  and	
  debt	
  associated	
  with	
  assets	
  held	
  for	
  sale.	
  

Debt	
  	
  
Less	
  debt	
  related	
  to:	
  

Investment	
  in	
  joint	
  ventures	
  

  Assets	
  held	
  for	
  sale	
  
Debt	
  (per	
  consolidated	
  financial	
  statements)	
  

December	
  31,	
  	
  

September	
  30,	
  

December	
  31,	
  	
  

2014	
  

2014	
  

$	
  

	
  3,594,341	
   $	
  

	
  3,567,775	
   $	
  

	
  496,980	
   	
  
	
  -‐	
   	
  

	
  502,100	
   	
  
	
  -‐	
   	
  

$	
  

	
  3,097,361	
   $	
  

	
  3,065,675	
   $	
  

2013	
  
	
  3,662,543	
  

	
  508,088	
  
	
  5,439	
  
	
  3,149,016	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  20	
  

 
 
 
 
 
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
 
	
  
	
  
A	
  summary	
  of	
  debt	
  
The	
  key	
  performance	
  indicators	
  in	
  the	
  management	
  of	
  our	
  debt	
  are	
  as	
  follows:	
  

December	
  31,	
  	
   
2014	
  

September	
  30,	
  

December	
  31,	
  	
  

2014	
  

2013	
  

Financing	
  and	
  liquidity	
  metrics	
  
Weighted	
  average	
  effective	
  interest	
  rate	
  (year-‐end)(1)	
  
Weighted	
  average	
  face	
  rate	
  of	
  interest	
  (year-‐end)(2)	
  
Interest	
  coverage	
  ratio	
  (times)(3)	
  
Net	
  average	
  debt-‐to-‐EBITDFV	
  (years)(3)	
  
Net	
  debt-‐to-‐adjusted	
  EBITDFV	
  (years)(3)	
  
Level	
  of	
  debt	
  (net	
  debt-‐to-‐gross	
  book	
  value)(3)	
  
Level	
  of	
  debt	
  (net	
  secured	
  debt-‐to-‐gross	
  book	
  value)(3)	
  
Secured	
  debt	
  to	
  total	
  investment	
  properties(4)	
  
Debt	
  –	
  average	
  term	
  to	
  maturity	
  (years)	
  	
  
Variable	
  rate	
  debt	
  as	
  percentage	
  of	
  total	
  debt	
  	
  
Secured	
  debt	
  
Unsecured	
  convertible	
  and	
  non-‐convertible	
  debentures	
  
Unencumbered	
  assets	
  
Cash	
  and	
  cash	
  equivalents	
  on	
  hand	
  
Undrawn	
  demand	
  revolving	
  credit	
  facilities	
  
(1)  Weighted	
   average	
   effective	
   interest	
   rate	
   is	
   calculated	
   as	
   the	
   weighted	
   average	
   face	
   rate	
   of	
   interest	
   net	
   of	
   amortization	
   of	
   fair	
   value	
   adjustments	
   and	
  	
  

4.15%	
  
4.18%	
  
2.9	
  
7.8	
  
7.9	
  
47.5%	
  
40.4%	
  
42.5%	
  
4.4	
  
7.6%	
  
	
  3,060,481	
  
	
  533,860	
  
	
  796,000	
  
	
  20,889	
  
	
  251,540	
  

4.20%	
  
4.21%	
  
2.9	
  
7.8	
  
7.8	
  
46.9%	
  
39.9%	
  
41.9%	
  
4.2	
  
7.7%	
  
	
  3,033,980	
  
	
  533,795	
  
	
  794,000	
  
	
  13,251	
  
	
  248,508	
  

4.18%	
  
4.22%	
  
2.9	
  
8.0	
  
8.0	
  
47.6%	
  
42.5%	
  
44.7%	
  
4.6	
  
8.7%	
  
	
  3,277,011	
  
	
  385,532	
  
	
  622,000	
  
	
  33,879	
  
	
  161,175	
  

	
   $	
  

	
   $	
  

$	
  

financing	
  costs	
  of	
  all	
  interest	
  bearing	
  debt,	
  including	
  debt	
  related	
  to	
  investment	
  in	
  joint	
  ventures,	
  which	
  are	
  equity	
  accounted.	
  

(2)  Weighted	
  average	
  face	
  rate	
  of	
  interest	
  includes	
  debt	
  related	
  to	
  investment	
  in	
  joint	
  ventures	
  that	
  are	
  equity	
  accounted.	
  
(3)  The	
   calculation	
   of	
   the	
   following	
   non-‐GAAP	
   measures,	
   interest	
   coverage	
   ratio,	
   net	
   average	
   debt-‐to-‐EBITDFV,	
   net	
   debt-‐to-‐adjusted	
   EBITDFV	
   and	
   levels	
   of	
  

debt,	
  are	
  included	
  in	
  the	
  “Non-‐GAAP	
  measures	
  and	
  other	
  disclosures”	
  section	
  of	
  the	
  MD&A.	
  

(4)  Secured	
   debt	
   to	
   total	
   investment	
   properties	
   (non-‐GAAP	
   measure)	
   is	
   calculated	
   as	
   secured	
   debt	
   divided	
   by	
   total	
   investment	
   properties.	
   Management	
  

believes	
  this	
  non-‐GAAP	
  measurement	
  is	
  an	
  important	
  measure	
  of	
  our	
  secured	
  debt	
  levels.	
  

We	
  currently	
  use	
  cash	
  ﬂow	
  performance	
  and	
  debt	
  level	
  indicators	
  to	
  assess	
  our	
  ability	
  to	
  meet	
  our	
  ﬁnancing	
  obligations.	
  Our	
  
current	
   interest	
   coverage	
   ratio	
   is	
   2.9	
   times,	
   demonstrating	
   our	
   ability	
   to	
   more	
   than	
   adequately	
   cover	
   interest	
   expense	
  
requirements.	
  We	
  also	
  monitor	
  our	
  debt-‐to-‐EBITDFV	
  ratio	
  to	
  gauge	
  our	
  ability	
  to	
  repay	
  existing	
  debt.	
  Our	
  current	
  net	
  average	
  
debt-‐to-‐EBITDFV	
  ratio	
  is	
  7.8	
  years.	
  Our	
  weighted	
  average	
  face	
  rate	
  of	
  interest	
  is	
  4.18%	
  at	
  December	
  31,	
  2014,	
  down	
  3	
  bps	
  when	
  
compared	
   to	
   September	
   30,	
   2014	
   and	
   down	
   4	
   bps	
   when	
   compared	
   to	
   December	
   31,	
   2013.	
   After	
   accounting	
   for	
   fair	
   value	
  
adjustments	
   and	
   ﬁnancing	
   costs,	
   the	
   weighted	
   average	
   effective	
   interest	
   rate	
   for	
   outstanding	
   debt	
   is	
   4.15%	
   at	
   December	
   31,	
  
2014,	
  down	
  5	
  bps	
  when	
  compared	
  to	
  September	
  30,	
  2014	
  and	
  down	
  3	
  bps	
  when	
  compared	
  to	
  December	
  31,	
  2013.	
  The	
  decline	
  
in	
   both	
   the	
   weighted	
   average	
   face	
   rate	
   and	
   effective	
   interest	
   rates	
   was	
   mainly	
   driven	
   by	
   the	
   interest	
   savings	
   from	
   disposed	
  
properties	
  during	
  the	
  year	
  and	
  interest	
  rate	
  savings	
  upon	
  refinancing	
  of	
  maturing	
  debt.	
  	
  	
  	
  

Financing	
  activities	
  during	
  the	
  quarter	
  
During	
  the	
  quarter,	
  we	
  refinanced	
  the	
  Adelaide	
  Place	
  mortgage	
  for	
  $200	
  million	
  at	
  a	
  fixed	
  face	
  rate	
  of	
  3.59%	
  per	
  annum	
  for	
  a	
  
ten-‐year	
  term,	
  with	
  only	
  interest	
  payable	
  for	
  the	
  first	
  five	
  years.	
  

During	
  the	
  quarter,	
  we	
  discharged	
  $151.4	
  million	
  of	
  debt	
  at	
  an	
  average	
  face	
  rate	
  of	
  4.29%.	
  	
  	
  

The	
  table	
  below	
  summarizes	
  the	
  debt	
  discharged	
  during	
  the	
  three	
  months	
  ended	
  December	
  31,	
  2014:	
  

Discharges	
  
Discharged	
  
Discharged	
  
Total	
  

  Properties	
  
  Adelaide	
  Place	
  
  Airway	
  Centre	
  1	
  and	
  2–4	
  

Date	
  discharged	
  
	
   December	
  18,	
  2014	
  
	
   December	
  22,	
  2014	
  

Amount	
  
	
  143,923	
   	
  
	
  7,500	
   	
  
	
  151,423	
   	
  

	
  $	
  

	
  $	
  

	
   Face	
  rate	
  
4.28%	
  
4.52%	
  
4.29%	
  

Type	
  
Fixed	
  
Fixed	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  21	
  

 
 
	
  
 
 
	
   
	
  
	
  
	
  
	
  
	
  
	
  
	
  
  	
  
 
   
     
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
 
	
  	
  
	
  
 
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
Composition	
  of	
  debt	
  
As	
  at	
  December	
  31,	
  2014,	
  variable	
  rate	
  debt	
  as	
  a	
  percentage	
  of	
  total	
  debt	
  decreased	
  to	
  7.6%	
  from	
  8.7%	
  at	
  December	
  31,	
  2013,	
  
primarily	
   due	
   to	
   the	
   net	
   repayment	
   of	
   one	
   of	
   the	
   demand	
   revolving	
   credit	
   facilities	
   offset	
   by	
   the	
   expiry	
   of	
   the	
   three-‐year	
  
interest	
  rate	
  swap	
  on	
  the	
  notional	
  balance	
  of	
  $53.7	
  million	
  during	
  the	
  year	
  ended	
  December	
  31,	
  2014.	
  

Mortgages	
  
Term	
  debt	
  
Demand	
  revolving	
  credit	
  facilities	
  
Term	
  loan	
  facility	
  
Convertible	
  debentures	
  
Debentures	
  
Total	
  

$	
  

$	
  

Fixed	
  
	
  2,781,344	
  
	
  533	
  
	
  -‐	
  
	
  128,948	
  
	
  51,160	
  
	
  358,144	
  
	
  3,320,129	
  

	
  $	
  

	
  $	
  

Variable	
  
	
  96,344	
  
	
  -‐	
  
	
  -‐	
  
	
  53,312	
  
	
  -‐	
  
	
  124,556	
  
	
  274,212	
  

	
  $	
  

December	
  31,	
  2014	
  
Total(1)	
  
	
  2,877,688	
  
	
  533	
  
	
  -‐	
  
	
  182,260	
  
	
  51,160	
  
	
  482,700	
  
	
  3,594,341	
  

	
  $	
  

Fixed	
  
	
  2,901,120	
  
	
  825	
  
	
  -‐	
  
	
  181,530	
  
	
  51,885	
  
	
  209,312	
  
	
  3,344,672	
  

	
  $	
  

	
  $	
  

	
  $	
  

	
  $	
  

92.4%	
  
Percentage	
  of	
  total	
  debt	
  
4.26%	
  
In-‐place	
  face	
  rate	
  (period-‐end)	
  
	
  4.6	
  
Average	
  term	
  to	
  maturity	
  
(1)	
  Includes	
  debt	
  related	
  to	
  investment	
  in	
  joint	
  ventures,	
  which	
  are	
  equity	
  accounted,	
  and	
  assets	
  held	
  for	
  sale.	
  

100.0%	
  
4.18%	
  
	
  4.4	
  

7.6%	
  
3.13%	
  
	
  1.8	
  

91.3%	
  
4.33%	
  
	
  4.8	
  

Variable	
  
	
  89,590	
  
	
  -‐	
  
	
  103,946	
  
	
  -‐	
  
	
  -‐	
  
	
  124,335	
  
	
  317,871	
  

8.7%	
  
3.07%	
  
	
  2.0	
  

	
  $	
  

December	
  31,	
  2013	
  
Total(1)	
  
	
  2,990,710	
  
	
  825	
  
	
  103,946	
  
	
  181,530	
  
	
  51,885	
  
	
  333,647	
  
	
  3,662,543	
  

	
  $	
  

100.0%	
  
4.22%	
  
	
  4.6	
  

Demand	
  revolving	
  credit	
  facilities	
  

Secured	
  	
  

investment	
  properties	
    

First-‐	
  

Second-‐	
  

Face	
  

December	
  31,	
  2014	
  

December	
  31,	
  2013	
  

ranking	
  

ranking	
  

interest	
  

Amount	
  

Amount	
  

Amount	
  

Maturity	
  date	
   mortgages	
   mortgages	
  

rate	
  

	
   available	
  

drawn	
  

	
   available	
  

Amount	
  

drawn	
  

Formula-‐based	
  maximum	
  	
  
	
   not	
  to	
  exceed	
  $171,500	
  
Formula-‐based	
  maximum	
  	
  
	
   not	
  to	
  exceed	
  $27,690	
  
Formula-‐based	
  maximum	
  	
  

	
   March	
  5,	
  2016	
  

	
   April	
  30,	
  2015	
  

	
   not	
  to	
  exceed	
  $35,000	
  

April	
  30,	
  2015	
  

Formula-‐based	
  maximum	
  

	
   not	
  to	
  exceed	
  $35,000	
  

April	
  30,	
  2015	
  

9	
  

2	
  

	
  -‐	
  

1	
  
12	
  

	
  -‐	
  

	
  3.75%(1)	
  	
   $	
  

	
  171,500	
  

	
  $	
  

	
  -‐	
  

	
  $	
  

	
  67,500	
  

	
  $	
  

	
  104,000	
  

	
  -‐	
  

	
  3.85%(2)	
  	
  

	
  27,247(3)	
  	
  

2	
  

	
  3.75%(1)	
  	
  

	
  34,850(4)	
  	
  

1	
  
3	
  

	
  3.75%(1)	
  	
  
	
  3.76%	
  

	
  $	
  

	
  17,943(5)	
  	
  
	
  251,540	
  

	
  $	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  
	
  -‐	
  

	
  26,156(3)	
  	
  

	
  32,819(4)	
  	
  

	
  -‐	
  

	
  -‐	
  

	
  34,700(5)	
  	
  

	
  $	
   	
  161,175	
  

	
  $	
  

	
  -‐	
  
	
  104,000	
  

(1)  In	
   the	
   form	
   of	
   rolling	
   one-‐month	
   bankersʼ	
   acceptances	
   (“BAs”)	
   bearing	
   interest	
   at	
   the	
   BA	
   rate	
   plus	
   1.75%	
   or	
   at	
   the	
   bankʼs	
   prime	
   rate	
   (3.0%	
   as	
   at	
  	
  

December	
  31,	
  2014)	
  plus	
  0.75%.	
  

(2)  This	
  facility	
  matured	
  on	
  April	
  30,	
  2014	
  and	
  was	
  extended	
  to	
  April	
  30,	
  2015	
  in	
  the	
  form	
  of	
  rolling	
  one-‐month	
  BAs	
  bearing	
  interest	
  at	
  BA	
  rate	
  plus	
  1.85%	
  or	
  at	
  

the	
  bankʼs	
  prime	
  rate	
  plus	
  0.85%.	
  

(3)  Formula-‐based	
  amount	
  available	
  under	
  this	
  facility	
  was	
  $27,690	
  less	
  $443	
  in	
  the	
  form	
  of	
  a	
  letter	
  of	
  credit	
  (“LOC”)	
  as	
  at	
  December	
  31,	
  2014	
  and	
  less	
  $1,534	
  

(LOC)	
  as	
  at	
  December	
  31,	
  2013.	
  

(4)  Formula-‐based	
  amount	
  available	
  under	
  this	
  facility	
  was	
  $35,000	
  less	
  $150	
  in	
  the	
  form	
  of	
  LOC	
  as	
  at	
  December	
  31,	
  2014	
  and	
  $35,000	
  less	
  $2,181	
  (LOC)	
  as	
  at	
  

December	
  31,	
  2013.	
  

(5)  Formula-‐based	
  amount	
  available	
  under	
  this	
  facility	
  was	
  $35,000	
  less	
  $17,057	
  in	
  the	
  form	
  of	
  LOC	
  as	
  at	
  December	
  31,	
  2014	
  and	
  $35,000	
  less	
  $300	
  (LOC)	
  as	
  at	
  

December	
  31,	
  2013.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  22	
  

	
  	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
 
 
 
 
 
 
 
 
 
 
 
	
  
	
  
	
  
	
  
	
  
   
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
 
   
 
   
 
   
 
 
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  	
   	
  
	
  
	
  	
  
	
  	
   	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
Changes	
  in	
  debt	
  levels,	
  including	
  debt	
  related	
  to	
  investment	
  in	
  joint	
  ventures	
  that	
  are	
  equity	
  accounted	
  and	
  assets	
  held	
  for	
  sale	
  
for	
  the	
  three	
  and	
  twelve	
  months	
  ended	
  December	
  31,	
  2014,	
  are	
  as	
  follows:	
  

Three	
  months	
  ended	
  December	
  31,	
  2014	
  

Demand	
   	
  	
  

revolving	
   	
  	
  

credit	
   	
  	
  

Term	
  loan	
  	
   	
  

Convertible	
  	
   	
  	
  

Mortgages	
   	
  

facilities	
   	
  

facility	
   	
  

	
  $	
  

	
  $	
  

	
   $	
  

Debt	
  as	
  at	
  September	
  30,	
  2014	
  
New	
  debt	
  placed	
  
Scheduled	
  repayments	
  
Lump	
  sum	
  repayments	
  	
  
Foreign	
  exchange	
  
Other	
  adjustments(1)	
  
Debt	
  as	
  at	
  December	
  31,	
  2014	
  
(1)	
  Other	
  adjustments	
  include	
  financing	
  costs	
  on	
  new	
  debt	
  placed,	
  fair	
  value	
  adjustments,	
  amortization	
  of	
  financing	
  costs	
  and	
  amortization	
  of	
  fair	
  value	
  	
  

	
  2,851,313	
  
	
  200,000	
  
	
  (22,094)	
   	
  	
  
	
  (151,423)	
   	
  	
  
	
  1,286	
  
	
  (1,394)	
   	
  	
  

	
  482,577	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  123	
  
	
  482,700	
  

	
  182,061	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  199	
  
	
  182,260	
  

	
  51,218	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  (58)	
   	
  	
  

-‐	
  	
   	
  	
  
	
  (26,107)	
   	
  	
  

	
  -‐	
  
	
  26,107	
  

	
  2,877,688	
  

	
  51,160	
  

	
  -‐	
  
	
  -‐	
  
	
  -‐	
  

	
   $	
  

	
  $	
  

	
  $	
  

	
  $	
  

	
  $	
  

	
  $	
  

	
  $	
  

	
  $	
  

	
  $	
  

	
  $	
  

Term	
  debt	
   	
  
	
  606	
  
	
  -‐	
  
	
  (73)	
   	
  	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  533	
  

debentures	
   	
   Debentures	
   	
  
	
  $	
  

Total	
  
	
  3,567,775	
  
	
  226,107	
  
	
  (22,167)	
  
	
  (177,530)	
  
	
  1,286	
  
	
  (1,130)	
  
	
  3,594,341	
  

adjustments.	
  

Demand	
   	
  	
  

revolving	
   	
  	
  

credit	
   	
  	
  

Term	
  loan	
  	
   	
  

Convertible	
  	
  	
  	
  

Year	
  ended	
  December	
  31,	
  2014	
  

Debt	
  as	
  at	
  December	
  31,	
  2013	
  
New	
  debt	
  placed	
  
Scheduled	
  repayments	
  
Lump	
  sum	
  repayments	
  
Lump	
  sum	
  repayments	
  related	
  

	
   $	
  

Mortgages	
   	
  

	
  $	
  

	
  2,990,710	
  
	
  231,707	
  
	
  (78,651)	
   	
  	
  
	
  (234,085)	
   	
  	
  

	
  $	
  

Term	
  debt	
   	
  
	
  825	
  
	
  -‐	
  
	
  (292)	
   	
  	
  
	
  -‐	
  

facilities	
   	
  

facility	
   	
  

	
  $	
  

	
  103,946	
  
	
  78,347	
  
	
  -‐	
  

	
  (182,347)	
   	
  	
  

	
  $	
  

	
  181,530	
  
	
  -‐	
  
	
  -‐	
  
-‐	
  	
   	
  	
  

debentures	
   	
   Debentures	
   	
  
	
  $	
  

	
  $	
  

	
  51,885	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  

	
  333,647	
  
	
  150,000	
  
	
  -‐	
  
	
  -‐	
  

Total	
  
	
  3,662,543	
  
	
  460,054	
  
	
  (78,943)	
  
	
  (416,432)	
  

to	
  assets	
  held	
  for	
  sale	
  

	
  (16,389)	
   	
  	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  (16,389)	
  

Debt	
  assumed	
  by	
  purchaser	
  upon	
  
	
   disposition	
  of	
  investment	
  
	
   properties	
  
Conversion	
  of	
  debentures	
  
Foreign	
  exchange	
  
Other	
  adjustments(1)	
  
Debt	
  as	
  at	
  December	
  31,	
  2014	
  
(1)	
  Other	
  adjustments	
  include	
  financing	
  costs	
  on	
  new	
  debt	
  placed,	
  fair	
  value	
  adjustments,	
  amortization	
  of	
  financing	
  costs	
  and	
  amortization	
  of	
  fair	
  value	
  	
  

	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  730	
  
	
  182,260	
  

	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  (947)	
   	
  	
  
	
  $	
  

	
  -‐	
  
	
  (500)	
   	
  	
  
	
  -‐	
  
	
  (225)	
   	
  	
  
	
  $	
  

	
  -‐	
  
	
  4,743	
  
	
  (3,300)	
   	
  	
  

	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  533	
  

	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  54	
  
	
  -‐	
  

	
  2,877,688	
  

	
  (17,047)	
   	
  	
  

	
  482,700	
  

	
  51,160	
  

	
   $	
  

	
  $	
  

	
  $	
  

	
  $	
  

	
  $	
  

	
  (17,047)	
  
	
  (500)	
  
	
  4,743	
  
	
  (3,688)	
  
	
  3,594,341	
  

adjustments.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  23	
  

	
  
	
  	
  
	
  
	
   	
  	
  
	
   	
  	
  
	
   	
  	
  
	
  
	
  	
  
	
  
	
   	
  	
  
	
   	
  	
  
	
   	
  	
  
	
   	
  	
  
	
   	
  	
  
	
  
	
  
	
  	
  
	
  
	
   	
  	
  
	
   	
  	
  
	
   	
  	
  
	
   	
  	
  
	
   	
  	
  
	
  
	
  
	
  	
  
	
  
	
   	
  	
  
	
   	
  	
  
	
   	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
 
	
  
	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
 
	
  
	
  
	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
  
	
  	
  
	
  
	
   	
  	
  
	
   	
  	
  
	
   	
  	
  
	
  
	
  	
  
	
  
	
   	
  	
  
	
   	
  	
  
	
   	
  	
  
	
   	
  	
  
	
   	
  	
  
	
  
	
  
	
  	
  
	
  
	
   	
  	
  
	
   	
  	
  
	
   	
  	
  
	
   	
  	
  
	
   	
  	
  
	
  
	
  
	
  	
  
	
  
	
   	
  	
  
	
   	
  	
  
	
   	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
   	
  	
  
	
   	
  	
  
	
   	
  	
  
	
   	
  	
  
	
   	
  	
  
	
   	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
 
   
 
   
 
   
 
   
 
  
 
   
	
  
	
  
	
  
	
   	
  	
  
	
   	
  	
  
	
   	
  	
  
	
   	
  	
  
	
   	
  	
  
	
   	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
 
	
  
	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
Our	
  current	
  debt	
  profile	
  is	
  balanced	
  with	
  staggered	
  maturities	
  over	
  the	
  next	
  14	
  years.	
  The	
  following	
  tables	
  summarize	
  our	
  debt	
  
maturity	
  proﬁle	
  as	
  at	
  December	
  31,	
  2014:	
  

Scheduled	
  

principal	
  

repayments	
  on	
  

	
   Outstanding	
  

non-‐matured	
  

$	
  

	
   $	
  

	
   $	
  

debt	
  	
  

balance	
  
	
  303,023	
  
	
  567,366	
  
	
  438,014	
  
	
  374,861	
  
	
  426,024	
  
	
  1,096,303	
  
	
  3,205,591	
  

Debt	
  maturities	
  	
  
2015	
  
2016	
  
2017	
  
2018	
  
2019	
  
2020–2028	
  
Subtotal	
  before	
  undernoted	
  item	
  
Demand	
  revolving	
  credit	
  facilities	
  
2016	
  
Subtotal	
  
Financing	
  costs	
  
Fair	
  value	
  adjustments	
  
Total	
  	
  
(1)	
  Includes	
  debt	
  related	
  to	
  investment	
  in	
  joint	
  ventures,	
  which	
  are	
  equity	
  accounted,	
  and	
  assets	
  held	
  for	
  sale.	
  	
  

Amount(1)	
  
	
  377,930	
  
	
  632,786	
  
	
  493,509	
  
	
  424,219	
  
	
  462,300	
  
	
  1,207,552	
  
	
  3,598,296	
  

	
  74,907	
  
	
  65,420	
  
	
  55,495	
  
	
  49,358	
  
	
  36,276	
  
	
  111,249	
  
	
  392,705	
  

	
  -‐	
  
	
  3,598,296	
  
	
  (14,240)	
  
	
  10,285	
  
	
  3,594,341	
  

	
  -‐	
  
	
  3,205,591	
  

	
  -‐	
  
	
  392,705	
  

   $	
  

	
  $	
  

	
  $	
  

$	
  

%	
  
	
   10.5%	
  
	
   17.6%	
  
	
   13.7%	
  
	
   11.8%	
  
	
   12.8%	
  
	
   33.6%	
  
	
   100.0%	
  

	
   0.00%	
  
	
   100.0%	
  

Weighted	
  

	
   average	
  effective	
  

interest	
  rate	
  on	
  

balance	
  due	
  

at	
  maturity	
  (%)	
  	
  
3.60%	
  
4.37%	
  
4.18%	
  
4.00%	
  
3.64%	
  
4.44%	
  
4.15%	
  

0.00%	
  
4.15%	
  

Weighted	
  

average	
  

face	
  rate	
  on	
  

balance	
  due	
  

	
   at	
  maturity	
  (%)	
  

4.08% 

4.40% 

4.45% 

3.93% 

3.33% 

4.39% 

4.18% 

0.00% 

4.18% 

Term	
  loan	
  	
  	
  

Convertible	
  	
  	
  	
  

Debt	
  maturities	
  
2015	
  
2016	
  
2017	
  
2018	
  
2019	
  
2020	
  and	
  thereafter	
  

$	
  

Mortgages(1)	
  

	
  377,633	
   $	
  
	
  414,097	
  
	
  317,881	
  
	
  249,219	
  
	
  462,300	
  
	
  1,057,552	
  
	
  2,878,682	
  
	
  (10,317)	
  
	
  9,323	
  
	
  2,877,688	
   $	
  

Term	
  debt	
   	
  
	
  297	
  
	
  236	
  
	
  -‐	
   	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  533	
   	
  
	
  -‐	
  
	
  -‐	
  
	
  533	
  

	
   $	
  

facility	
   	
  
	
  -‐	
  
	
   	
  183,453	
  
	
  -‐	
   	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
   	
  183,453	
   	
  
	
  (1,193)	
   	
  

debentures	
   	
   Debentures	
   	
  
	
   $	
  

	
   $	
  

	
  -‐	
  
	
  -‐	
  
	
  50,628	
   	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  50,628	
   	
  
	
  -‐	
  
	
  532	
  
	
  51,160	
  

	
  -‐	
  
	
  35,000	
  
	
   	
  125,000	
   	
  
	
   	
  175,000	
  
	
  -‐	
  
	
   	
  150,000	
  
	
   	
  485,000	
   	
  
	
  (2,730)	
  	
  
	
  430	
  
	
   $	
   	
  482,700	
  

	
   $	
  

Total	
  
	
  377,930	
  
	
  632,786	
  
	
  493,509	
  
	
  424,219	
  
	
  462,300	
  
	
   	
  1,207,552	
  
	
   	
  3,598,296	
  
	
  (14,240)	
  
	
  10,285	
  
	
   $	
   	
  3,594,341	
  

Financing	
  costs	
  
Fair	
  value	
  adjustments	
  
Total	
  
(1)	
  Includes	
  debt	
  related	
  to	
  investment	
  in	
  joint	
  ventures,	
  which	
  are	
  equity	
  accounted,	
  and	
  assets	
  held	
  for	
  sale.	
  

	
  -‐	
  
	
   $	
   	
  182,260	
  

$	
  

	
   $	
  

Convertible	
  debentures	
  
The	
  total	
  principal	
  amounts	
  outstanding	
  for	
  the	
  convertible	
  debentures	
  are	
  as	
  follows:	
  

5.5%	
  Series	
  H	
  Debentures	
  

Date	
  issued	
  	
  

Maturity	
  date	
  	
  
December	
  9,	
  2011	
  	
   March	
  31,	
  2017	
  	
  

December	
  31,	
  2014	
  
	
  50,628	
  

$	
  

	
  $	
  

February	
  19,	
  2015	
  

	
  50,628	
   $	
  

February	
  19,	
  2015	
  
	
  1,379,941	
  

The	
  fair	
  value	
  of	
  the	
  conversion	
  features	
  of	
  the	
  convertible	
  debentures	
  is	
  remeasured	
  each	
  period,	
  with	
  changes	
  in	
  fair	
  value	
  
being	
  recorded	
  in	
  comprehensive	
  income.	
  At	
  December	
  31,	
  2014,	
  the	
  conversion	
  feature	
  amounted	
  to	
  a	
  $0.8	
  million	
  financial	
  
asset	
  (December	
  31,	
  2013	
  –	
  $0.3	
  million	
  financial	
  asset).	
  	
  

Outstanding	
  

principal	
  

Outstanding	
  

principal	
  

REIT	
  A	
  Units	
  

if	
  converted	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  24	
  

	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
 
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
    
    
	
  
   
   
 
	
  
    
    
	
  
   
   
 
	
  
    
	
  
   
   
 
	
  
	
  
	
  	
  
	
  	
  
	
   	
  	
  
	
   	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
Debentures	
  
The	
  total	
  principal	
  amounts	
  outstanding	
  for	
  debentures	
  as	
  at	
  December	
  31,	
  2014	
  are	
  as	
  follows:	
  

Debentures	
  
Series	
  A	
  
Series	
  B	
  
Series	
  C	
  
Series	
  K	
  
Series	
  L	
  
Total	
  
(1)	
  Variable	
  interest	
  rate	
  at	
  three-‐month	
  Canadian	
  Dealer	
  Offered	
  Rate	
  (“CDOR”)	
  plus	
  1.7%.	
  

Date	
  issued	
  	
  
June	
  13,	
  2013	
  	
  
October	
  9,	
  2013	
  	
  
January	
  21,	
  2014	
  	
  
April	
  26,	
  2011	
  	
  
August	
  8,	
  2011	
  	
  

Maturity	
  date	
  
June	
  13,	
  2018	
  
January	
  9,	
  2017	
  
January	
  21,	
  2020	
  
April	
  26,	
  2016	
  
September	
  30,	
  2016	
  

Type	
  
Fixed	
  
Variable	
  
Fixed	
  
Fixed	
  
Fixed	
  

Interest	
  rate	
  
3.42%	
  
2.97%(1)	
  
4.07%	
  
5.95%	
  
5.95%	
  

Outstanding	
  

principal	
  

December	
  31,	
  	
  

2014	
  
	
  175,000	
  
	
  125,000	
  
	
  150,000	
  
	
  25,000	
  
	
  10,000	
  
	
  485,000	
  

$	
  

$	
  

Commitments	
  and	
  contingencies	
  
We	
   are	
   contingently	
   liable	
   with	
   respect	
   to	
   guarantees	
   that	
   are	
   issued	
   in	
   the	
   normal	
   course	
   of	
   business	
   and	
   with	
   respect	
   to	
  
litigation	
   and	
   claims	
   that	
   may	
   arise	
   from	
   time	
   to	
   time.	
   In	
   the	
   opinion	
   of	
   management,	
   any	
   liability	
   that	
   may	
   arise	
   from	
   such	
  
contingencies	
  would	
  not	
  have	
  a	
  material	
  adverse	
  effect	
  on	
  our	
  consolidated	
  ﬁnancial	
  statements.	
  

The	
  Trust	
  has	
  entered	
  into	
  lease	
  agreements	
  that	
  may	
  require	
  tenant	
  improvement	
  costs	
  of	
  approximately	
  $26.4	
  million.	
  

In	
  an	
  effort	
  to	
  manage	
  the	
  volatility	
  of	
  electricity	
  prices	
  mainly	
  in	
  the	
  Western	
  Canada	
  and	
  Calgary	
  regions,	
  the	
  Trust	
  entered	
  
into	
  fixed	
  price	
  contracts	
  to	
  purchase	
  electricity	
  for	
  60	
  properties	
  over	
  the	
  next	
  three	
  years.	
  

Dream	
   Office	
   REIT’s	
   ﬁnance	
   leases,	
   fixed	
   price	
   contracts	
   to	
   purchase	
   electricity,	
   and	
   future	
   minimum	
   commitments	
   under	
  
operating	
  leases	
  are	
  as	
  follows:	
  

Operating	
  lease	
  payments	
  
Finance	
  lease	
  payments	
  
Electricity	
  
Total	
  

<	
  1	
  year	
  
	
  1,019	
  
	
  28	
  
	
  5,788	
  
	
  6,835	
  

	
  $	
  

	
  $	
  

1–5	
  years	
  
	
  1,183	
  
	
  35	
  
	
  2,873	
  
	
  4,091	
  

	
  $	
  

	
  $	
  

	
  $	
  

	
  $	
  

Minimum	
  payments	
  due	
  

>	
  5	
  years	
  
	
  8,288	
  
	
  -‐	
  
	
  -‐	
  
	
  8,288	
  

	
  $	
  

	
  $	
  

Total	
  
	
  10,490	
  
	
  63	
  
	
  8,661	
  
	
  19,214	
  

OUR	
  EQUITY	
  	
  
Our	
  discussion	
  of	
  equity	
  includes	
  LP	
  B	
  Units	
  (or	
  subsidiary	
  redeemable	
  units),	
  which	
  are	
  economically	
  equivalent	
  to	
  REIT	
  Units.	
  
Pursuant	
  to	
  IFRS,	
  the	
  LP	
  B	
  Units	
  are	
  classiﬁed	
  as	
  a	
  liability	
  in	
  our	
  consolidated	
  ﬁnancial	
  statements.	
  

REIT	
  Units,	
  Series	
  A	
  	
  
Retained	
  earnings	
  
Accumulated	
  other	
  comprehensive	
  income	
  	
  

Add:	
  LP	
  B	
  Units	
  	
  
Total	
  	
  

Number	
  of	
  Units	
  	
  
	
  107,936,575	
  
	
  -‐	
  
	
  -‐	
  

	
  107,936,575	
  
	
  602,434	
  
	
  108,539,009	
  

	
  $	
  

	
  $	
  

December	
  31,	
  2014	
  

Amount	
  	
  

	
  3,171,794	
  
	
  601,495	
  
	
  4,228	
  

	
  3,777,517	
  
	
  15,151	
  
	
  3,792,668	
  

	
   Number	
  of	
  Units	
  	
  
	
  103,420,221	
  
	
  -‐	
  
	
  -‐	
  

	
  103,420,221	
  
	
  3,538,457	
  
	
  106,958,678	
  

	
  $	
  

	
  $	
  

Unitholders’	
  equity	
  

December	
  31,	
  2013	
  

Amount	
  	
  

	
  3,039,189	
  
	
  682,265	
  
	
  1,684	
  

	
  3,723,138	
  
	
  101,978	
  
	
  3,825,116	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  25	
  

	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
 
 
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
Our	
  Declaration	
  of	
  Trust	
  authorizes	
  the	
  issuance	
  of	
  an	
  unlimited	
  number	
  of	
  the	
  following	
  classes	
  of	
  units:	
  REIT	
  Units	
  and	
  Special	
  
Trust	
   Units.	
   The	
   Special	
   Trust	
   Units	
   may	
   only	
   be	
   issued	
   to	
   holders	
   of	
   LP	
   B	
   Units,	
   are	
   not	
   transferable	
   separately	
   from	
   these	
  
Units,	
  and	
  are	
  used	
  to	
  provide	
  voting	
  rights	
  with	
  respect	
  to	
  Dream	
  Office	
  REIT	
  to	
  persons	
  holding	
  LP	
  B	
  Units.	
  The	
  LP	
  B	
  Units	
  are	
  
held	
   by	
   Dream	
   Unlimited	
   Corp.,	
   directly	
   and	
   indirectly	
   through	
   its	
   subsidiaries,	
   related	
   parties	
   to	
   Dream	
   Office	
   REIT	
   and	
   one	
  
other	
   holder.	
   Both	
   the	
   REIT	
   Units	
   and	
   Special	
   Trust	
   Units	
   entitle	
   the	
   holder	
   to	
   one	
   vote	
   for	
   each	
   Unit	
   at	
   all	
   meetings	
   of	
   the	
  
unitholders.	
  The	
  LP	
  B	
  Units	
  are	
  exchangeable	
  on	
  a	
  one-‐for-‐one	
  basis	
  for	
  REIT	
  B	
  Units	
  at	
  the	
  option	
  of	
  the	
  holder,	
  which	
  can	
  then	
  
be	
  converted	
  into	
  REIT	
  A	
  Units.	
  The	
  LP	
  B	
  Units	
  and	
  corresponding	
  Special	
  Trust	
  Units	
  together	
  have	
  economic	
  and	
  voting	
  rights	
  
equivalent	
  in	
  all	
  material	
  respects	
  to	
  REIT	
  A	
  Units.	
  The	
  REIT	
  A	
  Units	
  and	
  REIT	
  B	
  Units	
  have	
  economic	
  and	
  voting	
  rights	
  equivalent	
  
in	
  all	
  material	
  respects	
  to	
  each	
  other.	
  	
  

At	
  December	
  31,	
  2014,	
  Dream	
  Unlimited	
  Corp.,	
  directly	
  and	
  indirectly	
  through	
  its	
  subsidiaries,	
  held	
   773,939	
  REIT	
   A	
  Units	
  and	
  
383,823	
  LP	
  B	
  Units	
  for	
  a	
  total	
  ownership	
  interest	
  of	
  approximately	
  1.1%.	
  

The	
  following	
  table	
  summarizes	
  the	
  changes	
  in	
  our	
  outstanding	
  equity:	
  

Total	
  Units	
  issued	
  and	
  outstanding	
  on	
  January	
  1,	
  2014	
  
Units	
  issued	
  pursuant	
  to	
  DRIP	
  
Units	
  issued	
  pursuant	
  to	
  the	
  Unit	
  Purchase	
  Plan	
  
Units	
  issued	
  pursuant	
  to	
  Deferred	
  Unit	
  Incentive	
  Plan	
  (“DUIP”)	
  
LP	
  B	
  Units	
  surrendered	
  and	
  exchanged	
  for	
  REIT	
  A	
  Units	
  
Cancellation	
  of	
  REIT	
  A	
  Units	
  
Conversion	
  of	
  Series	
  H	
  Debentures	
  
Total	
  Units	
  outstanding	
  on	
  December	
  31,	
  2014	
  
Percentage	
  of	
  all	
  Units	
  	
  
Units	
  issued	
  pursuant	
  to	
  DRIP	
  on	
  January	
  15,	
  2015	
  
Units	
  issued	
  pursuant	
  to	
  DRIP	
  on	
  February	
  15,	
  2015	
  
Units	
  issued	
  pursuant	
  to	
  Unit	
  Purchase	
  Plan	
  	
  
Cancellation	
  of	
  REIT	
  A	
  Units	
  
Total	
  Units	
  outstanding	
  on	
  February	
  19,	
  2015	
  
Percentage	
  of	
  all	
  Units	
  	
  

REIT	
  A	
  Units	
  
	
  103,420,221	
  
	
  2,236,530	
    
	
  4,765	
  
	
  157,608	
  
	
  2,936,023	
  
	
  (832,200)	
  
	
  13,628	
  
	
  107,936,575	
  
99.4%	
  
	
  228,186	
  
252,044	
  
	
  545	
  
	
  (835,000)	
  
	
  107,582,350	
  
99.4%	
  

LP	
  B	
  Units	
  
	
  3,538,457	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  (2,936,023)	
  
	
  -‐	
  
	
  -‐	
  
	
  602,434	
  
0.6%	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  602,434	
  
0.6%	
  

Total	
  
	
   	
  106,958,678	
  
	
  2,236,530	
  
	
  4,765	
  
	
  157,608	
  
	
  -‐	
  
	
  (832,200)	
  
	
  13,628	
  
	
   	
  108,539,009	
  
100.0%	
  
	
  228,186	
  
	
  252,044	
  
	
  545	
  
	
  (835,000)	
  
	
   	
  108,184,784	
  
100.0%	
  

Exchange	
  of	
  REIT	
  B	
  Units	
  for	
  REIT	
  A	
  Units	
  
On	
  July	
  23,	
  2014,	
  one	
  of	
  the	
  holders	
  of	
  the	
  subsidiary	
  redeemable	
  units	
  surrendered	
  2,936,023	
  subsidiary	
  redeemable	
  units	
  and	
  
received	
  2,936,023	
  REIT	
  B	
  Units.	
  On	
  July	
  24,	
  2014,	
  2,936,023	
  REIT	
  B	
  Units	
  were	
  exchanged	
  for	
  2,936,023	
  REIT	
  A	
  Units.	
  

Short	
  form	
  base	
  shelf	
  prospectus	
  
On	
  November	
  26,	
  2012,	
  the	
  Trust	
  issued	
  a	
  short	
  form	
  base	
  shelf	
  prospectus,	
  which	
  is	
  valid	
  for	
  a	
  25-‐month	
  period,	
  during	
  which	
  
time	
  the	
  Trust	
  may	
  offer	
  and	
  issue,	
  from	
  time	
  to	
  time,	
  units	
  and	
  debt	
  securities	
  convertible	
  into	
  or	
  exchangeable	
  for	
  Units	
  of	
  the	
  
Trust,	
  or	
  any	
  combination	
  thereof,	
  with	
  an	
  aggregate	
  offering	
  price	
  of	
  up	
  to	
  $2.0	
  billion.	
  The	
  short	
  form	
  base	
  shelf	
  prospectus	
  
expired	
  on	
  December	
  26,	
  2014,	
  and	
  has	
  not	
  yet	
  been	
  renewed.	
  	
  	
  

For	
  the	
  year	
  ended	
  December	
  31,	
  2014,	
  the	
  Trust	
  completed	
  the	
  issuance	
  of	
  $150	
  million	
  (December	
  31,	
  2013	
  –	
  $300	
  million)	
  
aggregate	
  principal	
  amount	
  of	
  senior	
  unsecured	
  debentures	
  under	
  the	
  short	
  form	
  base	
  shelf	
  prospectus.	
  	
  	
  

Normal	
  course	
  issuer	
  bid	
  
The	
  Trust	
  renewed	
  its	
  normal	
  course	
  issuer	
  bid,	
  which	
  commenced	
  on	
  June	
  20,	
  2014	
  and	
  will	
  remain	
  in	
  effect	
  until	
  the	
  earlier	
  of	
  
June	
  19,	
  2015	
   or	
  the	
  date	
  on	
   which	
  the	
  Trust	
  has	
  purchased	
   the	
  maximum	
  number	
  of	
  REIT	
   A	
  Units	
  permitted	
  under	
  the	
  bid.	
  	
  
Under	
  the	
  bid,	
  the	
  Trust	
  has	
  the	
  ability	
  to	
  purchase	
  for	
  cancellation	
  up	
  to	
  a	
  maximum	
  of	
  10,298,296	
  REIT	
  A	
  Units	
  (representing	
  
10%	
  of	
  the	
  Trust’s	
  public	
  float	
  of	
  102,982,963	
  REIT	
  A	
  Units	
  at	
  the	
  time	
  of	
  entering	
  the	
  bid	
  through	
  the	
  facilities	
  of	
  the	
  TSX).	
  For	
  
the	
  year	
  ended	
  December	
  31,	
  2014,	
  832,200	
  REIT	
  A	
  Units	
  had	
  been	
  purchased	
  and	
  subsequently	
  cancelled	
  under	
  the	
  bid	
  for	
  a	
  
total	
  cost	
  of	
  $20.9	
  million	
  (December	
  31,	
  2013	
  –	
  2,134,800	
  REIT	
  A	
  Units	
  had	
  been	
  purchased	
  and	
  subsequently	
  cancelled	
  under	
  
the	
  previous	
  bid	
  for	
  a	
  total	
  cost	
  of	
  $60.7	
  million).	
  	
  

Subsequent	
  to	
  year-‐end,	
  the	
  Trust	
  purchased	
  an	
  additional	
  835,000	
  REIT	
  A	
  Units	
  at	
  a	
  total	
  cost	
  of	
  approximately	
  $22.3	
  million.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  26	
  

 	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
 
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
Distribution	
  policy	
  	
  
Our	
  Declaration	
  of	
  Trust	
  provides	
  our	
  trustees	
  with	
  the	
  discretion	
  to	
  determine	
  the	
  percentage	
  payout	
  of	
  income	
  that	
  would	
  be	
  
in	
   the	
   best	
   interest	
   of	
   the	
   Trust,	
   which	
   allows	
   for	
   any	
   unforeseen	
   expenditures	
   and	
   the	
   variability	
   in	
   cash	
   distributions	
   as	
   a	
  
result	
   of	
   additional	
   units	
   issued	
   pursuant	
   to	
   the	
   Trust’s	
   DRIP.	
   The	
   Trust	
   determines	
   the	
   distribution	
   rate	
   by,	
   among	
   other	
  
considerations,	
   its	
   assessment	
   of	
   cash	
   flow	
   as	
   determined	
   using	
   adjusted	
   cash	
   flows	
   from	
   operating	
   activities	
   (a	
   non-‐GAAP	
  
measure),	
   which	
   includes	
   cash	
   flows	
   from	
   operating	
   activities	
   of	
   our	
   investments	
   in	
   joint	
   ventures	
   that	
   are	
   equity	
   accounted	
  
and	
  excludes	
  the	
  fluctuations	
  in	
  non-‐cash	
  working	
  capital,	
  transaction	
  costs	
  on	
  business	
  combinations	
  and	
  investment	
  in	
  lease	
  
incentives	
  and	
  initial	
  direct	
  leasing	
  costs.	
  As	
  such,	
  the	
  Trust	
  believes	
  the	
  cash	
  distributions	
  are	
  not	
  an	
  economic	
  return	
  of	
  capital,	
  
but	
  a	
  distribution	
  of	
  sustainable	
  adjusted	
  cash	
  flow	
  from	
  operating	
  activities.	
  Based	
  on	
  current	
  facts	
  and	
  assumptions,	
  the	
  Trust	
  
does	
  not	
  anticipate	
  cash	
  distributions	
  will	
  be	
  reduced	
  or	
  suspended	
  in	
  the	
  foreseeable	
  future.	
  	
  

The	
  table	
  below	
  summarizes	
  the	
  distributions	
  for	
  the	
  three	
  and	
  twelve	
  months	
  ended	
  December	
  31,	
  2014:	
  

Three	
  months	
  ended	
  December	
  31,	
  2014	
     

Year	
  ended	
  December	
  31,	
  2014	
  

Declared	
  	
  

distributions	
  	
  

4%	
  bonus	
  	
  
distributions(1)	
  

Declared	
  	
  

Total	
  

distributions	
  

4%	
  bonus	
  	
  
	
   distributions(1)	
  

$	
  	
  

	
  $	
  

	
  $	
  

	
  479	
   $	
  
	
  246	
  	
  
	
  725	
  	
  

	
  42,363	
  
	
  20,259	
  
	
  62,622	
  

2014	
  distributions(2)	
  
Paid	
  in	
  cash	
  or	
  reinvested	
  in	
  units	
  
Payable	
  at	
  December	
  31,	
  2014	
  
Total	
  distributions	
  	
  
2014	
  reinvestment(2)	
  
Reinvested	
  to	
  December	
  31,	
  2014	
  
Reinvested	
  on	
  January	
  15,	
  2015	
  
Total	
  distributions	
  reinvested	
  
Distributions	
  paid	
  in	
  cash(2)	
  
Reinvestment	
  to	
  distribution	
  ratio	
  
Cash	
  payout	
  ratio	
  
(1)	
  Unitholders	
  who	
  participate	
  in	
  the	
  DRIP	
  receive	
  an	
  additional	
  distribution	
  of	
  units	
  equal	
  to	
  4%	
  of	
  each	
  cash	
  distribution	
  that	
  was	
  reinvested.	
  
(2)	
  Includes	
  distributions	
  on	
  LP	
  B	
  Units.	
  

	
  55,788	
  
	
  5,891	
  
	
  61,679	
  
	
  180,541	
  
25.5%	
  
74.5%	
  

	
  11,987	
  
	
  5,891	
  
	
  17,878	
  
	
  44,744	
   	
  
28.5%	
  	
  
71.5%	
  	
  

	
  221,961	
  
	
  20,259	
  
	
  242,220	
  

	
  12,466	
  
	
  6,127	
  
	
  18,593	
  

	
  42,842	
  
	
  20,505	
  
	
  63,347	
  

	
  479	
  	
  
	
  236	
  	
  
	
  715	
   $	
  

	
  2,232	
   $	
  
	
  246	
  	
  
	
  2,478	
  	
  

	
  2,232	
  	
  
	
  236	
  	
  
	
  2,468	
   $	
  

	
  $	
  
	
  $	
  

$	
  	
  
$	
  	
  

	
  $	
  

	
  $	
  

	
  $	
  

Total	
  

	
  224,193	
  
	
  20,505	
  
	
  244,698	
  

	
  58,020	
  
	
  6,127	
  
	
  64,147	
  

Distributions	
  declared	
  for	
  the	
  three	
  months	
  ended	
  December	
  31,	
  2014	
  were	
  $62.6	
  million,	
  up	
  $2.6	
  million	
  over	
  the	
  prior	
  year	
  
comparative	
  quarter.	
  Distributions	
  declared	
   for	
  the	
  year	
  ended	
  December	
  31,	
  2014	
   were	
  $242.2	
   million,	
  up	
   $6.5	
   million	
  over	
  
the	
  prior	
  year.	
  The	
  increase	
  mainly	
  reﬂects	
  a	
  larger	
  number	
  of	
  Units	
  outstanding	
  as	
  a	
  result	
  of	
  the	
  equity	
  issuance	
  completed	
  in	
  
2013,	
   distributions	
   reinvested	
   in	
   additional	
   Units	
   and	
   vested	
   deferred	
   trust	
   units	
   exchanged	
   for	
   REIT	
   A	
   Units,	
   as	
   well	
   as	
   an	
  
increase	
   in	
   the	
   distribution	
   rate	
   commencing	
   Q2	
   2013,	
   offset	
   by	
   REIT	
   A	
   Units	
   buyback.	
   Of	
   the	
   distributions	
   declared	
   for	
   the	
  
three	
  months	
  ended	
  December	
  31,	
  2014,	
  $17.9	
  million,	
  or	
  approximately	
  28.5%,	
  was	
  reinvested	
  in	
  additional	
  REIT	
  A	
  Units	
  (year	
  
ended	
  December	
  31,	
  2014	
  –	
  $61.7	
  million,	
  or	
  approximately	
  25.5%,	
  was	
  reinvested	
  in	
  additional	
  REIT	
  A	
  Units),	
  resulting	
  in	
  the	
  
three	
  months	
  ended	
  December	
  31,	
  2014	
  cash	
  payout	
  ratio	
  of	
  71.5%	
  (year	
  ended	
  December	
  31,	
  2014	
  –	
  74.5%).	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  27	
  

 
 
 
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
OUR	
  RESULTS	
  OF	
  OPERATIONS	
  
Basis	
  of	
  accounting	
  
Our	
  discussion	
  of	
  results	
  of	
  operations	
  in	
  the	
  table	
  below	
  includes	
  our	
  share	
  of	
  income	
  from	
  investment	
  in	
  joint	
  ventures.	
  

Investment	
  properties	
  revenue	
  
Investment	
  properties	
  operating	
  expenses	
  
Net	
  rental	
  income	
  	
  	
  

Other	
  income	
  
Share	
  of	
  net	
  income	
  and	
  dilution	
  gain	
  (loss)	
  from	
  investment	
  

	
  in	
  Dream	
  Industrial	
  REIT	
  

Interest	
  and	
  fee	
  income	
  

Other	
  expenses	
  
General	
  and	
  administrative	
  
Interest:	
  
	
   Debt	
  

Subsidiary	
  redeemable	
  units	
  

Amortization	
  of	
  external	
  management	
  contracts	
  and	
  	
  
	
   depreciation	
  on	
  property	
  and	
  equipment	
  

Fair	
  value	
  adjustments,	
  net	
  gains	
  (losses)	
  on	
  transactions	
  	
  

and	
  other	
  activities	
  

Fair	
  value	
  adjustments	
  to	
  investment	
  properties	
  
Fair	
  value	
  adjustments	
  to	
  financial	
  instruments	
  
Net	
  gains	
  (losses)	
  on	
  transactions	
  and	
  other	
  activities	
  

Income	
  before	
  income	
  taxes	
  
Deferred	
  income	
  taxes	
  	
  
Net	
  income	
  for	
  the	
  period	
  
Other	
  comprehensive	
  income	
  (loss)	
  
Unrealized	
  gain	
  (loss)	
  on	
  interest	
  rate	
  swaps	
  
Unrealized	
  foreign	
  currency	
  translation	
  gain	
  

  $	
  

Three	
  months	
  ended	
  December	
  31,	
  	
  
2013	
  
	
  208,418	
     $	
  
	
  (92,171)	
  
	
  116,247	
  

2014	
  
	
  205,186	
    $	
  
	
  (91,015)	
  
	
  114,171	
  

Year	
  ended	
  December	
  31,	
  
2013	
  
2014	
  
	
  800,531	
  
	
  817,995	
  
	
  (347,643)	
  
	
  (356,045)	
  
	
  452,888	
  
	
  461,950	
  

	
  $	
  

	
  3,699	
   	
  
	
  908	
  

	
  4,607	
  

	
  3,027	
  
	
  942	
  

	
  3,969	
  

	
  15,965	
  
	
  3,234	
  

	
  19,199	
  

	
  15,697	
  
	
  4,690	
  

	
  20,387	
  

	
  (5,882)	
  

	
  (6,155)	
  

	
  (24,396)	
  

	
  (24,061)	
  

	
  (37,825)	
  
	
  (338)	
   

	
  (800)	
  
	
  (44,845)	
   

	
  (67,300)	
  
	
  2,689	
  
	
  (1,716)	
  	
  
	
  (66,327)	
  
	
  7,606	
  
	
  (300)	
  
	
  7,306	
  

	
  (38,365)	
  
	
  (1,981)	
  

	
  (693)	
  
	
  (47,194)	
  

	
  (12,627)	
  
	
  251	
  
	
  (1,755)	
  
	
  (14,131)	
  
	
  58,891	
  
	
  865	
  
	
  59,756	
  

	
  (152,677)	
  
	
  (4,638)	
   

	
  (148,369)	
  
	
  (7,897)	
  

	
  (2,970)	
  
	
  (184,681)	
  

	
  (2,531)	
  
	
  (182,858)	
  

	
  (128,456)	
  
	
  2,749	
  
	
  (10,833)	
  
	
  (136,540)	
  
	
  159,928	
  
	
  (638)	
  
	
  159,290	
  

	
  127,453	
  
	
  34,840	
  
	
  (7,355)	
  
	
  154,938	
  
	
  445,355	
  
	
  (344)	
  
	
  445,011	
  

	
  39	
  
	
  1,942	
  
	
  1,981	
  
	
  446,992	
  

	
  (323)	
  
	
  1,675	
  
	
  1,352	
  
	
  8,658	
  

	
  $	
  

	
  (480)	
  
	
  1,085	
  
	
  605	
  
	
  60,361	
  

	
  $	
  

	
  (666)	
  
	
  3,210	
  
	
  2,544	
  
	
  161,834	
  

	
  $	
  

Comprehensive	
  income	
  for	
  the	
  period	
  

	
  	
   $	
  

Investment	
  properties	
  revenue	
  
Investment	
  properties	
  revenue	
  includes	
  net	
  rental	
  income	
  from	
  investment	
  properties	
  as	
  well	
  as	
  the	
  recovery	
  of	
  operating	
  costs	
  
and	
  property	
  taxes	
  from	
  tenants.	
  	
  

Investment	
   properties	
   revenue	
   for	
   the	
   quarter	
   was	
   $205.2	
   million,	
   a	
   decrease	
   of	
   $3.2	
   million,	
   or	
   1.6%,	
   over	
   the	
   prior	
   year	
  
comparative	
   quarter,	
   mainly	
   due	
   to	
   lower	
   in-‐place	
   occupancy,	
   decline	
   in	
   straight-‐line	
   rent,	
   increase	
   in	
   amortization	
   of	
   lease	
  
incentives	
   and	
   dispositions	
   during	
   2014,	
   offset	
   by	
   acquisitions	
   completed	
   in	
   2013.	
   For	
   the	
   year	
   ended	
   December	
   31,	
   2014,	
  
investment	
  properties	
  revenue	
  was	
  $818.0	
  million,	
  an	
  increase	
  of	
  $17.5	
  million,	
  or	
  2.2%,	
  over	
  the	
  prior	
  year.	
  The	
  increase	
  was	
  
mainly	
  attributable	
  to	
  the	
  acquisitions	
  completed	
  in	
  2013,	
  offset	
  by	
  the	
  explanations	
  noted	
  previously.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  28	
  

	
  
	
  
 
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
 
 
	
  
	
  	
  
	
  
	
  	
  
	
   
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
 
 
 
 
 
 
 
 
 
 
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
 
 
 
 
	
   
 
	
  
 
 
 
	
   
 
	
  
	
   
	
   
 
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
 
 
 
 
 
 
 
	
   
	
  
	
  
	
  
	
  
	
  
	
  
 
	
  
	
  
	
  
 
 
 
 
 
 
	
  
	
  
	
  
	
  
	
  
 
	
  
	
  
	
  
 
 
 
 
 
 
	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
Investment	
  properties	
  operating	
  expenses	
  
Investment	
  properties	
  operating	
  expenses	
  comprises	
  occupancy	
  costs	
  and	
  property	
  taxes	
  as	
  well	
  as	
  certain	
  expenses	
  that	
  are	
  
not	
   recoverable	
   from	
   tenants,	
   the	
   majority	
   of	
   which	
   are	
   related	
   to	
   leasing.	
   Operating	
   expenses	
   fluctuate	
   with	
   changes	
   in	
  
occupancy	
  levels	
  and	
  levels	
  of	
  repairs	
  and	
  maintenance.	
  	
  

Investment	
  properties	
  operating	
  expenses	
  for	
  the	
  quarter	
  was	
  $91.0	
  million,	
  a	
  decrease	
  of	
  $1.2	
  million,	
  or	
  1.3%,	
  over	
  the	
  prior	
  
year	
   comparative	
   quarter,	
   mainly	
   due	
   to	
   lower	
   in-‐place	
   occupancy	
   and	
   dispositions	
   during	
   2014,	
   offset	
   by	
   acquisitions	
  
completed	
  in	
  2013.	
  For	
  the	
  year	
  ended	
  December	
  31,	
  2014,	
  investment	
  properties	
  operating	
  expenses	
  were	
  $356.0	
  million,	
  an	
  
increase	
   of	
   $8.4	
   million,	
   or	
   2.4%,	
   over	
   the	
   prior	
   year.	
   The	
   increase	
   was	
   mainly	
   attributable	
   to	
   the	
   acquisitions	
   completed	
   in	
  
2013,	
  offset	
  by	
  dispositions	
  during	
  2014.	
  

Interest	
  and	
  fee	
  income	
  
Interest	
   and	
   fee	
   income	
   comprises	
   fees	
   earned	
   from	
   third-‐party	
   property	
   management,	
   including	
   management,	
   construction	
  
and	
  leasing	
  fees,	
  and	
  interest	
  earned	
  on	
  bank	
  accounts	
  and	
  related	
  fees.	
  Except	
  for	
  the	
  third-‐party	
  property	
  management	
  fees,	
  
the	
   income	
   included	
   in	
   interest	
   and	
   fee	
   income	
   is	
   not	
   necessarily	
   of	
   a	
   recurring	
   nature	
   and	
   the	
   amounts	
   may	
   vary	
   quarter-‐	
  
over-‐quarter.	
  	
  

Interest	
  and	
  fee	
  income	
  for	
  the	
  quarter	
  remained	
  relatively	
  flat	
  at	
  $0.9	
  million	
  when	
  compared	
  to	
  the	
  prior	
  year	
  comparative	
  
quarter	
  (for	
  the	
  year	
  ended	
  December	
  31,	
  2014	
  –	
  $3.2	
  million,	
  a	
  decrease	
  of	
  $1.5	
  million,	
  or	
  31.0%,	
  over	
  the	
  prior	
  year).	
  The	
  
decrease	
   was	
   mainly	
   attributable	
   to	
   the	
   decrease	
   in	
   property	
   management	
   fees	
   subsequent	
   to	
   the	
   acquisition	
   of	
   our	
   joint	
  
venture’s	
  two-‐third	
  interest	
  in	
  IBM	
  Corporate	
  Park,	
  and	
  the	
  higher	
  interest	
  income	
  earned	
  on	
  the	
  excess	
  cash	
  on	
  hand	
  during	
  
the	
  prior	
  year.	
  

General	
  and	
  administrative	
  expenses 
The	
  following	
  table	
  summarizes	
  the	
  nature	
  of	
  expenses	
  included: 

Asset	
  management	
  fees	
  
Deferred	
  compensation	
  expense	
  
Other(1)	
  
General	
  and	
  administrative	
  expenses	
  
(1)	
  Other	
  comprises	
  corporate	
  management,	
  Board	
  of	
  Trusteesʼ	
  fees	
  and	
  expenses,	
  and	
  investor	
  relations	
  expenses.	
  

$	
  

$	
  

Three	
  months	
  ended	
  December	
  31,	
  	
  	
  
2013	
  	
  
	
  4,286	
   $	
  
	
  943	
  
	
  926	
  
	
  6,155	
   $	
  

2014	
  
	
  4,244	
   $	
  
	
  787	
  
	
  851	
  
	
  5,882	
   $	
  

Year	
  ended	
  December	
  31,	
  
2013	
  
2014	
  
	
  16,568	
  
	
  17,093	
   $	
  
	
  4,087	
  
	
  3,707	
  
	
  3,406	
  
	
  3,596	
  
	
  24,061	
  
	
  24,396	
   $	
  

General	
  and	
  administrative	
  expenses	
  for	
  the	
  quarter	
  were	
  $5.9	
  million,	
  a	
  decrease	
  of	
  $0.3	
  million,	
  or	
  4.4%,	
  over	
  the	
  prior	
  year	
  
comparative	
   quarter,	
   mainly	
   attributable	
   to	
   fair	
   value	
   adjustments	
   to	
   vested	
   DUIP	
   units	
   during	
   the	
   quarter	
   and	
   lower	
  
professional	
  fees.	
  For	
  the	
  year	
  ended	
  December	
  31,	
  2014,	
  general	
  and	
  administrative	
  expenses	
  were	
  $24.4	
  million,	
  an	
  increase	
  
of	
   $0.3	
   million,	
   or	
   1.4%,	
   over	
   the	
   prior	
   year.	
   The	
   increase	
   was	
   mainly	
   driven	
   by	
   higher	
   asset	
   management	
   fees	
   related	
   to	
  
acquisitions	
  completed	
  in	
  2013,	
  along	
  with	
  higher	
  general	
  corporate	
  costs	
  resulting	
  from	
  the	
  growth	
  of	
  the	
  portfolio	
  and	
  more	
  
DUIP	
  units	
  vesting,	
  offset	
  by	
  fair	
  value	
  adjustments	
  to	
  vested	
  DUIP	
  units	
  during	
  the	
  year.	
  

Interest	
  expense	
  –	
  debt	
  
Interest	
  expense	
  on	
  debt	
  for	
  the	
  three	
  months	
  ended	
  December	
  31,	
  2014	
  was	
  $37.8	
  million,	
  a	
  decrease	
  of	
  $0.5	
  million,	
  or	
  1.4%,	
  
over	
   the	
   prior	
   year	
   comparative	
   quarter,	
   primarily	
   due	
   to	
   interest	
   expense	
   savings	
   from	
   the	
   refinancing	
   of	
   maturing	
   debt	
   at	
  
lower	
   interest	
   rates	
   in	
   2013	
   and	
   in	
   2014	
   and	
   higher	
   rate	
   mortgages	
   assumed	
   by	
   the	
   purchaser	
   upon	
   disposition	
   of	
   certain	
  
investment	
  properties	
  sold	
  during	
  2014.	
  	
  

Interest	
  expense	
  on	
  debt	
  for	
  the	
  year	
  ended	
  December	
  31,	
  2014	
  was	
  $152.7	
  million,	
  an	
  increase	
  of	
  $4.3	
  million,	
  or	
  2.9%,	
  over	
  
the	
  prior	
  year.	
  The	
  increase	
  in	
  interest	
  expense	
  on	
  debt	
  for	
  the	
  year	
  resulted	
  mainly	
  from	
  carrying	
  more	
  debt	
  from	
  acquisitions	
  
in	
  2013	
  and	
  through	
  Units	
  buyback	
  predominantly	
  during	
  this	
  quarter,	
  offset	
  by	
  interest	
  expense	
  savings	
  from	
  the	
  refinancing	
  of	
  
maturing	
  debt	
  at	
  lower	
  interest	
  rates	
  in	
  2013	
  and	
  in	
  2014	
  and	
  mortgages	
  assumed	
  by	
  the	
  purchaser	
  upon	
  disposition	
  of	
  certain	
  
investment	
  properties	
  sold	
  during	
  2014.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  29	
  

	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
Interest	
  expense	
  –	
  subsidiary	
  redeemable	
  units	
  
Interest	
  expense	
  on	
  subsidiary	
  redeemable	
  units	
  for	
  the	
  quarter	
  was	
  $0.3	
  million,	
  a	
  decrease	
  of	
  $1.6	
  million,	
  or	
  82.9%,	
  over	
  the	
  
prior	
  year	
  comparative	
  quarter	
  (for	
  the	
  year	
  ended	
  December	
  31,	
  2014	
  –	
  $4.6	
  million,	
  a	
  decrease	
  of	
  $3.3	
  million,	
  or	
  41.3%,	
  over	
  
the	
   prior	
   year).	
   The	
   decrease	
   was	
   mainly	
   attributable	
   to	
   one	
   of	
   the	
   holders	
   of	
   the	
   subsidiary	
   redeemable	
   units	
   surrendering	
  
2,936,023	
  subsidiary	
  redeemable	
  units	
  and	
  receiving	
  2,936,023	
  REIT	
  A	
  Units.	
  

Amortization	
  of	
  external	
  management	
  contracts	
  and	
  depreciation	
  on	
  property	
  and	
  equipment	
  
Amortization	
   of	
   external	
   management	
   contracts	
   and	
   depreciation	
   on	
   property	
   and	
   equipment	
   expense	
   for	
   the	
   quarter	
   was	
  	
  
$0.8	
  million,	
  an	
  increase	
  of	
  $0.1	
  million,	
  or	
  15.4%,	
  over	
  the	
  prior	
  year	
  comparative	
  quarter	
  (for	
  the	
  year	
  ended	
  December	
  31,	
  
2014	
  –	
  $3.0	
  million,	
  an	
  increase	
  of	
  $0.4	
  million,	
  or	
  17.3%,	
  over	
  the	
  prior	
  year).	
  The	
  increase	
  was	
  primarily	
  due	
  to	
  an	
  increase	
  in	
  
property	
  and	
  equipment.	
  	
  

Fair	
  value	
  adjustments	
  to	
  investment	
  properties	
  
Fair	
   value	
   adjustments	
   to	
   investment	
   properties	
   for	
   the	
   quarter	
   resulted	
   in	
   a	
   loss	
   of	
   $67.3	
   million	
   (for	
   the	
   year	
   ended	
  	
  
December	
  31,	
  2014	
  –	
  a	
  loss	
  of	
  $128.5	
  million),	
  mainly	
  driven	
  by	
  externally	
  appraised	
  properties	
  in	
  Western	
  Canada	
  and	
  Calgary,	
  
where	
  the	
  external	
  appraisers	
  assumed	
  lowered	
  market	
  rents	
  and	
  increased	
  downtimes	
  in	
  selected	
  assets.	
  Other	
  factors	
  which	
  
contributed	
  to	
  the	
  fair	
  value	
  decline	
  included	
  changes	
  in	
  rental	
  rates	
  and	
  leasing	
  assumptions,	
  mainly	
  in	
  Western	
  Canada	
  and	
  
Calgary	
  downtown	
  properties	
  with	
  previously	
  identified	
  future	
  tenant	
  vacancies.	
  

The	
   weighted	
   average	
   cap	
   rate	
   across	
   our	
   total	
   portfolio	
   before	
   redevelopment	
   properties,	
   assets	
   held	
   for	
   sale	
   and	
   sold	
  
properties	
  compressed	
  by	
  2	
  bps	
  to	
  6.16%	
  when	
  compared	
  to	
  September	
  30,	
  2014	
  and	
  December	
  31,	
  2013.	
  The	
  overall	
  decrease	
  
in	
  cap	
  rates	
  was	
  mainly	
  experienced	
  in	
  Toronto	
  downtown	
  and	
  Eastern	
  Canada,	
  offset	
  by	
  modest	
  increases	
  in	
  other	
  regions.	
  

Fair	
  value	
  adjustments	
  to	
  financial	
  instruments	
  
Fair	
  value	
  adjustments	
  to	
  financial	
  instruments	
  include	
  remeasurement	
  on	
  the	
  conversion	
  feature	
  of	
  the	
  convertible	
  debenture,	
  
remeasurement	
  of	
  the	
  carrying	
  value	
  of	
  subsidiary	
  redeemable	
  units	
  and	
  remeasurement	
  of	
  deferred	
  trust	
  units.	
  	
  

Our	
  remeasurement	
  of	
  the	
  conversion	
  feature	
  of	
  the	
  convertible	
  debenture	
  resulted	
  in	
  a	
  loss	
  of	
  $0.3	
  million	
  during	
  the	
  quarter	
  
(gain	
  of	
  $0.5	
  million	
  for	
  the	
  year	
  ended	
  December	
  31,	
  2014),	
  mainly	
  as	
  a	
  result	
  of	
  fluctuations	
  in	
  the	
  unit	
  price,	
  credit	
  spread	
  
and	
  historical	
  volatility	
  inputs	
  used	
  to	
  value	
  the	
  conversion	
  feature	
  of	
  the	
  convertible	
  debenture.	
  	
  

Our	
  remeasurement	
  of	
  the	
  carrying	
  value	
  of	
  subsidiary	
  redeemable	
  units	
  resulted	
  in	
  a	
  gain	
  of	
  $1.7	
  million	
  during	
  the	
  quarter	
  
(gain	
  of	
  $1.5	
  million	
  for	
  the	
  year	
  ended	
  December	
  31,	
  2014),	
  mainly	
  as	
  a	
  result	
  of	
  a	
  decrease	
  in	
  the	
  unit	
  price	
  during	
  the	
  quarter	
  
and	
  for	
  the	
  year	
  ended	
  December	
  31,	
  2014.	
  

The	
  remeasurement	
  of	
  the	
  deferred	
  trust	
  units	
  resulted	
  in	
  a	
  gain	
  of	
  $1.3	
  million	
  during	
  the	
  quarter	
  (gain	
  of	
  $0.8	
  million	
  for	
  the	
  
year	
  ended	
  December	
  31,	
  2014),	
  mainly	
  as	
  a	
  result	
  of	
  a	
  decrease	
  in	
  the	
  unit	
  price	
  during	
  the	
  quarter	
  and	
  for	
  the	
  year	
  ended	
  
December	
  31,	
  2014.	
  	
  

Net	
  gains	
  (losses)	
  on	
  transactions	
  and	
  other	
  activities	
  
The	
  following	
  table	
  summarizes	
  the	
  nature	
  of	
  expenses	
  included:	
  

Debt	
  settlement	
  costs	
  
Net	
  loss	
  on	
  sale	
  of	
  investment	
  properties	
  
Internal	
  leasing	
  costs	
  
Business	
  transformation	
  costs	
  
Total	
  

Three	
  months	
  ended	
  December	
  31,	
  	
  
2013	
  
	
  -‐	
  
	
  -‐	
  
	
  (1,755)	
  
	
  -‐	
  
	
  (1,755)	
  

2014	
  
	
  (683)	
   $	
  
	
  -‐	
  
	
  (758)	
  
	
  (275)	
  
	
  (1,716)	
   $	
  

	
   $	
  

	
   $	
  

$	
  

$	
  

Year	
  ended	
  December	
  31,	
  
2013	
  
2014	
  
(241)	
  
	
  (1,892)	
   $	
  
(283)	
  
	
  (1,496)	
  	
  
(6,831)	
  
	
  (6,345)	
  	
  
	
  (1,100)	
  	
  
	
  -‐	
  
(7,355)	
  
	
  (10,833)	
   $	
  

Net	
   losses	
   on	
   transactions	
   and	
   other	
   activities	
   for	
   the	
   quarter	
   remained	
   flat	
   at	
   $1.7	
   million	
   over	
   the	
   prior	
   year	
   comparative	
  
quarter	
   (for	
   the	
   year	
   ended	
   December	
   31,	
   2014	
   –	
   $10.8	
   million,	
   an	
   increase	
   of	
   $3.5	
   million,	
   or	
   47.2%,	
   over	
   the	
   prior	
   year).	
  
During	
   the	
   quarter,	
   the	
   Trust	
   incurred	
   $0.7	
   million	
   of	
   debt	
   settlement	
   costs	
   related	
   to	
   the	
   early	
   discharge	
   of	
   mortgages	
  
associated	
  with	
  Adelaide	
  Place	
  and	
  Airway	
  Centre	
  1	
  and	
  2–4.	
  Included	
  within	
  internal	
  leasing	
  costs	
  during	
  the	
  quarter	
  is	
  a	
  one-‐
time	
  cost	
  recovery	
  of	
  $1.4	
  million	
  from	
  third-‐party	
  managed	
  properties	
  related	
  to	
  leasing	
  services	
  provided	
  prior	
  to	
  2014.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  30	
  

	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
For	
  the	
  year	
  ended	
  December	
  31,	
  2014,	
  the	
  overall	
  increase	
  in	
  net	
  losses	
  on	
  transactions	
  and	
  other	
  activities	
  was	
  mainly	
  driven	
  
by	
  an	
  increase	
  in	
  debt	
  settlement	
  costs,	
  increase	
  in	
  net	
  loss	
  on	
  sale	
  due	
  to	
  the	
  sale	
  of	
  nine	
  investment	
  properties	
  for	
  the	
  year	
  
compared	
   to	
   two	
   properties	
   in	
   the	
   prior	
   year,	
   and	
   business	
   transformation	
   costs	
   incurred	
   in	
   the	
   year	
   as	
   part	
   of	
   the	
   Shared	
  
Services	
  and	
  Cost	
  Sharing	
  Agreement	
  entered	
  into	
  with	
  Dream	
  Asset	
  Management	
  Corp.	
  (“DAM”),	
  formerly	
  known	
  as	
  Dundee	
  
Realty	
   Corporation,	
   a	
   subsidiary	
   of	
   Dream	
   Unlimited	
   Corp.,	
   in	
   December	
   2013.	
   The	
   business	
   transformation	
   costs	
   relate	
   to	
  
process	
   and	
   technology	
   improvement	
   costs.	
   We	
   are	
   presently	
   in	
   the	
   early	
   stages	
   of	
   a	
   new	
   initiative	
   that	
   will	
   transform	
   our	
  
operating	
   platform	
   to	
   allow	
   us	
   to	
   improve	
   data	
   integrity,	
   realize	
   operating	
   efficiencies,	
   establish	
   business	
   analytic	
   tools	
   and	
  
ultimately	
  generate	
  better	
  business	
  outcomes.	
  This	
  initiative	
  will	
  form	
  the	
  foundation	
  of	
  our	
  continuous	
  improvement	
  culture.	
  

Related	
  party	
  transactions	
  
From	
  time	
  to	
  time,	
  the	
  Trust	
  and	
  its	
  subsidiaries	
  enter	
  into	
  transactions	
  with	
  related	
  parties	
  that	
  are	
  conducted	
  under	
  normal	
  
commercial	
  terms.	
  

Asset	
  Management	
  Agreement	
  with	
  DAM	
  
The	
  Asset	
  Management	
  Agreement	
  provides	
  for	
  a	
  broad	
  range	
  of	
  asset	
  management	
  services	
  for	
  the	
  following	
  fees:	
  

• 

• 
• 

• 

• 

base	
   annual	
   management	
   fee	
   calculated	
   and	
   payable	
   on	
   a	
   monthly	
   basis,	
   equal	
   to	
   0.25%	
   of	
   the	
   gross	
   asset	
   value	
   of	
  
properties,	
  deﬁned	
  as	
  the	
  fair	
  value	
  of	
  the	
  properties	
  at	
  August	
  23,	
  2007	
  (the	
  date	
  of	
  the	
  sale	
  of	
  our	
  portfolio	
  of	
  properties	
  
in	
  Eastern	
  Canada)	
  plus	
  the	
  purchase	
  price	
  of	
  properties	
  acquired	
  subsequent	
  to	
  that	
  date,	
  adjusted	
  for	
  any	
  properties	
  sold;	
  

incentive	
  fee	
  equal	
  to	
  15%	
  of	
  Dream	
  Office	
  REIT’s	
  adjusted	
  funds	
  from	
  operations	
  per	
  unit	
  in	
  excess	
  of	
  $2.65	
  per	
  unit;	
  	
  

capital	
  expenditures	
  fee	
  equal	
  to	
  5%	
  of	
  all	
  hard	
  construction	
  costs	
  incurred	
  on	
  each	
  capital	
  project	
  with	
  costs	
  in	
  excess	
  of	
  
$1	
  million,	
  excluding	
  work	
  done	
  on	
  behalf	
  of	
  tenants	
  or	
  any	
  maintenance	
  capital	
  expenditures;	
  	
  

acquisition	
  fee,	
  calculated	
  over	
  a	
  ﬁscal	
  year	
  based	
  on	
  the	
  anniversary	
  date	
  of	
  the	
  Asset	
  Management	
  Agreement,	
  equal	
  to:	
  
(i)	
  1.0%	
  of	
  the	
  purchase	
  price	
  of	
  a	
  property	
  on	
  the	
  ﬁrst	
  $100	
  million	
  of	
  properties	
  acquired;	
  (ii)	
  0.75%	
  of	
  the	
  purchase	
  price	
  
of	
  a	
  property	
  on	
  the	
  next	
  $100	
  million	
  of	
  properties	
  acquired;	
  and	
  (iii)	
  0.50%	
  of	
  the	
  purchase	
  price	
  of	
  a	
  property	
  acquired	
  in	
  
excess	
  of	
  $200	
  million	
  of	
  properties	
  acquired;	
  and	
  

financing	
  fee	
  equal	
  to	
  the	
  lesser	
  of	
  actual	
  expenses	
  incurred	
  by	
  DAM	
  in	
  supplying	
  services	
  relating	
  to	
  ﬁnancing	
  transactions	
  
and	
  0.25%	
  of	
  the	
  debt	
  and	
  equity	
  of	
  all	
  ﬁnancing	
  transactions	
  completed	
  on	
  behalf	
  of	
  Dream	
  Office	
  REIT.	
  

Pursuant	
  to	
  the	
  Asset	
  Management	
  Agreement	
  with	
  DAM,	
  the	
  following	
  is	
  a	
  summary	
  of	
  fees	
  incurred	
  for	
  the	
  three	
  and	
  twelve	
  
months	
  ended	
  December	
  31,	
  2014	
  and	
  December	
  31,	
  2013:	
  

Base	
  annual	
  management	
  fee	
  (included	
  in	
  general	
  and	
  	
  
	
   administrative	
  expenses)	
  
Acquisition	
  fee	
  (included	
  in	
  investment	
  properties)	
  
Expense	
  reimbursements	
  (recovery)	
  related	
  to	
  financing	
  	
  
	
   arrangements	
  (included	
  in	
  debt)	
  
Total	
  incurred	
  under	
  the	
  Asset	
  Management	
  Agreement	
  

Three	
  months	
  ended	
  December	
  31,	
  	
  
2013	
  

2014	
  	
  

Year	
  ended	
  December	
  31,	
  
2013	
  

2014	
  	
  

$	
  

$	
  

	
  4,244	
   $	
  
	
  -‐	
  

	
  4,287	
  
	
  81	
  

	
   $	
  

	
  17,093	
   $	
  

	
  -‐	
  

	
  16,568	
  
	
  3,201	
  

	
  (245)	
  
	
  3,999	
   $	
  

	
  185	
  
	
  4,553	
  

	
   $	
  

	
  319	
  
	
  17,412	
   $	
  

825	
  
	
  20,594	
  

Shared	
  Services	
  and	
  Cost	
  Sharing	
  Agreement	
  with	
  DAM	
  
Pursuant	
   to	
   the	
   Shared	
   Services	
   and	
   Cost	
   Sharing	
   Agreement	
   with	
   DAM,	
   the	
   following	
   is	
   a	
   summary	
   of	
   fees	
   incurred	
   for	
   the	
  
three	
  and	
  twelve	
  months	
  ended	
  December	
  31,	
  2014	
  and	
  December	
  31,	
  2013:	
  

Business	
  transformation	
  costs	
  
Strategic	
  services	
  and	
  other	
  
Total	
  costs	
  incurred	
  under	
  the	
  Shared	
  Services	
  and	
  Cost	
  Sharing	
  

$	
  

Three	
  months	
  ended	
  December	
  31,	
  	
  
2013	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  

2014	
  	
  
	
  275	
   $	
  
	
  97	
  
	
  372	
   $	
  

$	
  

Year	
  ended	
  December	
  31,	
  
2013	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  

2014	
  	
  
	
  1,100	
   $	
  
	
  405	
  
	
  1,505	
   $	
  

	
   $	
  

	
   $	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  31	
  

	
   	
   	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
   	
   	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
Services	
  Agreement	
  with	
  Dream	
  Industrial	
  REIT	
  
The	
   following	
   is	
   a	
   summary	
   of	
   the	
   cost	
   recoveries	
   from	
   Dream	
   Industrial	
   REIT	
   for	
   the	
   three	
   and	
   twelve	
   months	
   ended	
  	
  
December	
  31,	
  2014	
  and	
  December	
  31,	
  2013:	
  

Cost	
  recoveries	
  charged	
  to	
  Dream	
  Industrial	
  REIT:	
  
Services	
  Agreement	
  with	
  Dream	
  Industrial	
  REIT	
  
Total	
  cost	
  recoveries	
  from	
  Dream	
  Industrial	
  REIT	
  

	
   $	
  
	
   $	
  

	
  1,640	
  
	
  1,640	
  

	
  $	
  
	
  $	
  

	
  2,177	
   	
  
	
  2,177	
   	
  

$	
  
$	
  

	
  5,999	
  
	
  5,999	
  

	
  $	
  
	
  $	
  

	
  5,130	
    
	
  5,130	
    

Three	
  months	
  ended	
  December	
  31,	
  	
  	
  
2013	
  	
  

2014	
  

Year	
  ended	
  December	
  31,	
   
2013	
   
2014	
  

Deferred	
  income	
  taxes	
  expense	
  
Deferred	
  income	
  taxes	
  expense	
  for	
  the	
  three	
  and	
  twelve	
  months	
  ended	
  December	
  31,	
  2014	
  were	
  $0.3	
  million	
  and	
  $0.6	
  million,	
  
respectively,	
  which	
  related	
  to	
  the	
  two	
  investment	
  properties	
  located	
  in	
  the	
  United	
  States	
  (“U.S.”).	
  	
  

Other	
  comprehensive	
  income	
  (loss)	
  
Other	
   comprehensive	
   income	
   (loss)	
   comprises	
   unrealized	
   gain	
   (loss)	
   on	
   interest	
   rate	
   swaps	
   and	
   unrealized	
   foreign	
   currency	
  
translation	
   gain	
   related	
   to	
   the	
   two	
   properties	
   located	
   in	
   the	
   United	
   States.	
   For	
   the	
   three	
   and	
   twelve	
   months	
   ended	
  	
  
December	
   31,	
   2014,	
   other	
   comprehensive	
   income	
   amounted	
   to	
   $1.4	
   million	
   and	
   $2.5	
   million,	
   respectively.	
   The	
   increase	
   in	
  
overall	
   comprehensive	
   income	
   (loss)	
   for	
   the	
   three	
   and	
   twelve	
   months	
   ended	
   December	
   31,	
   2014	
   was	
   mainly	
   driven	
   by	
   the	
  
strong	
  U.S.	
  dollar	
  in	
  relation	
  to	
  the	
  Canadian	
  dollar	
  throughout	
  2014.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  32	
  

	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
   
	
  
Net	
  operating	
  income	
  (“NOI”)	
  
We	
  define	
  NOI	
  as	
  the	
  total	
  of	
  net	
  rental	
  income,	
  including	
  the	
  share	
  of	
  net	
  rental	
  income	
  from	
  investment	
  in	
  joint	
  ventures	
  and	
  
property	
  management	
  income,	
  excluding	
  net	
  rental	
  income	
  from	
  properties	
  sold	
  and	
  assets	
  held	
  for	
  sale.	
  

NOI	
  is	
  an	
  important	
  measure	
  used	
  by	
  management	
  in	
  evaluating	
  property	
  operation;	
  however,	
  it	
  is	
  not	
  defined	
  by	
  IFRS,	
  does	
  
not	
   have	
   a	
   standard	
   meaning	
   and	
   may	
   not	
   be	
   comparable	
   with	
   similar	
   measures	
   presented	
   by	
   other	
   income	
   trusts.	
   In	
  
compliance	
   with	
   Canadian	
   Securities	
   Administrators	
   Staff	
   Notice	
   52-‐306	
   (Revised),	
   “Non-‐GAAP	
   Financial	
   Measures”,	
   NOI	
   has	
  
been	
  reconciled	
  to	
  net	
  rental	
  income	
  in	
  the	
  “Non-‐GAAP	
  measures	
  and	
  other	
  disclosures”	
  section	
  of	
  the	
  MD&A.	
  

The	
  following	
  pie	
  chart	
  illustrates	
  NOI	
  by	
  region	
  as	
  a	
  percentage	
  of	
  total	
  NOI	
  excluding	
  properties	
  sold	
  and	
  properties	
  held	
  for	
  
sale	
  for	
  the	
  three	
  months	
  ended	
  December	
  31,	
  2014.	
  

NOI	
  BY	
  REGION	
  
(Three	
  months	
  ended	
  December	
  31,	
  2014)	
  	
  	
  

Eastern	
  Canada,	
  
17%	
  

Western	
  Canada,	
  
20%	
  

Toronto	
  
suburban,	
  13%	
  

Calgary	
  
downtown,	
  16%	
  

Toronto	
  
downtown,	
  31%	
  

Calgary	
  suburban,	
  
3%	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  33	
  

	
  
	
  
NOI	
  comparative	
  portfolio	
  
NOI	
  shown	
  below	
  details	
  comparative	
  and	
  non-‐comparative	
  items	
  to	
  assist	
  in	
  understanding	
  the	
  impact	
  each	
  component	
  has	
  on	
  
NOI.	
  The	
  comparative	
  properties	
  disclosed	
  in	
  the	
  following	
  table	
  are	
  properties	
  acquired	
  prior	
  to	
  January	
  1,	
  2013.	
  Income	
  from,	
  
properties	
  sold	
  and	
  properties	
  held	
  for	
  sale	
  contributing	
  to	
  NOI	
  in	
  comparative	
  periods	
  are	
  shown	
  separately.	
  Comparative	
  NOI	
  
and	
  NOI	
  attributed	
  to	
  acquisitions	
  exclude	
  lease	
  termination	
  fees,	
  bad	
  debt	
  expense,	
  one-‐time	
  property	
  adjustments,	
  straight-‐
line	
  rents	
  and	
  amortization	
  of	
  lease	
  incentives.	
  

For	
   the	
   year	
   ended	
   December	
   31,	
   2014,	
   NOI	
   from	
   comparative	
   properties	
   increased	
   by	
   0.5%,	
   or	
   $2.2	
   million,	
   over	
   the	
   prior	
  
year,	
   with	
   increases	
   across	
   all	
   regions,	
   except	
   for	
   Calgary	
   suburban	
   and	
   Toronto	
   suburban.	
   The	
   overall	
   increase	
   was	
   mainly	
  
driven	
  by	
  higher	
  rental	
  rates	
  achieved	
  on	
  new	
  leasing	
  completed	
  during	
  the	
  period	
  and	
  over	
  the	
  past	
  year	
  and	
  the	
  benefit	
  of	
  
step	
  rents,	
  offset	
  by	
  lower	
  occupancy.	
  On	
  a	
  quarterly	
  basis,	
  NOI	
  from	
  comparative	
  properties	
  increased	
  by	
  0.7%,	
  or	
  $0.7	
  million,	
  
over	
  the	
  prior	
  year	
  comparative	
  quarter,	
  with	
  increases	
  across	
  all	
  regions,	
  except	
  for	
  Calgary	
  downtown	
  and	
  Toronto	
  suburban.	
  

$	
  

Western	
  Canada	
  
Calgary	
  –	
  downtown	
  
Calgary	
  –	
  suburban	
  
Toronto	
  –	
  downtown	
  
Toronto	
  –	
  suburban	
  
Eastern	
  Canada	
  
Comparative	
  properties	
  
Lease	
  termination	
  fees	
  and	
  other	
  
Properties	
  held	
  for	
  redevelopment	
  
Acquisitions	
  
Straight-‐line	
  rent	
  
Amortization	
  of	
  lease	
  incentives	
  
NOI	
  
NOI	
  from	
  properties	
  sold	
  and	
  	
  
	
   properties	
  held	
  for	
  sale(1)	
  
NOI	
  including	
  income	
  from	
  properties	
  	
  
$	
  

sold	
  and	
  assets	
  held	
  for	
  sale	
  

2013	
  	
   	
  
	
  $	
  

Three	
  months	
  ended	
  December	
  31,	
  	
   
Growth	
  	
  
%	
  	
  
	
  1.8	
  
	
   	
  (6.0)	
  
	
  7.6	
  
	
  4.8	
  
	
   	
  (3.6)	
  
	
  1.7	
  
	
  0.7	
  

2014	
  	
   	
  
	
  $	
  

	
  20,993	
  
	
  16,341	
  
	
  2,740	
  
	
  30,920	
  
	
  15,487	
  
	
  19,334	
  
	
  105,815	
  
	
  546	
  
	
  (126)	
   	
  	
  
	
  9,877	
  
	
  778	
  
	
  (2,726)	
   	
  	
  

	
  20,616	
  
	
  17,383	
  
	
  2,547	
  
	
  29,500	
  
	
  16,069	
  
	
  19,004	
  
	
  105,119	
  
	
  621	
  
	
  (113)	
   	
  	
  
	
  9,319	
  
	
  1,848	
  
	
  (1,921)	
   	
  	
  

Amount	
  	
  
	
  377	
  
	
  (1,042)	
  
	
  193	
  
	
  1,420	
  
	
  (582)	
  
	
  330	
  
	
  696	
  
	
  (75)	
  
	
  (13)	
  
	
  558	
  
	
  (1,070)	
  
	
  (805)	
  
	
  (709)	
  

Year	
  ended	
  December	
  31,	
  

Growth	
  

	
  $	
  

2014	
  	
   	
  
	
  $	
  

	
  83,807	
  
	
  68,931	
  
	
  10,283	
  
	
  120,508	
  
	
  63,324	
  
	
  77,084	
  
	
  423,937	
  
	
  1,869	
  
	
  (468)	
   	
  	
  

	
  38,846	
  
	
  4,612	
  
	
  (9,952)	
   	
  	
  

2013	
  	
   	
  
	
  $	
  

	
  82,015	
  
	
  68,434	
  
	
  10,397	
  
	
  118,399	
  
	
  65,866	
  
	
  76,631	
  
	
  421,742	
  
	
  2,127	
  
	
  (532)	
   	
  	
  

	
  22,978	
  
	
  7,415	
  
	
  (6,343)	
   	
  	
  

Amount	
  	
  
%	
  
	
  1,792	
  
	
  2.2	
  
	
  0.7	
  
	
  497	
  
	
  (114)	
   	
   	
  (1.1)	
  
	
  2,109	
  
	
  1.8	
  
	
  (2,542)	
   	
   	
  (3.9)	
  
	
  0.6	
  
	
  0.5	
  

	
  453	
  
	
  2,195	
  
	
  (258)	
   	
  
	
  64	
  
	
  15,868	
  
	
  (2,803)	
   	
  
	
  (3,609)	
   	
  
	
  11,457	
  

	
  114,164	
  

	
  114,873	
  

	
   	
  (0.6)	
  

	
  458,844	
  

	
  447,387	
  

	
  2.6	
  

	
  7	
  

	
  1,374	
  

	
  (1,367)	
  

	
  3,106	
  

	
  5,501	
  

	
  (2,395)	
   	
  

	
  114,171	
  

	
  $	
  

	
  116,247	
  

	
  $	
  

	
  (2,076)	
  

	
   	
  (1.8)	
  

	
  $	
  

	
  461,950	
  

	
  $	
  

	
  452,888	
  

	
  $	
  

	
  9,062	
  

	
  2.0	
  

(1)	
  Includes	
  straight-‐line	
  rents	
  and	
  amortization	
  of	
  lease	
  incentives.	
  

Western	
  Canada	
  increased	
  by	
  1.8%,	
  or	
  $0.4	
  million,	
  over	
  the	
  prior	
  year	
  comparative	
  quarter	
  (for	
  the	
  year	
  ended	
  December	
  31,	
  
2014	
  –	
  an	
  increase	
  of	
  2.2%,	
  or	
  $1.8	
  million,	
  over	
  the	
  prior	
  year),	
  largely	
  due	
  to	
  higher	
  rents	
  on	
  renewals	
  and	
  step-‐up	
  in	
  rental	
  
rates	
  for	
  certain	
  tenants,	
  offset	
  by	
  a	
  decline	
  in	
  weighted	
  average	
  in-‐place	
  occupancy	
  of	
  approximately	
  70,000	
  square	
  feet.	
  

Calgary	
   downtown	
   decreased	
   by	
   6.0%,	
   or	
   $1.0	
   million,	
   over	
   the	
   prior	
   year	
   comparative	
   quarter,	
   primarily	
   due	
   to	
   a	
   decline	
   in	
  
weighted	
  average	
  in-‐place	
  occupancy,	
  mainly	
  attributed	
  to	
  the	
  100,000	
  square	
  feet	
  of	
  previously	
  identified	
  vacates	
  taking	
  effect	
  
in	
  the	
  prior	
  quarter.	
  For	
  the	
  year	
  ended	
  December	
  31,	
  2014,	
  the	
  increase	
  of	
  0.7%,	
  or	
  $0.5	
  million,	
  over	
  the	
  prior	
  year	
  was	
  mainly	
  
attributable	
   to	
   higher	
   rents	
   on	
   renewals	
   and	
   step-‐up	
   in	
   rental	
   rates	
   and	
   recoveries	
   for	
   certain	
   tenants,	
   offset	
   by	
   a	
   decline	
   in	
  
weighted	
  average	
  in-‐place	
  occupancy,	
  mainly	
  attributed	
  to	
  the	
  100,000	
  square	
  feet	
  of	
  previously	
  identified	
  vacates	
  taking	
  effect	
  
in	
  the	
  prior	
  quarter.	
  

Calgary	
   suburban	
   increased	
   by	
   7.6%,	
   or	
   $0.2	
   million,	
   over	
   the	
   prior	
   year	
   comparative	
   quarter,	
   mainly	
   due	
   to	
   higher	
   rents	
   on	
  
renewals,	
  step-‐up	
  in	
  rental	
  rates	
  for	
  certain	
  tenants,	
  lower	
  non-‐recoverable	
  expenses	
  and	
  savings	
  in	
  operating	
  expenses	
  related	
  
to	
  certain	
   government	
   tenants.	
  For	
  the	
  year	
  ended	
  December	
  31,	
  2014,	
  the	
  decrease	
  of	
  1.1%,	
  or	
  $0.1	
   million,	
  over	
  the	
  prior	
  
year	
  was	
  mainly	
  attributable	
  to	
  a	
  decline	
  in	
  weighted	
  average	
  in-‐place	
  occupancy.	
  

Toronto	
   downtown	
   increased	
   by	
   4.8%,	
   or	
   $1.4	
   million,	
   over	
   the	
   prior	
   year	
   comparative	
   quarter	
   (for	
   the	
   year	
   ended	
  	
  
December	
  31,	
  2014	
  –	
  an	
  increase	
  of	
  1.8%,	
  or	
  $2.1	
  million,	
  over	
  the	
  prior	
  year),	
  mainly	
  due	
  to	
  higher	
  rents	
  on	
  renewals,	
  step-‐up	
  
in	
  rental	
  rates	
  for	
  certain	
  tenants	
  and	
  higher	
  weighted	
  average	
  in-‐place	
  occupancy	
  of	
  approximately	
  27,000	
  square	
  feet.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  34	
  

 
 
 
 
 
 
	
  
	
  
	
  
	
  	
   	
  
	
  
	
  	
   	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
   	
  	
  
	
   	
  	
  
	
  
	
  
	
  
	
  	
  
	
   	
  	
  
	
   	
  	
  
	
   	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
   	
  	
  
	
   	
  	
  
	
  
	
  
	
  
	
  	
  
	
  	
   	
  
	
  	
   	
  
	
  
	
   	
  
	
  
	
  
Toronto	
   suburban	
   decreased	
   by	
   3.6%,	
   or	
   $0.6	
   million,	
   over	
   the	
   prior	
   year	
   comparative	
   quarter	
   (for	
   the	
   year	
   ended	
  	
  
December	
   31,	
   2014	
   –	
   a	
   decrease	
   of	
   3.9%,	
   or	
   $2.5	
   million,	
   over	
   the	
   prior	
   year),	
   mainly	
   due	
   to	
   a	
   decline	
   in	
   weighted	
   average	
  	
  
in-‐place	
   occupancy	
   of	
   approximately	
   210,000	
   square	
   feet,	
   offset	
   by	
   higher	
   rents	
   on	
   renewals	
   and	
   step-‐up	
   in	
   rental	
   rates	
   for	
  
certain	
  tenants.	
  	
  	
  

Eastern	
  Canada	
  increased	
  by	
  1.7%,	
  or	
  $0.3	
  million,	
  over	
  the	
  prior	
  year	
  comparative	
  quarter	
  (for	
  the	
  year	
  ended	
  December	
  31,	
  
2014	
  –	
  an	
  increase	
  of	
  0.6%,	
  or	
  $0.5	
  million,	
  over	
  the	
  prior	
  year),	
  mainly	
  due	
  to	
  higher	
  rents	
  on	
  renewals	
  and	
  step-‐up	
  in	
  rental	
  
rates	
   for	
   certain	
   tenants,	
   and	
   favourable	
   foreign	
   exchange	
   adjustments	
   in	
   our	
   U.S.	
   properties	
   of	
   $0.4	
   million	
   throughout	
   the	
  
period.	
  This	
  was	
  offset	
  by	
  a	
  decline	
  in	
  weighted	
  average	
  in-‐place	
  occupancy	
  of	
  approximately	
  73,000	
  square	
  feet.	
  

For	
   the	
   three	
   and	
   twelve	
   months	
   ended	
   December	
   31,	
   2014,	
   we	
   recognized	
   lease	
   termination	
   fees	
   and	
   other	
   adjustments	
  	
  
of	
   $0.5	
   million	
   and	
   $1.9	
   million,	
   respectively	
   (three	
   and	
   twelve	
   months	
   ended	
   December	
   31,	
   2013	
   –	
   $0.6	
   million	
   and	
  	
  
$2.1	
  million,	
  respectively).	
  	
  

NOI	
  prior	
  quarter	
  comparison 
The	
  comparative	
  properties	
  disclosed	
  in	
  the	
  following	
  table	
  include	
  properties	
  acquired	
  prior	
  to	
  January	
  1,	
  2014.	
  

Western	
  Canada	
  
Calgary	
  –	
  downtown	
  
Calgary	
  –	
  suburban	
  
Toronto	
  –	
  downtown	
  
Toronto	
  –	
  suburban	
  
Eastern	
  Canada	
  
Comparative	
  properties	
  	
  
Lease	
  termination	
  fees	
  and	
  other	
  
Properties	
  held	
  for	
  redevelopment	
  
Straight-‐line	
  rent	
  	
  
Amortization	
  of	
  lease	
  incentives	
  
NOI	
  	
  
NOI	
  from	
  properties	
  sold	
  and	
  properties	
  held	
  for	
  sale(1)	
  
NOI	
  including	
  income	
  from	
  properties	
  sold	
  and	
  assets	
  held	
  for	
  sale	
  
(1)	
  Includes	
  straight-‐line	
  rents	
  and	
  amortization	
  of	
  lease	
  incentives.	
  

December	
  31,	
  	
  

September	
  30,	
  

2014	
  
	
  24,319	
  
	
  18,309	
  
	
  3,107	
  
	
  35,136	
  
	
  15,487	
  
	
  19,334	
  
	
  115,692	
  
	
  546	
  
	
  (126)	
  
	
  778	
  
	
  (2,726)	
  
	
  114,164	
  
	
  7	
  
	
  114,171	
  

	
  $	
  

	
  $	
  

$	
  

$	
  

2014	
  
	
  24,270	
  
	
  19,485	
  
	
  3,011	
  
	
  34,424	
  
	
  15,472	
  
	
  19,300	
  
	
  115,962	
  
	
  97	
  
	
  (70)	
  
	
  513	
  
	
  (2,717)	
  
	
  113,785	
  
	
  635	
  
	
  114,420	
  

	
  $	
  

	
  $	
  

Three	
  months	
  ended	
  	
  

Growth	
  

Amount	
  	
   	
  
	
  49	
  
	
  (1,176)	
   	
  
	
  96	
  
	
  712	
  
	
  15	
  
	
  34	
  
	
  (270)	
   	
  
	
  449	
  
	
  (56)	
   	
  
	
  265	
  

	
  (9)	
   	
  

	
  379	
  
	
  (628)	
   	
  
	
  (249)	
   	
  

%	
  	
  

	
  0.2	
  
	
  (6.0)	
  
	
  3.2	
  
	
  2.1	
  
	
  0.1	
  
	
  0.2	
  
	
  (0.2)	
  

	
  0.3	
  

	
  (0.2)	
  

Comparative	
  properties	
  NOI	
  decreased	
  by	
  0.2%,	
  or	
  $0.3	
  million,	
  over	
  the	
  prior	
  quarter.	
  

Calgary	
   downtown	
   decreased	
   by	
   6.0%,	
   or	
   $1.2	
   million,	
   over	
   the	
   prior	
   quarter,	
   mainly	
   due	
   to	
   a	
   tenant	
   that	
   vacated	
  
approximately	
  100,000	
  square	
  feet	
  in	
  the	
  previous	
  quarter	
  and	
  lower	
  average	
  in-‐place	
  rents.	
  

Calgary	
   suburban	
   increased	
   by	
   3.2%,	
   or	
   $0.1	
   million,	
   over	
   the	
   prior	
   quarter,	
   mainly	
   due	
   to	
   an	
   increase	
   in	
   weighted	
   average	
  	
  
in-‐place	
  occupancy	
  and	
  higher	
  rents	
  on	
  renewals	
  and	
  step-‐up	
  in	
  rental	
  rates	
  for	
  certain	
  tenants.	
  

Toronto	
   downtown	
   increased	
   by	
   2.1%,	
   or	
   $0.7	
   million,	
   over	
   the	
   prior	
   quarter,	
   mainly	
   due	
   to	
   an	
   increase	
   in	
   weighted	
  	
  
average	
  in-‐place	
  occupancy	
  of	
  approximately	
  39,000	
  square	
  feet	
  and	
  higher	
  rents	
  on	
  renewals	
  and	
  step-‐up	
  in	
  rental	
  rates	
  for	
  	
  
certain	
  tenants.	
  	
  

Western	
  Canada,	
  Toronto	
  suburban	
  and	
  Eastern	
  Canada	
  remained	
  relatively	
  flat	
  over	
  the	
  prior	
  quarter.	
  

For	
  the	
  three	
  months	
  ended	
  December	
  31,	
  2014,	
  we	
  recognized	
  lease	
  termination	
  fees	
  and	
  other	
  adjustments	
  of	
  $0.5	
  million	
  
(three	
  months	
  ended	
  September	
  30,	
  2014	
  –	
  $0.1	
  million).	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  35	
  

	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
   	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
Funds	
  from	
  operations	
  and	
  adjusted	
  funds	
  from	
  operations	
  

Net	
  income	
  for	
  the	
  period	
  
Add	
  (deduct):	
  

Share	
  of	
  net	
  income	
  and	
  dilution	
  gain	
  (loss)	
  from	
  investment	
  

in	
  Dream	
  Industrial	
  REIT	
  

Share	
  of	
  FFO	
  from	
  investment	
  in	
  Dream	
  Industrial	
  REIT	
  
Depreciation	
  and	
  amortization	
  
Loss	
  on	
  sale	
  of	
  investment	
  properties	
  
Interest	
  expense	
  on	
  subsidiary	
  redeemable	
  units	
  
Fair	
  value	
  adjustments	
  to	
  investment	
  properties	
  
Fair	
  value	
  adjustments	
  to	
  financial	
  instruments	
  and	
  DUIP	
  

	
  included	
  in	
  general	
  and	
  administrative	
  expenses	
  (“G&A”)	
  

Debt	
  settlement	
  costs	
  
Internal	
  leasing	
  costs	
  
Deferred	
  income	
  taxes	
  expense	
  (recovery)	
  
Lease	
  termination	
  write-‐offs	
  
Other	
  

FFO	
  

Funds	
  from	
  operations	
  
Add	
  (deduct):	
  

Share	
  of	
  FFO	
  from	
  investment	
  in	
  Dream	
  Industrial	
  REIT	
  
Share	
  of	
  AFFO	
  from	
  investment	
  in	
  Dream	
  Industrial	
  REIT	
  	
  
Amortization	
  of	
  fair	
  value	
  adjustments	
  on	
  assumed	
  debt	
  
Deferred	
  unit	
  compensation	
  expense	
  
Straight-‐line	
  rent	
  
Business	
  transformation	
  costs	
  
Other	
  

Deduct:	
  

Normalized	
  initial	
  direct	
  leasing	
  costs	
  and	
  lease	
  incentives	
  

AFFO	
  

Funds	
  from	
  operations	
  

Three	
  months	
  ended	
  December	
  31,	
  	
  

Year	
  ended	
  December	
  31,	
  

$	
  

2014	
  
	
  7,306	
  

	
  $	
  

2013	
  
	
  59,756	
   	
   $	
  

2014	
  
	
  159,290	
   	
   $	
  

2013	
  
	
  445,011	
  

	
  (3,699)	
  
	
  4,565	
  
	
  3,526	
  
	
  -‐	
  
	
  338	
  
	
  67,300	
  

	
  (2,918)	
    	
  
	
  683	
  
	
  758	
  
	
  300	
  
	
  -‐	
  
	
  (10)	
  
	
  78,149	
  

	
  $	
  

	
  (3,027)	
  	
  
	
  3,860	
   	
  
	
  2,629	
   	
  
	
  -‐	
   	
  
	
  1,981	
   	
  
	
  12,627	
   	
  

	
  (417)	
  	
  
	
  -‐	
   	
  
	
  1,755	
   	
  
	
  (865)	
  	
  
	
  -‐	
   	
  
	
  (57)	
  
	
  78,242	
  

	
  $	
  

	
  (15,965)	
  	
  
	
  16,412	
   	
  
	
  12,922	
   	
  
	
  1,496	
   	
  
	
  4,638	
   	
  
	
  128,456	
   	
  

	
  (3,441)	
  	
  
	
  1,892	
   	
  
	
  6,345	
   	
  
	
  638	
   	
  
	
  336	
   	
  
	
  (190)	
  
	
  312,829	
  

	
  $	
  

	
  (15,697)	
  
	
  15,104	
  
	
  8,878	
  
	
  283	
  
	
  7,897	
  
	
  (127,453)	
  

	
  (35,070)	
  
	
  241	
  
	
  6,831	
  
	
  344	
  
	
  45	
  
	
  (167)	
  
	
  306,247	
  

	
  78,149	
  

	
  $	
  

	
  78,242	
  

	
  $	
  

	
  312,829	
  

	
  $	
  

	
  306,247	
  

	
  (4,565)	
  
	
  3,767	
  
	
  (1,110)	
  
	
  1,016	
  
	
  (778)	
  
	
  275	
      
	
  (54)	
  
	
  76,700	
  

	
  (3,860)	
  
	
  3,116	
  
	
  (1,370)	
  
	
  1,109	
  
	
  (1,848)	
  

	
  -‐	
     

	
  (400)	
  
	
  74,989	
  

	
  (16,412)	
  
	
  13,511	
  
	
  (4,754)	
  
	
  4,399	
  
	
  (4,612)	
  
	
  1,100	
      
	
  (433)	
  
	
  305,628	
  

	
  (15,104)	
  
	
  12,052	
  
	
  (6,633)	
  
	
  4,317	
  
	
  (7,415)	
  
	
  -‐	
  
	
  (260)	
  
	
  293,204	
  

$	
  

$	
  

	
  (8,130)	
  	
  
	
  68,570	
  

	
  $	
  

	
  (8,005)	
  	
  
	
  66,984	
  

	
  $	
  

	
  (32,568)	
  	
  
	
  273,060	
  

	
  $	
  

	
  (31,428)	
  
	
  261,776	
  

$	
  

FFO	
  
FFO	
  per	
  unit	
  –	
  basic(1)	
  
FFO	
  per	
  unit	
  –	
  diluted(1)	
  
(1)	
  The	
  LP	
  B	
  Units	
  are	
  included	
  in	
  the	
  calculation	
  of	
  basic	
  and	
  diluted	
  FFO	
  per	
  unit.	
  

$	
  
$	
  
$	
  

Three	
  months	
  ended	
  December	
  31,	
  	
  	
  

Year	
  ended	
  December	
  31,	
  

2014	
  
	
  78,149	
  
	
  0.72	
  
	
  0.71	
  

	
  $	
  
	
  $	
  
	
  $	
  

2013	
  
	
  78,242	
  
	
  0.72	
  
	
  0.72	
  

	
  $	
  
	
  $	
  
	
  $	
  

2014	
  
	
  312,829	
  
	
  2.88	
  
	
  2.87	
  

	
  $	
  
	
  $	
  
	
  $	
  

2013	
  
	
  306,247	
  
	
  2.88	
  
	
  2.87	
  

Total	
  FFO	
  for	
  the	
  year	
  ended	
  December	
  31,	
  2014	
  was	
  $312.8	
  million,	
  an	
  increase	
  of	
  $6.6	
  million,	
  or	
  2.1%,	
  over	
  the	
  prior	
  year	
  
(FFO	
  for	
  the	
  quarter	
  was	
  $78.1	
  million,	
  a	
  decrease	
  of	
  $0.1	
  million,	
  or	
  0.1%,	
  over	
  the	
  prior	
  year	
  comparative	
  quarter).	
  	
  

Diluted	
   FFO	
   on	
   a	
   per	
   unit	
   basis	
   for	
   the	
   year	
   ended	
   December	
   31,	
   2014	
   remained	
   flat	
   at	
   $2.87	
   per	
   unit	
   over	
   the	
   prior	
   year	
  
(diluted	
  FFO	
  on	
  a	
  per	
  unit	
  basis	
  for	
  the	
  quarter	
  decreased	
  to	
  $0.71	
  from	
  $0.72	
  over	
  the	
  prior	
  year	
  comparative	
  quarter).	
  

The	
   decrease	
   in	
   diluted	
   FFO	
   per	
   unit	
   over	
   the	
   prior	
   year	
   comparative	
   quarter	
   primarily	
   resulted	
   from	
   the	
   favourable	
   points	
  
noted	
   below	
   offset	
   by	
   write-‐off	
   of	
   straight-‐line	
   rent	
   due	
   to	
   early	
   lease	
   terminations	
   during	
   2014	
   and	
   dispositions	
   completed	
  	
  
during	
  2014.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  36	
  

	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
 
   
	
  
	
  
	
  
 
   
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
 
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
 
	
  
	
  
	
  
	
  
 
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
 
 
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
Adjusted	
  funds	
  from	
  operations	
  

AFFO	
  
AFFO	
  per	
  unit	
  –	
  basic(1)	
  
(1)	
  The	
  LP	
  B	
  Units	
  are	
  included	
  in	
  the	
  calculation	
  of	
  basic	
  AFFO	
  per	
  unit.	
  

$	
  
$	
  

Three	
  months	
  ended	
  December	
  31,	
  	
     

Year	
  ended	
  December	
  31,	
  

2014	
  
	
  68,570	
  
	
  0.63	
  

	
  $	
  
	
  $	
  

2013	
  
	
  66,984	
  
	
  0.62	
  

	
  $	
  
	
  $	
  

2014	
  
	
  273,060	
  
	
  2.52	
  

	
  $	
  
	
  $	
  

2013	
  
	
  261,776	
  
	
  2.47	
  

Total	
  AFFO	
  for	
  the	
  year	
  ended	
  December	
  31,	
  2014	
  was	
  $273.1	
  million,	
  an	
  increase	
  of	
  $11.3	
  million,	
  or	
  4.3%,	
  over	
  the	
  prior	
  year	
  
comparative	
   period	
   (AFFO	
   for	
   the	
   quarter	
   was	
   $68.6	
   million,	
   an	
   increase	
   of	
   $1.6	
   million,	
   or	
   2.4%,	
   over	
   the	
   prior	
   year	
  
comparative	
  quarter).	
  	
  

Basic	
   AFFO	
   on	
   a	
   per	
   unit	
   basis	
   for	
   the	
   year	
   ended	
   December	
   31,	
   2014	
   increased	
   to	
   $2.52	
   from	
   $2.47	
   over	
   the	
   prior	
   year	
  
comparative	
   period	
   (AFFO	
   on	
   a	
   per	
   unit	
   basis	
   for	
   the	
   quarter	
   increased	
   to	
   $0.63	
   from	
   $0.62	
   over	
   the	
   prior	
   year	
  	
  
comparative	
  quarter).	
  

The	
  increase	
  in	
  basic	
  AFFO	
  per	
  unit	
  over	
  the	
  prior	
  year	
  and	
  prior	
  year	
  comparative	
  quarter	
  resulted	
  from:	
  

0.5%	
  and	
  0.7%	
  growth	
  in	
  comparative	
  properties	
  NOI	
  over	
  the	
  prior	
  year	
  and	
  prior	
  year	
  comparative	
  quarter,	
  respectively;	
  

• 
• 
•  A	
  full	
  year	
  of	
  NOI	
  from	
  accretive	
  acquisitions	
  completed	
  in	
  2013;	
  and	
  

Incremental	
  increase	
  in	
  AFFO	
  from	
  our	
  investment	
  in	
  Dream	
  Industrial	
  REIT;	
  

• 

Interest	
  rate	
  savings	
  upon	
  refinancing	
  of	
  maturing	
  debt;	
  

Offset	
  by:	
  

•  Dispositions	
  completed	
  during	
  2014.	
  

SELECTED	
  ANNUAL	
  INFORMATION	
  
The	
  following	
  table	
  provides	
  selected	
  financial	
  information	
  for	
  the	
  past	
  three	
  years:	
  

Investment	
  properties	
  revenue(1)	
  
Income	
  from	
  continuing	
  operations	
  
Net	
  income	
  	
  
Total	
  assets(1)	
  
Non-‐current	
  debt(1)	
  
Total	
  debt(1)	
  
Distributions	
  declared	
  
Distribution	
  rate	
  (per	
  unit)	
  
Units	
  outstanding:	
  

REIT	
  Units,	
  Series	
  A	
  
REIT	
  Units,	
  Series	
  B	
  
LP	
  Class	
  B	
  Units,	
  Series	
  1	
  

$	
  

2014	
  	
  
817,995	
   $	
  
159,290	
  	
  
159,290	
  	
  
7,558,895	
  	
  
3,216,411	
  	
  
3,594,341	
  	
  
242,220	
  	
  
2.24	
  	
  

2013	
  	
  
800,531	
   $	
  
445,011	
  	
  
445,011	
  	
  
7,667,742	
  	
  
3,380,891	
  	
  
3,662,543	
  	
  
235,751	
  	
  
2.23	
  	
  

2012	
  
686,564	
  
266,174	
  
291,073	
  
6,913,744	
  
2,960,313	
  
3,314,594	
  
203,596	
  
2.20	
  

107,936,575	
  	
  
	
  -‐	
   	
  
602,434	
  	
  

103,420,221	
  	
  
	
  -‐	
   	
  
3,538,457	
  	
  

97,618,625	
  
16,316	
  
3,528,658	
  

(1)	
  	
  Includes	
  investment	
  in	
  joint	
  ventures,	
  which	
  are	
  equity	
  accounted,	
  and	
  properties	
  held	
  for	
  sale.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  37	
  

 
 
 
 
 
   
 
 
 
 
 
 
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
QUARTERLY	
  INFORMATION	
  	
  
The	
  following	
  tables	
  show	
  quarterly	
  information	
  since	
  January	
  1,	
  2013.	
  

Key	
  leasing,	
  financing,	
  portfolio	
  and	
  results	
  of	
  operations	
  quarterly	
  information	
  

Leasing	
  
Occupancy	
  –	
  including	
  committed	
  (period-‐end)	
  
Occupancy	
  –	
  in	
  place	
  (period-‐end)	
  
Occupancy	
  –	
  national	
  industry	
  average	
  
Tenant	
  retention	
  ratio	
  
Average	
  in-‐place	
  net	
  rent	
  per	
  square	
  

foot	
  (period-‐end)(1)	
  

$	
  

Q4	
  	
  

Q3	
  	
  

Q2	
  

93.0%	
  	
  
91.4%	
   
89.3%	
   
64.4%	
   

93.0%	
  	
  
91.1%	
   
89.7%	
   
34.5%	
   

94.1%	
  	
  
92.5%	
  	
  
89.6%	
  	
  
54.8%	
  	
  

2014	
  	
  

Q1	
  

94.2%	
  	
  
92.5%	
  	
  
89.7%	
  	
  
62.6%	
  	
  

Q4	
  

Q3	
  

Q2	
  	
  

94.3%	
  	
  
92.7%	
  	
  
90.3%	
  	
  
67.8%	
  	
  

94.6%	
  	
  
93.6%	
  	
  
90.9%	
  	
  
64.1%	
  	
  

94.9%	
  	
  
93.8%	
  	
  
91.3%	
  	
  
61.5%	
  	
  

2013	
  

Q1	
  

94.7%	
  
93.7%	
  
91.5%	
  
56.5%	
  

18.22	
   $	
  
7.8%	
  	
  

18.21	
   $	
  
8.2%	
  	
  

18.14	
   $	
  
8.0%	
  	
  

4.20%	
  	
  

4.15%	
  	
  

Market	
  rent/in-‐place	
  rent	
  (%)(1)	
  
Financing	
  
Weighted	
  average	
  effective	
  interest	
  rate	
  on	
  	
  
	
   debt	
  (period-‐end)	
  
Weighted	
  average	
  face	
  rate	
  of	
  interest	
  on	
  	
  
	
   debt	
  (period-‐end)	
  
Interest	
  coverage	
  ratio	
  (times)	
  
Net	
  average	
  debt-‐to-‐EBITDFV	
  (years)	
  
Level	
  of	
  debt	
  (net	
  debt-‐to-‐gross	
  book	
  value)	
  
Debt	
  –	
  average	
  term	
  to	
  maturity	
  (years)	
  
Unencumbered	
  assets	
  (in	
  millions)	
  
Portfolio	
  
Number	
  of	
  properties	
  
GLA	
  (millions	
  of	
  sq.	
  ft.)(2)	
  
(1)	
  Comparative	
  figures	
  have	
  been	
  reclassified	
  to	
  conform	
  to	
  the	
  current	
  period	
  presentation.	
  
(2)	
  Excludes	
  redevelopment	
  properties	
  and	
  properties	
  held	
  for	
  sale.	
  

4.18%	
  	
  
2.9	
  	
  
7.8	
  	
  
47.5%	
  	
  
4.4	
  	
  
	
  796	
   $	
  

4.21%	
  	
  
2.9	
  	
  
7.8	
  	
  
46.9%	
  	
  
4.2	
  	
  
	
  794	
   $	
  

177	
  	
  
24.2	
  	
  

177	
  	
  
24.2	
  	
  

$	
  

4.19%	
  	
  

4.22%	
  	
  
2.9	
  	
  
7.9	
  	
  
47.3%	
  	
  
4.4	
  	
  
	
  793	
   $	
  

182	
  	
  
24.5	
  	
  

17.97	
   $	
  
8.9%	
  	
  

17.83	
   $	
  
8.9%	
  	
  

17.85	
   $	
  
9.4%	
  	
  

17.54	
   $	
  
10.8%	
  	
  

17.26	
  
12.1%	
  

4.19%	
  	
  

4.18%	
  	
  

4.22%	
  	
  

4.26%	
  	
  

4.33%	
  

4.23%	
  	
  
2.9	
  	
  
8.0	
  	
  
47.6%	
  	
  
4.6	
  	
  
	
  771	
   $	
  

4.22%	
  	
  
2.9	
  	
  
8.0	
  	
  
47.6%	
  	
  
4.6	
  	
  
	
  622	
   $	
  

4.28%	
  	
  
2.9	
  	
  
7.8	
  	
  
47.0%	
  	
  
4.8	
  	
  
	
  568	
   $	
  

4.35%	
  	
  
2.9	
  	
  
8.0	
  	
  
46.4%	
  	
  
4.8	
  	
  
	
  377	
   $	
  

4.49%	
  
2.9	
  
8.0	
  
47.3%	
  
4.8	
  
	
  115	
  

186	
  	
  
24.6	
  	
  

186	
  	
  
24.6	
  	
  

185	
  	
  
24.5	
  	
  

184	
  	
  
24.2	
  	
  

177	
  
23.3	
  

Results	
  of	
  operations	
  
(in	
  thousands	
  of	
  Canadian	
  dollars)	
  

Investment	
  properties	
  revenue	
  
Investment	
  properties	
  operating	
  

expenses	
  

Net	
  rental	
  income	
  
Other	
  income	
  	
  
Other	
  expenses	
  
Fair	
  value	
  adjustments,	
  net	
  

gains	
  (losses)	
  on	
  transactions	
  
and	
  other	
  activities	
  

Income	
  before	
  income	
  taxes	
  
Deferred	
  income	
  taxes	
  recovery	
  

(expense)	
  

Net	
  income	
  for	
  the	
  period	
  
Other	
  comprehensive	
  income	
  

Q4	
  	
  

Q1	
  
	
  $	
  	
  	
  176,460	
   	
  $	
  	
   	
  173,724	
   	
  $	
  	
   	
  176,432	
   $	
  	
   	
  178,663	
   $	
  	
   	
  179,574	
   $	
  	
   	
  175,044	
   $	
  	
   	
  170,589	
   	
  	
  $	
   	
  161,965	
  

Q2	
  	
  

Q2	
  	
  

Q3	
  	
  

Q4	
  

Q1	
  

Q3	
  	
  

2014	
  	
  

2013	
  

	
  (77,702)	
  	
  
	
  98,758	
  	
  
14,950	
  	
  
	
  (40,108)	
  	
  

	
  (74,449)	
  
	
  99,275	
  
12,784	
  
	
  (40,548)	
  

	
  (74,339)	
  
	
   	
  102,093	
  
14,363	
  
	
  (43,507)	
  

	
  (77,281)	
  
	
   	
  101,382	
  
14,678	
  
	
  (42,790)	
  

	
  (78,732)	
  
	
   	
  100,842	
  
9,380	
  
	
  (42,684)	
  

	
  (74,181)	
  
	
   	
  100,863	
  
17,416	
  
	
  (41,902)	
  

	
  (73,570)	
  
	
  97,019	
  
42,862	
  
	
  (40,802)	
  

	
  (69,189)	
  
	
  92,776	
  
35,056	
  
	
  (39,041)	
  

	
  (65,994)	
  	
  
	
  7,606	
   	
  

	
  (16,608)	
  
	
  54,903	
  

	
  (26,226)	
  
	
  46,723	
  

	
  (22,574)	
  
	
  50,696	
  

	
  (8,647)	
  
	
  58,891	
  

	
  16,457	
  
	
  92,834	
  

	
  45,356	
  
	
   	
  144,435	
  

	
  60,427	
  
	
   	
  149,218	
  

	
  (300)	
  	
  
	
  7,306	
   	
  

	
  (36)	
  
	
  54,867	
  

	
  (155)	
  
	
  46,568	
  

	
  (147)	
  
	
  50,549	
  

	
  865	
  
	
  59,756	
  

	
  (475)	
  
	
  92,359	
  

	
  (182)	
  
	
   	
  144,253	
  

	
  (552)	
  
	
   	
  148,666	
  

(loss)	
  

	
  1,352	
   	
  

	
  1,708	
  

	
  (1,523)	
  

	
  1,007	
  

	
  605	
  

	
  (1,350)	
  

	
  2,705	
  

	
  21	
  

Comprehensive	
  income	
  for	
  the	
  
	
   period	
  

$	
  

	
  8,658	
   $	
  

	
  56,575	
   $	
  

	
  45,045	
   $	
  

	
  51,556	
   $	
  

	
  60,361	
   $	
  

	
  91,009	
   $	
   	
  146,958	
   $	
   	
  148,687	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  38	
  

	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
   	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
 
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
 
 
 
 
 
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
 
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
Calculation	
  of	
  funds	
  from	
  operations	
  	
  
(in	
  thousands	
  of	
  Canadian	
  dollars	
  except	
  for	
  unit	
  and	
  per	
  unit	
  amounts)	
  

Net	
  income	
  for	
  the	
  period	
  
Add	
  (deduct):	
  

Share	
  of	
  net	
  income	
  and	
  	
  
	
   dilution	
  gain	
  (loss)	
  from	
  	
  
investment	
  in	
  Dream	
  
Industrial	
  REIT	
  

Share	
  of	
  FFO	
  from	
  investment	
  

in	
  Dream	
  Industrial	
  REIT	
  

Depreciation	
  and	
  amortization	
  
Loss	
  on	
  disposal	
  of	
  	
  

Q4	
   	
  	
  

Q3	
   	
  	
  

Q2	
   	
  	
  

2014	
   	
  	
  

Q1	
   	
  	
  

Q4	
  	
   	
  

Q3	
  	
   	
  

Q2	
   	
  	
  

$	
  

	
  7,306	
   	
   $	
  

	
  54,867	
   	
   $	
  

	
  46,568	
   	
   $	
  

	
  50,549	
   	
   $	
  

	
  59,756	
   	
   $	
  

	
  92,359	
   	
   $	
  

	
  144,253	
  

	
  $	
  

2013	
  

Q1	
  
	
  148,666	
  

	
  (3,699)	
  	
   	
  

	
  (3,291)	
  	
   	
  

	
  (5,386)	
  	
   	
  

	
  (3,589)	
  	
   	
  

	
  (3,027)	
  	
   	
  

	
  (3,454)	
  	
   	
  

	
  (2,884)	
   	
  	
  

	
  (6,332)	
  

	
  4,565	
   	
   	
  
	
  3,526	
   	
   	
  

	
  4,070	
   	
   	
  
	
  3,515	
   	
   	
  

	
  3,946	
   	
   	
  
	
  3,065	
   	
   	
  

	
  3,831	
   	
   	
  
	
  2,817	
   	
   	
  

	
  3,860	
   	
   	
  
	
  2,629	
   	
   	
  

	
  3,932	
   	
   	
  
	
  2,173	
   	
   	
  

	
  3,780	
  
	
  2,259	
  

	
  3,532	
  
	
  1,817	
  

investment	
  properties	
  

	
  -‐	
  	
   	
  

	
  565	
  

	
  931	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
   	
   	
  

	
  -‐	
  

	
  283	
  

Interest	
  expense	
  on	
  subsidiary	
  

redeemable	
  units	
  

Fair	
  value	
  adjustments	
  to	
  
investment	
  properties	
  
Fair	
  value	
  adjustments	
  to	
  	
  
financial	
  instruments	
  
and	
  DUIP	
  included	
  in	
  G&A	
  

Debt	
  settlement	
  costs	
  
Internal	
  leasing	
  costs	
  
Deferred	
  income	
  taxes	
  expense	
  	
  

(recovery)	
  

Other	
  

	
  338	
   	
   	
  

	
  337	
   	
   	
  

	
  1,982	
   	
   	
  

	
  1,981	
   	
   	
  

	
  1,981	
   	
   	
  

	
  1,982	
   	
   	
  

	
  1,986	
  

	
  1,948	
  

	
  67,300	
  	
   	
  

	
  17,644	
   	
   	
  

	
  25,197	
   	
   	
  

	
  18,315	
   	
   	
  

	
  12,627	
   	
  

	
  (3,359)	
  	
  

	
  (56,560)	
   	
  	
  

	
  (80,161)	
  

	
  (2,918)	
  	
   	
  
	
  683	
   	
   	
  
	
  758	
   	
   	
  

	
  (2,285)	
  	
   	
  
	
  -‐	
   	
   	
  
	
  1,969	
   	
   	
  

	
  746	
   	
   	
  
	
  -‐	
   	
   	
  
	
  1,718	
   	
   	
  

	
  1,016	
   	
   	
  
	
  1,209	
   	
   	
  
	
  1,900	
   	
   	
  

	
  (417)	
  	
   	
  
	
  -‐	
  	
   	
  
	
  1,755	
   	
   	
  

	
  (16,548)	
  	
   	
  
	
  -‐	
   	
   	
  
	
  1,736	
   	
   	
  

	
  (18,894)	
  	
   	
  
	
  241	
  
	
  1,732	
  

789	
  
	
  -‐	
  
	
  1,610	
  

FFO	
  
FFO	
  per	
  unit	
  –	
  basic(1)	
  
FFO	
  per	
  unit	
  –	
  diluted(1)	
  
(1)	
  The	
  LP	
  B	
  Units	
  are	
  included	
  in	
  the	
  calculation	
  of	
  basic	
  and	
  diluted	
  FFO	
  per	
  unit.	
  	
  

	
  77,389	
   	
   $	
  
0.71	
   	
   $	
  
0.71	
   	
   $	
  

$	
  
$	
  
$	
  

	
  300	
   	
   	
  
	
  (10)	
  	
   	
  
	
  78,149	
  	
   $	
  
0.72	
   	
   $	
  
0.71	
   	
   $	
  

	
  36	
   	
   	
  
	
  (38)	
  	
   	
  

	
  155	
   	
   	
  
	
  265	
   	
   	
  
	
  79,187	
   	
   $	
  
0.73	
   	
   $	
  
0.73	
   	
   $	
  

	
  147	
   	
   	
  
	
  (72)	
  	
   	
  

	
  (865)	
  	
   	
  
	
  (57)	
  	
   	
  

	
  475	
   	
   	
  
	
  2	
   	
   	
  

	
  78,104	
   	
   $	
  
0.73	
   	
   $	
  
0.72	
   	
   $	
  

	
  78,242	
   	
   $	
  
	
  0.72	
   	
   $	
  
	
  0.72	
   	
   $	
  

	
  79,298	
   	
   $	
  
	
  0.73	
   	
   $	
  
	
  0.73	
   	
   $	
  

	
  182	
  
	
  (55)	
   	
  	
  
	
  $	
  
	
  $	
  
	
  $	
  

	
  76,040	
  
	
  0.72	
  
	
  0.71	
  

	
  552	
  
	
  (35)	
  
	
  72,669	
  
	
  0.72	
  
	
  0.71	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  39	
  

	
  
	
   	
   	
  
	
   	
   	
  
	
   	
   	
  
	
   	
   	
  
	
  
	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
  	
   	
  
	
  
	
   	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
   	
  
	
  	
   	
  
	
  	
   	
  
	
  	
   	
  
	
  	
   	
  
	
  	
   	
  
	
   	
  	
  
	
  
	
  
	
  	
   	
  
	
  	
   	
  
	
  	
   	
  
	
  	
   	
  
	
  	
   	
  
	
  	
   	
  
	
   	
  	
  
	
  
	
  
	
  	
   	
  
	
  	
   	
  
	
  	
   	
  
	
  	
   	
  
	
  	
   	
  
	
  	
   	
  
	
   	
  	
  
	
  
	
  
	
  
	
  	
   	
  
	
  	
   	
  
	
  	
   	
  
	
  	
   	
  
	
  	
   	
  
	
  	
   	
  
	
   	
  	
  
	
  
	
  
	
  
	
  
	
  	
   	
  
	
  	
   	
  
	
  	
   	
  
	
  	
   	
  
	
  	
   	
  
	
  	
   	
  
	
   	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
   	
  
	
  	
   	
  
	
  	
   	
  
	
  	
   	
  
	
  	
   	
  
	
  	
   	
   	
  
	
   	
   	
  
	
  
	
  
	
   	
  
	
   	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
   	
  
	
  	
   	
  
	
  	
   	
  
	
  	
   	
  
	
  	
   	
  
	
  	
   	
   	
  
	
   	
   	
  
	
  
	
  
	
  	
  
	
  
	
  	
   	
  
	
  	
   	
  
	
  	
   	
  
	
  	
   	
  
	
  	
   	
  
	
  	
   	
   	
  
	
   	
   	
  
	
  
	
  
	
  
	
  
	
  
	
  	
   	
  
	
  	
   	
  
	
  	
   	
  
	
  	
   	
  
	
  	
   	
  
	
  	
   	
   	
  
	
   	
   	
  
	
  
	
  
	
  	
   	
  
	
  	
   	
  
	
  	
   	
  
	
  	
   	
  
	
  	
   	
  
	
  	
   	
  
	
   	
  	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
   	
  
	
  
	
   	
   	
  
	
   	
   	
  
	
   	
  
	
  
	
   	
  
	
  
	
   	
   	
  
	
   	
   	
  
	
  
	
  
	
  
	
  	
  
	
  
Calculation	
  of	
  adjusted	
  funds	
  from	
  operations	
  
(in	
  thousands	
  of	
  Canadian	
  dollars	
  except	
  for	
  unit	
  and	
  per	
  unit	
  amounts)	
  

Funds	
  from	
  operations	
  	
  
Add	
  (deduct):	
  	
  

Q4	
   	
  
	
  78,149	
   $	
  

$	
  

Q3	
  	
  	
  

Q2	
  	
  	
  

2014	
  	
  

Q1	
  	
  	
  

Q4	
  	
  	
  

Q3	
  	
  

Q2	
  	
  	
  

	
  77,389	
   	
  $	
  

	
  79,187	
   	
  $	
  

	
  78,104	
  	
  $	
  

	
  78,242	
   	
  $	
  

	
  79,298	
   	
  $	
  

	
  76,040	
    $	
  

2013	
  	
  

Q1	
  	
  
	
  72,669	
   	
  

Share	
  of	
  FFO	
  from	
  investment	
  in	
   	
  
	
   Dream	
  Industrial	
  REIT	
  
Share	
  of	
  AFFO	
  from	
  investment	
  	
  
in	
  Dream	
  Industrial	
  REIT	
  

  Amortization	
  of	
  fair	
  value	
  	
  

	
  (4,565)	
   	
  

	
  (4,070)	
  	
  	
  

	
  (3,946)	
  	
  	
  

	
  (3,831)	
  	
  	
  

	
  (3,860)	
  	
  	
  

	
  (3,932)	
  	
  	
  

	
  (3,780)	
  	
  

	
  (3,532)	
  	
  

	
  3,767	
  

	
  3,325	
   	
  	
  

	
  3,277	
   	
  	
  

	
  3,142	
   	
  	
  

	
  3,116	
   	
  	
  

	
  3,154	
   	
  	
  

	
  3,050	
   	
  

	
  2,732	
   	
  

adjustments	
  on	
  assumed	
  debt	
  	
  

	
  (1,110)	
   	
  

	
  (1,166)	
  	
  	
  

	
  (1,217)	
  	
  	
  

	
  (1,261)	
  	
  	
  

	
  (1,370)	
  	
  	
  

	
  (1,511)	
  	
  	
  

	
  (1,807)	
  	
  

	
  (1,946)	
  	
  

	
   Deferred	
  unit	
  compensation	
  	
  

expense	
  

Straight-‐line	
  rent	
  	
  

	
   Business	
  transformation	
  costs	
  
  Other	
  

Deduct:	
  
  Normalized	
  initial	
  direct	
  leasing	
  

	
  1,016	
  
	
  (778)	
   	
  
	
  275	
  
	
  (54)	
   	
  

	
  76,700	
  

	
  1,016	
   	
  	
  
	
  (513)	
  	
  	
  
	
  275	
   	
  	
  
	
  (55)	
  	
  	
  
	
  76,201	
   	
  	
  

	
  1,307	
   	
  	
  
	
  (1,489)	
  	
  	
  
	
  274	
   	
  	
  
	
  (69)	
  	
  	
  
	
  77,324	
   	
  	
  

	
  1,060	
   	
  	
  
	
  (1,832)	
  	
  	
  
	
  276	
   	
  	
  
	
  (255)	
  	
  	
  
	
  75,403	
   	
  	
  

	
  1,109	
   	
  	
  
	
  (1,848)	
  	
  	
  
	
  -‐	
  	
  	
  
	
  (400)	
  	
  	
  
	
  74,989	
   	
  	
  

	
  1,108	
   	
  	
  
	
  (1,859)	
  	
  	
  
	
  -‐	
  	
  	
  
	
  244	
   	
  	
  
	
  76,502	
   	
  	
  

	
  1,129	
   	
  
	
  (1,887)	
  	
  
	
  -‐	
   	
  
	
  (53)	
  	
  
	
  72,692	
   	
  

	
  971	
   	
  
	
  (1,815)	
  	
  
	
  -‐	
   	
  
	
  (57)	
  	
  
	
  69,022	
   	
  

$	
  
$	
  

	
  (8,130)	
   	
  
	
  68,570	
   $	
  
	
  0.63	
   $	
  

costs	
  and	
  lease	
  incentives	
  
Adjusted	
  funds	
  from	
  operations	
  	
  
AFFO	
  per	
  unit	
  –	
  basic(1)	
  
Weighted	
  average	
  units	
  
	
   outstanding	
  for	
  FFO	
  and	
  AFFO	
  
	
  108,758	
   	
  	
  
Basic	
  (in	
  thousands)	
  
	
  110,375	
   	
  	
  
Diluted	
  (in	
  thousands)	
  
(1)	
  The	
  LP	
  B	
  Units	
  are	
  included	
  in	
  the	
  calculation	
  of	
  basic	
  AFFO	
  per	
  unit.	
  	
  

	
  (8,141)	
  	
  	
  
	
  68,060	
   	
  $	
  
	
  0.63	
   	
  $	
  

	
  109,232	
  
	
  110,849	
  

	
  (8,185)	
  	
  	
  
	
  69,139	
   	
  $	
  
	
  0.64	
   	
  $	
  

	
  (8,112)	
  	
  	
  
	
  67,291	
   	
  $	
  
	
  0.62	
   	
  $	
  

	
  (8,005)	
  	
  	
  
	
  66,984	
   	
  $	
  
	
  0.62	
   	
  $	
  

	
  (8,204)	
  	
  	
  
	
  68,298	
   	
  $	
  
	
  0.63	
   	
  $	
  

	
  (7,812)	
  	
  
	
  64,880	
   	
  $	
  
	
  0.61	
   	
  $	
  

	
  (7,407)	
  	
  
	
  61,615	
   	
  
	
  0.61	
   	
  

	
  108,301	
   	
  	
  
	
  109,938	
   	
  	
  

	
  107,728	
   	
  	
  
	
  109,231	
   	
  	
  

	
  108,082	
   	
  
	
  109,691	
   	
  

	
   	
  108,671	
   	
  
	
   	
  110,290	
   	
  

	
   	
  106,226	
   	
  
	
   	
  107,861	
   	
  

	
   	
  101,564	
   	
  
	
   	
  103,171	
   	
  

NON-‐GAAP	
  MEASURES	
  AND	
  OTHER	
  DISCLOSURES	
  
The	
  following	
  non-‐GAAP	
  measures	
  are	
  important	
  measures	
  used	
  by	
  management	
  in	
  evaluating	
  the	
  Trust’s	
  underlying	
  operating	
  
performance	
  and	
  debt	
  management.	
  These	
  non-‐GAAP	
  measures	
  are	
  not	
  defined	
  by	
  IFRS,	
  do	
  not	
  have	
  a	
  standardized	
  meaning	
  
and	
  may	
  not	
  be	
  comparable	
  with	
  similar	
  measures	
  presented	
  by	
  other	
  income	
  trusts.	
  

Funds	
  from	
  operations	
  (“FFO”)	
  
Management	
  believes	
  FFO	
  is	
  an	
  important	
  measure	
  of	
  our	
  operating	
  performance.	
  This	
  non-‐GAAP	
  measurement	
  is	
  a	
  commonly	
  
used	
   measure	
   of	
   performance	
   of	
   real	
   estate	
   operations;	
   however,	
   it	
   does	
   not	
   represent	
   net	
   income	
   or	
   cash	
   generated	
   from	
  
operating	
  activities,	
  as	
  deﬁned	
  by	
  GAAP,	
  and	
  is	
  not	
  necessarily	
  indicative	
  of	
  cash	
  available	
  to	
  fund	
  Dream	
  Office	
  REIT’s	
  needs.	
  	
  

In	
  compliance	
  with	
  Canadian	
  Securities	
  Administrators	
  Staff	
  Notice	
  52-‐306	
  (Revised),	
  “Non-‐GAAP	
  Financial	
  Measures”,	
  FFO	
  has	
  
been	
   reconciled	
   to	
   net	
   income	
   in	
   the	
   section	
   “Our	
   results	
   of	
   operations”	
   under	
   the	
   heading	
   “Funds	
   from	
   operations	
   and	
  
adjusted	
  funds	
  from	
  operations”.	
  

Adjusted	
  funds	
  from	
  operations	
  (“AFFO”)	
  
Management	
   believes	
   AFFO	
   is	
   an	
   important	
   measure	
   of	
   our	
   economic	
   performance	
   and	
   is	
   indicative	
   of	
   our	
   ability	
   to	
   pay	
  
distributions.	
   This	
   non-‐GAAP	
   measurement	
   is	
   commonly	
   used	
   for	
   assessing	
   real	
   estate	
   performance;	
   however,	
   it	
   does	
   not	
  
represent	
   cash	
   generated	
   from	
   operating	
   activities,	
   as	
   deﬁned	
   by	
   GAAP,	
   and	
   is	
   not	
   necessarily	
   indicative	
   of	
   cash	
   available	
   to	
  
fund	
  Dream	
  Office	
  REIT’s	
  needs.	
  	
  

Our	
   calculation	
   of	
   AFFO	
   includes	
   a	
   deduction	
   for	
   an	
   estimated	
   amount	
   of	
   normalized	
   initial	
   direct	
   leasing	
   costs	
   and	
   lease	
  
incentives	
  that	
  we	
  expect	
  to	
  incur	
  based	
  on	
  our	
  current	
  portfolio,	
  and	
  expected	
  average	
  leasing	
  activity.	
  Our	
  estimates	
  of	
  initial	
  
direct	
  leasing	
  costs	
  and	
  lease	
  incentives	
  are	
  based	
  on	
  the	
  average	
  of	
  our	
  expected	
  leasing	
  activity	
  multiplied	
  by	
  the	
  average	
  cost	
  
per	
  square	
  foot	
  that	
  we	
  incurred	
  and	
  committed	
  to	
  during	
  the	
  period,	
  adjusted	
  for	
  properties	
  that	
  have	
  been	
  acquired	
  or	
  sold.	
  	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  40	
  

 
	
  	
  
	
  
	
  	
   	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
 
	
  
	
  
	
  
	
  
	
  
	
   	
  
	
  	
  
	
  	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
   	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  
	
  
	
  	
  
 
	
   	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
 
	
  
	
   	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
   	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
   	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  
	
  
	
  	
  
 
	
  
	
  
	
  
	
  
 
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
   	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  
	
  
	
  	
  
 
   
  	
  
  	
  
	
  	
  	
  
	
  	
   
	
  	
   
  
 
  
	
  
	
  
	
  
	
  
	
  
	
   	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  
	
  
	
  	
  
	
  
	
   	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
In	
  compliance	
  with	
  Canadian	
  Securities	
  Administrators	
  Staff	
  Notice	
  52-‐306	
  (Revised),	
  “Non-‐GAAP	
  Financial	
  Measures”,	
  AFFO	
  has	
  
been	
  reconciled	
  to	
  cash	
  generated	
  from	
  operating	
  activities	
  in	
  this	
  section	
  under	
  the	
  heading	
  “Cash	
  generated	
  from	
  operating	
  
activities	
  to	
  AFFO	
  reconciliation”.	
  

NOI	
  
NOI	
  is	
  defined	
  by	
  the	
  Trust	
  as	
  the	
  total	
  investment	
  property	
  revenue	
  less	
  investment	
  property	
  operating	
  expenses,	
  including	
  the	
  
share	
  of	
  net	
  rental	
  income	
  from	
  investment	
  in	
  joint	
  ventures	
  and	
  property	
  management	
  income.	
  This	
  non-‐GAAP	
  measurement	
  
is	
  an	
  important	
   measure	
  used	
  by	
  the	
  Trust	
  in	
  evaluating	
   property	
  operating	
  performance;	
  however,	
  it	
  is	
  not	
  defined	
   by	
  IFRS,	
  
does	
   not	
   have	
   a	
   standard	
   meaning	
   and	
   may	
   not	
   be	
   comparable	
   with	
   similar	
   measures	
   presented	
   by	
   other	
   income	
   trusts.	
   In	
  
compliance	
   with	
   Canadian	
   Securities	
   Administrators	
   Staff	
   Notice	
   52-‐306	
   (Revised),	
   “Non-‐GAAP	
   Financial	
   Measures”,	
   NOI	
   has	
  
been	
  reconciled	
  to	
  net	
  rental	
  income	
  in	
  the	
  table	
  below:	
  

Net	
  rental	
  income	
  (per	
  consolidated	
  financial	
  statements)	
  
Add:	
  Share	
  of	
  net	
  rental	
  income	
  from	
  investments	
  in	
  joint	
  ventures	
  
NOI	
  
Less:	
  NOI	
  from	
  properties	
  sold	
  and	
  properties	
  held	
  for	
  sale	
  
NOI	
  (excluding	
  properties	
  sold	
  and	
  properties	
  held	
  for	
  sale)	
  

$	
  

$	
  

	
  $	
  

Three	
  months	
  ended	
  December	
  31,	
  	
   
2013	
  
	
  100,842	
  
	
  15,405	
  
	
  116,247	
  
	
  1,374	
  
	
  114,873	
  

2014	
  
	
  98,758	
  
	
  15,413	
  
	
  114,171	
  
	
  7	
  
	
  114,164	
  

	
  $	
  

Year	
  ended	
  December	
  31,	
  

2014	
  
	
  401,508	
  
	
  60,442	
  
	
  461,950	
  
	
  3,106	
  
	
  458,844	
  

	
  $	
  

	
  $	
  

2013	
  
	
  391,500	
  
	
  61,388	
  
	
  452,888	
  
	
  5,501	
  
	
  447,387	
  

	
  $	
  

	
  $	
  

Comparative	
  properties	
  NOI	
  
Comparative	
   properties	
   NOI	
   includes	
   NOI	
   of	
   same	
   properties	
   owned	
   by	
   the	
   Trust	
   in	
   the	
   current	
   and	
   prior	
   year	
   comparative	
  
period	
   and	
   current	
   and	
   prior	
   year,	
   and	
   excludes	
   lease	
   termination	
   fees	
   and	
   property	
   one-‐time	
   adjustments,	
   NOI	
   of	
   acquired	
  
properties	
  and	
  properties	
  held	
  for	
  redevelopment,	
  straight-‐line	
  rents,	
  bad	
  debt	
  expenses	
  and	
  amortization	
  of	
  lease	
  incentives.	
  
Comparative	
  properties	
  NOI	
  is	
  an	
  important	
  non-‐GAAP	
  measure	
  used	
  by	
  management	
  to	
  evaluate	
  the	
  performance	
  of	
  the	
  same	
  
properties	
  owned	
  by	
  the	
  Trust	
  in	
  the	
  current,	
  comparative	
  period	
  and	
  prior	
  quarter	
  as	
  presented.	
  This	
  non-‐GAAP	
  measure	
  is	
  not	
  
defined	
   by	
   IFRS,	
   does	
   not	
   have	
   a	
   standard	
   meaning	
   and	
   may	
   not	
   be	
   comparable	
   with	
   similar	
   measures	
   presented	
   by	
   other	
  
income	
  trusts.	
  

Stabilized	
  NOI	
  
Stabilized	
   NOI	
   for	
   an	
   individual	
   property	
   is	
   defined	
   by	
   the	
   Trust	
   as	
   investment	
   property	
   revenues	
   less	
   property	
   operating	
  
expenses,	
   including	
   the	
   share	
   of	
   net	
   rental	
   income	
   from	
   investment	
   in	
   joint	
   ventures	
   and	
   property	
   management	
   income,	
  
adjusted	
  for	
  items	
  such	
  as	
  average	
  lease	
  up	
  costs,	
  long-‐term	
  vacancy	
  rates,	
  non-‐recoverable	
  capital	
  expenditures,	
  management	
  
fees,	
  straight-‐line	
  rents	
  and	
  other	
  non-‐recurring	
  items.	
  This	
  non-‐GAAP	
  measurement	
  is	
  an	
  important	
  measure	
  used	
  by	
  the	
  Trust	
  
in	
  determining	
  the	
  fair	
  value	
  of	
  individual	
  investment	
  properties;	
  however,	
  it	
  is	
  not	
  defined	
  by	
  IFRS,	
  does	
  not	
  have	
  a	
  standard	
  
meaning	
  and	
  may	
  not	
  be	
  comparable	
  with	
  similar	
  measures	
  presented	
  by	
  other	
  income	
  trusts.	
  	
  	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  41	
  

 
 
 
 
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
Weighted	
  average	
  number	
  of	
  units	
  
The	
  basic	
  weighted	
  average	
  number	
  of	
  units	
  outstanding	
  used	
  in	
  the	
  FFO	
  and	
  AFFO	
  per	
  unit	
  calculations	
  includes	
  the	
  weighted	
  
average	
  number	
  of	
  all	
  REIT	
  Units,	
  LP	
  B	
  Units,	
  and	
  vested	
  but	
  unissued	
  deferred	
  trust	
  units	
  and	
  income	
  deferred	
  trust	
  units.	
  The	
  
diluted	
  weighted	
  average	
  number	
  of	
  units	
  for	
  the	
  three	
  months	
  and	
  year	
  ended	
  December	
  31,	
  2014	
  assumes	
  the	
  conversion	
  of	
  
the	
  5.5%	
  Series	
  H	
  Debentures,	
  as	
  they	
  are	
  dilutive.	
  Diluted	
  FFO	
  per	
  unit	
  for	
  the	
  three	
  and	
  twelve	
  months	
  ended	
  December	
  31,	
  
2014	
  excludes	
  $0.7	
  million	
  and	
  $2.8	
  million,	
  respectively,	
  in	
  interest	
  related	
  to	
  convertible	
  debentures	
  (for	
  the	
  three	
  and	
  twelve	
  
months	
  ended	
  December	
  31,	
  2013	
  –	
  $0.7	
  million	
  and	
  $2.9	
  million,	
  respectively).	
  

Weighted	
  average	
  units	
  outstanding	
  for	
  basic	
  	
  

per	
  unit	
  amounts	
  (in	
  thousands)	
  

Weighted	
  average	
  units	
  outstanding	
  for	
  diluted	
  	
  

per	
  unit	
  amounts	
  (in	
  thousands)	
  

Three	
  months	
  ended	
  December	
  31,	
  	
  

Year	
  ended	
  December	
  31,	
  

2014	
  

2013	
  

2014	
  

2013	
  

109,232	
  

108,082	
  

108,484	
  

106,164	
  

110,849	
  

109,691	
  

110,100	
  

107,773	
  

Adjusted	
  cash	
  flows	
  from	
  operating	
  activities	
  
When	
   the	
   Trust	
   determines	
   its	
   cash	
   available	
   for	
   distribution,	
   it	
   uses	
   adjusted	
   cash	
   flows	
   from	
   operating	
   activities	
   which	
  
includes	
   cash	
   flows	
   from	
   operating	
   activities	
   of	
   our	
   investments	
   in	
   joint	
   ventures	
   that	
   are	
   equity	
   accounted	
   and	
   excludes	
  
fluctuations	
  in	
  working	
  capital,	
  transaction	
  costs	
  on	
  business	
  combinations	
  and	
  investment	
  in	
  lease	
  incentives	
  and	
  initial	
  direct	
  
leasing	
  costs.	
  The	
  Trust	
  funds	
  its	
  working	
  capital	
  needs	
  and	
  investments	
  in	
  lease	
  incentives	
  and	
  initial	
  direct	
  leasing	
  costs	
  with	
  
cash	
   and	
   cash	
   equivalent	
   on	
   hand	
   and	
   our	
   credit	
   facilities.	
   Accordingly,	
   management	
   believes	
   adjusted	
   cash	
   flows	
   from	
  
operating	
   activities	
   is	
   an	
   important	
   measure	
   that	
   reflects	
   our	
   ability	
   to	
   pay	
   cash	
   distributions.	
   This	
   non-‐GAAP	
   measurement	
  
does	
  not	
  represent	
  cash	
  generated	
  from	
  (utilized	
  in)	
  operating	
  activities	
  (as	
  per	
  consolidated	
  financial	
  statements),	
  as	
  defined	
  
by	
  GAAP.	
  

Cash	
  flows	
  from	
  operating	
  activities	
  (including	
  investments	
  in	
  joint	
  ventures)	
  
When	
  the	
  Trust	
  determines	
  its	
  cash	
  available	
  for	
  distribution,	
  it	
  uses	
  adjusted	
  cash	
  flows	
  from	
  operating	
  activities.	
  One	
  of	
  the	
  
components	
  of	
  adjusted	
  cash	
  flows	
  from	
  operating	
  activities	
  is	
  cash	
  flows	
  from	
  operating	
  activities	
  of	
  our	
  investments	
  in	
  joint	
  
ventures	
  that	
  are	
  equity	
  accounted.	
  Management	
  believes	
  it	
  is	
  important	
  to	
  include	
  cash	
  flows	
  from	
  operating	
  activities	
  of	
  our	
  
investments	
   in	
   joint	
   ventures	
   that	
   are	
   equity	
   accounted	
   as	
   it	
   forms	
   part	
   of	
   the	
   Trust’s	
   determination	
   of	
   its	
   cash	
   available	
   for	
  
distribution.	
   This	
   non-‐GAAP	
   measurement	
   does	
   not	
   represent	
   cash	
   generated	
   from	
   (utilized	
   in)	
   operating	
   activities	
   (as	
   per	
  
consolidated	
  financial	
  statements),	
  as	
  defined	
  by	
  GAAP.	
  

Investment	
  in	
  joint	
  ventures	
  
The	
  Trust’s	
  proportionate	
  share	
  of	
  the	
  financial	
  position	
  and	
  results	
  of	
  operations	
  of	
  its	
  investment	
  in	
  joint	
  ventures,	
  which	
  are	
  
accounted	
  for	
  using	
  the	
  equity	
  method	
  in	
  the	
  consolidated	
  financial	
  statements	
  and	
  as	
  presented	
  and	
  discussed	
  throughout	
  the	
  
MD&A	
   using	
   the	
   proportionate	
   consolidation	
   method,	
   are	
   non-‐GAAP	
   measures.	
   A	
   reconciliation	
   of	
   the	
   financial	
   position	
   and	
  
results	
  of	
  operations	
  to	
  the	
  consolidated	
  balance	
  sheets	
  and	
  consolidated	
  statements	
  of	
  comprehensive	
  income	
  is	
  included	
  in	
  
the	
  following	
  tables.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  42	
  

	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
 	
  
Balance	
  sheet	
  reconciliation	
  to	
  consolidated	
  financial	
  statements	
  

December	
  31,	
  2014	
  

December	
  31,	
  2013	
  

Amounts	
  per	
  

consolidated	
  

financial	
  

statements	
  

Share	
  from	
  	
  	
  

investment	
  	
  

in	
  joint	
  	
  

ventures	
  

Amounts	
  per	
  

consolidated	
  

financial	
  

statements	
  

Share	
  from	
  	
  

investment	
  	
  

in	
  joint	
  	
  

ventures	
  

Total	
  

$	
  

	
  6,139,070	
  
	
  191,691	
  
	
  553,141	
  
	
  106,803	
  
	
  6,990,705	
  

	
   $	
  

	
  $	
  

	
  1,062,776	
  
	
  -‐	
  
	
  (553,141)	
  
	
  8,507	
  
	
  518,142	
  

$	
  

$	
  

	
  16,565	
  
	
  8,593	
  
	
  10,920	
  
	
  36,078	
  
	
  2,968	
  
	
  7,029,751	
  

	
  2,731,506	
  
	
  15,151	
  
	
  17,082	
  
	
  6,183	
  
	
  18,935	
  
	
  2,788,857	
  

	
   $	
  

	
   $	
  

	
  682	
  
	
  351	
  
	
  9,969	
  
	
  11,002	
  
	
  -‐	
  
	
  529,144	
  

	
  484,905	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  378	
  
	
  485,283	
  

	
  $	
  

	
  $	
  

	
  7,201,846	
  
	
  191,691	
  
	
  -‐	
  
	
  115,310	
  
	
  7,508,847	
  

	
  17,247	
  
	
  8,944	
  
	
  20,889	
  
	
  47,080	
  
	
  2,968	
  
	
  7,558,895	
  

	
  3,216,411	
  
	
  15,151	
  
	
  17,082	
  
	
  6,183	
  
	
  19,313	
  
	
  3,274,140	
  

	
   $	
  

	
   $	
  

	
   $	
  

	
  6,241,685	
  
	
  166,317	
  
	
  527,255	
  
	
  104,822	
  
	
  7,040,079	
  

	
  28,476	
  
	
  9,450	
  
	
  31,017	
  
	
  68,943	
  
	
  15,921	
  
	
  7,124,943	
  

	
  2,884,481	
  
	
  101,978	
  
	
  18,535	
  
	
  5,167	
  
	
  18,867	
  
	
  3,029,028	
  

	
   $	
  

	
  $	
  

	
  1,061,436	
  
	
  -‐	
  
	
  (527,255)	
  
	
  2,804	
  
	
  536,985	
  

	
   $	
  

	
   $	
  

	
  2,520	
  
	
  432	
  
	
  2,862	
  
	
  5,814	
  
	
  -‐	
  
	
  542,799	
  

	
  496,410	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  235	
  
	
  496,645	
  

	
  $	
  

	
  $	
  

Total	
  

	
  7,303,121	
  
	
  166,317	
  
	
  -‐	
  
	
  107,626	
  
	
  7,577,064	
  

	
  30,996	
  
	
  9,882	
  
	
  33,879	
  
	
  74,757	
  
	
  15,921	
  
	
  7,667,742	
  

	
  3,380,891	
  
	
  101,978	
  
	
  18,535	
  
	
  5,167	
  
	
  19,102	
  
	
  3,525,673	
  

	
  365,855	
  

	
  12,075	
  

	
  377,930	
  

	
  264,535	
  

	
  11,678	
  

	
  276,213	
  

	
  97,522	
  
	
  463,377	
  
	
  3,252,234	
  

$	
  

	
   $	
  

	
  31,786	
  
	
  43,861	
  
	
  529,144	
  

	
  129,308	
  
	
  507,238	
  
	
  3,781,378	
  

	
  $	
  

	
  108,242	
  
	
  372,777	
  
	
  3,401,805	
  

	
   $	
  

	
   $	
  

	
  34,476	
  
	
  46,154	
  
	
  542,799	
  

	
  142,718	
  
	
  418,931	
  
	
  3,944,604	
  

	
  $	
  

Assets	
  
NON-‐CURRENT	
  ASSETS	
  
Investment	
  properties	
  
Investment	
  in	
  Dream	
  Industrial	
  REIT	
  
Investment	
  in	
  joint	
  ventures	
  
Other	
  non-‐current	
  assets	
  

CURRENT	
  ASSETS	
  
Amounts	
  receivable	
  
Prepaid	
  expenses	
  and	
  other	
  assets	
  
Cash	
  and	
  cash	
  equivalents	
  

Assets	
  held	
  for	
  sale	
  
Total	
  assets	
  

Liabilities	
  
NON-‐CURRENT	
  LIABILITIES	
  
Debt	
  
Subsidiary	
  redeemable	
  units	
  
Deferred	
  Unit	
  Incentive	
  Plan	
  
Deferred	
  tax	
  liabilities,	
  net	
  
Other	
  non-‐current	
  liabilities	
  

CURRENT	
  LIABILITIES	
  
Debt	
  
Amounts	
  payable	
  and	
  accrued	
  

liabilities	
  

Total	
  liabilities	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  43	
  

	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
 
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
   
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
Statement	
  of	
  comprehensive	
  income	
  to	
  consolidated	
  financial	
  statements	
  	
  	
  

2014	
  	
  

Three	
  months	
  ended	
  December	
  31,	
  	
  
2013	
  

Amounts	
  included	
  	
   
in	
  consolidated	
  

Share	
  of	
  	
  	
  

income	
  from	
  	
  	
  

	
   Amounts	
  included	
  	
   
in	
  consolidated	
  

Share	
  of	
  	
  	
  

income	
  from	
  	
  	
  

financial	
  

investment	
  in	
  	
  	
  

financial	
  

investment	
  in	
  	
  	
  

Investment	
  properties	
  revenue	
  
Investment	
  properties	
  operating	
  expenses	
  
Net	
  rental	
  income	
  	
  	
  

$	
  

Other	
  income	
  
Share	
  of	
  net	
  income	
  and	
  dilution	
  gain	
  (loss)	
  	
  
from	
  investment	
  in	
  Dream	
  Industrial	
  REIT	
  

Share	
  of	
  net	
  income	
  from	
  investment	
  

in	
  joint	
  ventures	
  
Interest	
  and	
  fee	
  income	
  

Other	
  expenses	
  
General	
  and	
  administrative	
  
Interest:	
  
	
   Debt	
  

Subsidiary	
  redeemable	
  units	
  

Amortization	
  of	
  external	
  management	
  

contracts	
  and	
  depreciation	
  on	
  property	
  
and	
  equipment	
  

Fair	
  value	
  adjustments,	
  net	
  gains	
  (losses)	
  	
  
	
   on	
  transactions	
  and	
  other	
  activities	
  
Fair	
  value	
  adjustments	
  to	
  investment	
  properties	
  
Fair	
  value	
  adjustments	
  to	
  financial	
  instruments	
  
Net	
  gains	
  (losses)	
  on	
  transactions	
  and	
  
	
   other	
  activities	
  

Income	
  before	
  income	
  taxes	
  
Deferred	
  income	
  tax	
  recovery	
  (expense)	
  	
  
Net	
  income	
  for	
  the	
  period	
  
Other	
  comprehensive	
  income	
  (loss)	
  
Unrealized	
  loss	
  on	
  interest	
  rate	
  swaps	
  
Unrealized	
  foreign	
  currency	
  translation	
  gain	
  

Comprehensive	
  income	
  for	
  the	
  period	
  

$	
  

statements	
  
	
  176,460	
   	
   $	
  
	
  (77,702)	
  	
  	
  
	
  98,758	
   	
  	
  

joint	
  ventures	
  	
  	
  

Total	
  	
  

	
  28,726	
   	
   $	
   	
  205,186	
   	
   $	
  
	
  (13,313)	
  	
  	
  
	
  15,413	
   	
  	
  

	
  (91,015)	
  	
  	
  
	
  114,171	
   	
  	
  

statements	
  
	
  179,574	
   	
   $	
  
	
  (78,732)	
  	
  	
  
	
  100,842	
   	
  	
  

joint	
  ventures	
  	
  	
  

Total	
  
	
  28,844	
   	
   $	
   	
  208,418	
  
	
  (92,171)	
  
	
  (13,439)	
  	
  	
  
	
  116,247	
  
	
  15,405	
   	
  	
  

	
  3,699	
   	
  	
  

	
  -‐	
   	
  	
  

	
  3,699	
   	
  	
  

	
  3,027	
   	
  	
  

	
  -‐	
   	
  	
  

	
  3,027	
  

	
  10,343	
   	
  	
  
	
  908	
   	
  	
  
	
  14,950	
   	
  	
  

	
  (10,343)	
  	
  	
  
	
  -‐	
  	
  	
  
	
  (10,343)	
  	
  	
  

	
  -‐	
   	
  	
  
	
  908	
   	
  	
  
	
  4,607	
   	
  	
  

	
  5,415	
   	
  	
  
	
  938	
   	
  	
  
	
  9,380	
   	
  	
  

	
  (5,415)	
  	
  	
  
	
  4	
   	
  	
  
	
  (5,411)	
  	
  	
  

	
  -‐	
  
	
  942	
  

	
  3,969	
  

	
  (5,879)	
  	
  	
  

	
  (3)	
  	
  	
  

	
  (5,882)	
  	
  	
  

	
  (6,155)	
  	
  	
  

	
  -‐	
   	
  	
  

	
  (6,155)	
  

	
  (33,091)	
  	
  	
  
	
  (338)	
    

	
  (4,734)	
  	
  	
  
	
  -‐	
     

	
  (37,825)	
  	
  	
  
	
  (338)	
    

	
  (33,857)	
  	
  	
  
	
  (1,981)	
  	
  

	
  (4,508)	
  	
  	
  
	
  -‐	
     

	
  (38,365)	
  
	
  (1,981)	
  

	
  (800)	
  	
  	
  
	
  (40,108)	
    

	
  -‐	
   	
  	
  
	
  (4,737)	
    

	
  (800)	
  	
  	
  
	
  (44,845)	
    

	
  (691)	
  	
  	
  
	
  (42,684)	
  	
  

	
  (2)	
  	
  	
  
	
  (4,510)	
  	
  

	
  (693)	
  
	
  (47,194)	
  

	
  (67,100)	
  	
  	
  
	
  2,689	
   	
  	
  

	
  (1,583)	
  	
  	
  
	
  (65,994)	
  	
  	
  
	
  7,606	
   	
  	
  
	
  (300)	
  	
  	
  
	
  7,306	
   	
  	
  

	
  (200)	
  	
  	
  
	
  -‐	
   	
  	
  

	
  (67,300)	
  	
  	
  
	
  2,689	
   	
  	
  

	
  (7,143)	
  	
  	
  
	
  251	
   	
  	
  

	
  (5,484)	
  	
  	
  
	
  -‐	
   	
  	
  

	
  (12,627)	
  
	
  251	
  

	
  (133)	
  	
  	
  
	
  (333)	
  	
  	
  
	
  -‐	
   	
  	
  
	
  -‐	
   	
  	
  
	
  -‐	
   	
  	
  

	
  (1,716)	
  	
  	
  
	
  (66,327)	
  	
  	
  
	
  7,606	
   	
  	
  
	
  (300)	
  	
  	
  
	
  7,306	
   	
  	
  

	
  (1,755)	
  	
  	
  
	
  (8,647)	
  	
  	
  
	
  58,891	
   	
  	
  
	
  865	
   	
  	
  
	
  59,756	
   	
  	
  

	
  -‐	
   	
  	
  
	
  (5,484)	
  	
  	
  
	
  -‐	
   	
  	
  
	
  -‐	
   	
  	
  
	
  -‐	
   	
  	
  

	
  (1,755)	
  
	
  (14,131)	
  
	
  58,891	
  
	
  865	
  
	
  59,756	
  

	
  (323)	
  	
  	
  
	
  1,675	
   	
  	
  
	
  1,352	
   	
  	
  
	
  8,658	
   	
   $	
  

	
  -‐	
   	
  	
  
	
  -‐	
   	
  	
  
	
  -‐	
   	
  	
  
	
  -‐	
   	
   $	
  

	
  (323)	
  	
  	
  
	
  1,675	
   	
  	
  
	
  1,352	
   	
  	
  
	
  8,658	
   	
   $	
  

	
  (480)	
  	
  	
  
	
  1,085	
   	
  	
  
	
  605	
   	
  	
  
	
  60,361	
   	
   $	
  

	
  -‐	
   	
  	
  
	
  -‐	
   	
  	
  
	
  -‐	
   	
  	
  
	
  -‐	
   	
   $	
  

	
  (480)	
  
	
  1,085	
  
	
  605	
  
	
  60,361	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  44	
  

	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  
	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  
	
  
	
  
	
  
 
    
  
 
    
    
    
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  
	
  
	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  
	
  
	
  
	
  
	
  
	
    
	
    
	
    
	
  	
  
	
  
	
    
	
  
	
  
	
  
	
    
	
    
	
    
	
  	
  
	
  
	
    
	
  
	
  
	
  
 
 
 
	
  
	
  
 
 
    
  
 
    
    
    
 
 
    
  
 
    
    
    
	
  
	
  
	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
2014	
   	
  

Year	
  ended	
  December	
  31,	
  
2013	
  

Amounts	
  per	
   	
   
consolidated	
  

Share	
  of	
  	
  	
  

income	
  from	
  	
  	
  

financial	
  

investment	
  in	
  	
  	
  

Amounts	
  per	
   	
  

Share	
  of	
  	
  	
  

consolidated	
  

income	
  from	
  	
  	
  

financial	
  

investment	
  in	
  	
  	
  

statements	
  
	
  705,279	
  
	
  (303,771)	
   	
  	
  
	
  401,508	
  

	
  $	
  

joint	
  ventures	
   	
  	
  
	
  112,716	
  
	
  (52,274)	
   	
  	
  
	
  60,442	
  

	
  $	
  

Total	
   	
  

	
  $	
  

	
  817,995	
  
	
  (356,045)	
   	
  	
  
	
  461,950	
  

statements	
  
	
  687,172	
  
	
  (295,672)	
   	
  	
  
	
  391,500	
  

	
  $	
  

joint	
  ventures	
   	
  	
  
	
  113,359	
  
	
  (51,971)	
   	
  	
  
	
  61,388	
  

	
  $	
  

Total	
  
	
  800,531	
  
	
  (347,643)	
  
	
  452,888	
  

	
  15,965	
  

	
  37,611	
  
	
  3,199	
  

	
  56,775	
  

	
  -‐	
  

	
  15,965	
  

	
  15,697	
  

	
  -‐	
  

	
  15,697	
  

	
  (37,611)	
   	
  	
  

	
  35	
  

	
  (37,576)	
   	
  	
  

	
  -‐	
  
	
  3,234	
  

	
  84,382	
  
	
  4,635	
  

	
  19,199	
  

	
  104,714	
  

	
  (84,382)	
   	
  	
  

	
  55	
  
	
  (84,327)	
   	
  	
  

	
  -‐	
  
	
  4,690	
  

	
  20,387	
  

	
  (24,393)	
   	
  	
  

	
  (3)	
   	
  	
  

	
  (24,396)	
   	
  	
  

	
  (23,859)	
   	
  	
  

	
  (202)	
   	
  	
  

	
  (24,061)	
  

	
  (134,952)	
   	
  	
  
	
  (4,638)	
    

	
  (17,725)	
   	
  	
  
	
  -‐	
     

	
  (152,677)	
   	
  	
  
	
  (4,638)	
    

	
  (130,169)	
   	
  	
  
	
  (7,897)	
   	
  

	
  (18,200)	
   	
  	
  
	
  -‐	
     

	
  (148,369)	
  
	
  (7,897)	
  

	
  (2,970)	
   	
  	
  
	
  (166,953)	
    

	
  -‐	
  

	
  (17,728)	
    

	
  (2,970)	
   	
  	
  
	
  (184,681)	
    

	
  (2,527)	
   	
  	
  
	
  (164,452)	
   	
  

	
  (4)	
   	
  	
  
	
  (18,406)	
   	
  

	
  (2,531)	
  
	
  (182,858)	
  

	
  (124,303)	
   	
  	
  
	
  2,749	
  

	
  (4,153)	
   	
  	
  

	
  -‐	
  

	
  (128,456)	
   	
  	
  
	
  2,749	
  

	
  85,745	
  
	
  34,840	
  

	
  41,708	
  
	
  -‐	
  

	
  127,453	
  
	
  34,840	
  

	
  (9,848)	
   	
  	
  
	
  (131,402)	
   	
  	
  
	
  159,928	
  

	
  (638)	
   	
  	
  

	
  159,290	
  

	
  (666)	
   	
  	
  
	
  3,210	
  
	
  2,544	
  
	
  161,834	
  

	
  $	
  

	
  -‐	
  
	
  -‐	
  
	
  -‐	
  

	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  

	
  (985)	
   	
  	
  
	
  (5,138)	
   	
  	
  

	
  (10,833)	
   	
  	
  
	
  (136,540)	
   	
  	
  
	
  159,928	
  

	
  113,593	
  
	
  445,355	
  

	
  (6,992)	
   	
  	
  

	
  (363)	
   	
  	
  

	
  41,345	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  

	
  (7,355)	
  
	
  154,938	
  
	
  445,355	
  
	
  (344)	
  
	
  445,011	
  

	
  (638)	
   	
  	
  

	
  (344)	
   	
  	
  

	
  159,290	
  

	
  445,011	
  

	
  (666)	
   	
  	
  
	
  3,210	
  
	
  2,544	
  
	
  161,834	
  

	
  $	
  

	
  39	
  
	
  1,942	
  
	
  1,981	
  
	
  446,992	
  

	
  $	
  

	
  $	
  

	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  

	
  $	
  

	
  39	
  
	
  1,942	
  
	
  1,981	
  
	
  446,992	
  

Investment	
  properties	
  revenue	
  
Investment	
  properties	
  operating	
  expenses	
  
Net	
  rental	
  income	
  	
  	
  

$	
  

Other	
  income	
  
Share	
  of	
  net	
  income	
  and	
  dilution	
  gain	
  (loss)	
  	
  
from	
  investment	
  in	
  Dream	
  Industrial	
  REIT	
  

Share	
  of	
  net	
  income	
  from	
  investment	
  

in	
  joint	
  ventures	
  
Interest	
  and	
  fee	
  income	
  

Other	
  expenses	
  
General	
  and	
  administrative	
  
Interest:	
  
Debt	
  
Subsidiary	
  redeemable	
  units	
  

Amortization	
  of	
  external	
  management	
  

contracts	
  and	
  depreciation	
  on	
  property	
  
and	
  equipment	
  

Fair	
  value	
  adjustments,	
  net	
  gains	
  (losses)	
  	
  
on	
  transactions	
  and	
  other	
  activities	
  

Fair	
  value	
  adjustments	
  to	
  investment	
  properties	
  
Fair	
  value	
  adjustments	
  to	
  financial	
  instruments	
  
Net	
  gains	
  (losses)	
  on	
  transactions	
  and	
  

other	
  activities	
  

Income	
  before	
  income	
  taxes	
  
Deferred	
  income	
  taxes	
  	
  
Net	
  income	
  for	
  the	
  year	
  
Other	
  comprehensive	
  income	
  (loss)	
  
Unrealized	
  gain	
  (loss)	
  on	
  interest	
  rate	
  swap	
  	
  
Unrealized	
  foreign	
  currency	
  translation	
  gain	
  

Comprehensive	
  income	
  for	
  the	
  year	
  

$	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  45	
  

	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  
	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
 
    
    
  
 
  
 
    
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  
	
  
	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
    
	
    
	
    
	
  	
  
	
  
	
    
	
  
	
  
	
  
	
    
	
    
	
    
	
  	
  
	
  
	
    
	
  
	
  
	
  
	
  	
  
 
 
 
	
  
	
  
 
 
    
    
  
 
  
 
    
	
  
 
 
    
    
  
 
  
 
    
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
Cash	
  generated	
  from	
  operating	
  activities	
  to	
  AFFO	
  reconciliation	
  
In	
  compliance	
  with	
  Canadian	
  Securities	
  Administrators	
  Staff	
  Notice	
  52-‐306	
  (Revised),	
  “Non-‐GAAP	
  Financial	
  Measures”,	
  the	
  table	
  
below	
  reconciles	
  AFFO	
  to	
  cash	
  generated	
  from	
  (utilized	
  in)	
  operating	
  activities.	
  

Cash	
  generated	
  from	
  (utilized	
  in)	
  operating	
  activities	
  
Add	
  (deduct):	
  

Share	
  of	
  AFFO	
  from	
  investment	
  in	
  Dream	
  Industrial	
  REIT	
  
Share	
  of	
  net	
  income	
  from	
  investment	
  in	
  joint	
  ventures	
  
Initial	
  direct	
  leasing	
  costs	
  and	
  lease	
  incentives	
  

	
   Amortization	
  of	
  deferred	
  financing	
  costs	
  

Internal	
  leasing	
  costs	
  

	
   Business	
  transformation	
  costs	
  
	
   Change	
  in	
  non-‐cash	
  working	
  capital	
  
	
   Adjustments	
  for	
  investment	
  in	
  joint	
  ventures:	
  

Fair	
  value	
  adjustments	
  to	
  investment	
  properties	
  
Straight-‐line	
  rent	
  

	
   Amortization	
  of	
  lease	
  incentives	
  

Internal	
  leasing	
  costs	
  
Loss	
  on	
  sale	
  of	
  investment	
  properties	
  

  Normalized	
  initial	
  direct	
  leasing	
  costs	
  and	
  lease	
  incentives	
  
	
   Other	
  
AFFO	
  

Three	
  months	
  ended	
  December	
  31,	
  	
   	
  

Year	
  ended	
  December	
  31,	
  

2014	
   	
  	
  

$	
  

	
  55,103	
  

	
  $	
  

2013	
  
	
  64,081	
  

	
  $	
  

2014	
   	
  	
  

	
  203,354	
  

	
  $	
  

2013	
  
	
  195,237	
  

	
  3,767	
  
	
  10,343	
  
	
  18,295	
  

	
  (786)	
   	
  	
  
	
  625	
  
	
  275	
  
	
  (11,039)	
   	
  	
  

	
  200	
  
	
  (174)	
   	
  	
  
	
  57	
     
	
  133	
     
	
  -‐	
     
	
  (8,130)	
   	
  	
  
	
  (99)	
   	
  	
  

$	
  

	
  68,570	
  

	
  $	
  

	
  3,116	
  
	
  5,415	
  
	
  5,489	
  
	
  (820)	
   	
  	
  
	
  1,755	
  
	
  -‐	
  

	
  (6,815)	
   	
  	
  

	
  5,484	
  
	
  170	
  
	
  30	
     
	
  -‐	
     
	
  -‐	
     
	
  (8,005)	
   	
  	
  
	
  (2,916)	
   	
  	
  
	
  66,984	
  

	
  $	
  

	
  13,511	
  
	
  37,611	
  
	
  49,116	
  
	
  (3,178)	
   	
  	
  
	
  6,118	
  
	
  1,100	
  
	
  (5,648)	
   	
  	
  

	
  4,153	
  
	
  (683)	
   	
  	
  
	
  59	
     
	
  227	
  
	
  758	
  
	
  (32,568)	
   	
  	
  
	
  (870)	
   	
  	
  

	
  273,060	
  

	
  $	
  

	
  12,052	
  
	
  84,382	
  
	
  31,034	
  
	
  (3,034)	
  
	
  6,468	
  
	
  -‐	
  
	
  9,066	
  

	
  (41,708)	
  
	
  648	
  
	
  328	
  
	
  363	
  
	
  -‐	
  
	
  (31,428)	
  
	
  (1,632)	
  
	
  261,776	
  

Cash	
  flows	
  from	
  operating	
  activities	
  and	
  distributions	
  declared	
  
In	
  any	
  given	
  period,	
  actual	
  distributions	
  declared	
  may	
  differ	
  from	
  cash	
  generated	
  from	
  (utilized	
  in)	
  operating	
  activities,	
  primarily	
  
due	
  to	
  seasonal	
  fluctuations	
  in	
  non-‐cash	
  working	
  capital	
  and	
  the	
  impact	
  of	
  leasing	
  costs,	
  which	
  fluctuate	
  with	
  lease	
  maturities,	
  
renewal	
  terms	
  and	
  the	
  type	
  of	
  asset	
  being	
  leased.	
  These	
  seasonal	
  or	
  short-‐term	
  fluctuations	
  are	
  funded	
  with	
  our	
  cash	
  and	
  cash	
  
equivalents	
  on	
  hand	
  and,	
  if	
  necessary,	
  with	
  our	
  existing	
  credit	
  facilities.	
  The	
  Trust	
  determines	
  the	
  distribution	
  rate	
  by,	
  among	
  
other	
   considerations,	
   its	
   assessment	
   of	
   cash	
   flow	
   as	
   determined	
   using	
   adjusted	
   cash	
   flows	
   from	
   operating	
   activities	
   (a	
   non-‐
GAAP	
   measure),	
   which	
   includes	
   cash	
   flows	
   from	
   operating	
   activities	
   of	
   our	
   investments	
   in	
   joint	
   ventures	
   that	
   are	
   equity	
  
accounted	
   and	
   excludes	
   the	
   fluctuations	
   in	
   non-‐cash	
   working	
   capital,	
   transaction	
   costs	
   on	
   business	
   combinations,	
   and	
  
investment	
   in	
   lease	
   incentives	
   and	
   initial	
   direct	
   leasing	
   costs.	
   As	
   such,	
   the	
   Trust	
   believes	
   the	
   cash	
   distributions	
   are	
   not	
   an	
  
economic	
  return	
  of	
  capital,	
  but	
  a	
  distribution	
  of	
  sustainable	
  adjusted	
  cash	
  flow	
  from	
  operating	
  activities.	
  Based	
  on	
  current	
  facts	
  
and	
  assumptions,	
  the	
  Trust	
  does	
  not	
  anticipate	
  cash	
  distributions	
  will	
  be	
  reduced	
  or	
  suspended	
  in	
  the	
  foreseeable	
  future.	
  

In	
  any	
  given	
  period,	
  the	
  Trust	
  anticipates	
  that	
  actual	
  distributions	
  declared	
  will,	
  in	
  the	
  foreseeable	
  future,	
  continue	
  to	
  vary	
  from	
  
net	
   income	
   as	
   net	
   income	
   includes	
   non-‐cash	
   items	
   such	
   as	
   fair	
   value	
   adjustments	
   to	
   investment	
   properties	
   and	
   fair	
   value	
  
adjustments	
  to	
  financial	
  instruments.	
  Accordingly,	
  the	
  Trust	
  does	
  not	
  use	
  net	
  income	
  as	
  a	
  proxy	
  for	
  distributions.	
  

As	
  required	
  by	
  National	
  Policy	
  41-‐201,	
  “Income	
  Trusts	
  and	
  Other	
  Indirect	
  Offerings”,	
  the	
  following	
  table	
  outlines	
  the	
  differences	
  
between	
   cash	
   generated	
   from	
   (utilized	
   in)	
   operating	
   activities	
   (per	
   consolidated	
   financial	
   statements)	
   and	
   distributions	
  
declared,	
  as	
  well	
  as	
  the	
  differences	
  between	
  net	
  income	
  and	
  distributions	
  declared,	
  in	
  accordance	
  with	
  the	
  guidelines.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  46	
  

	
  
 
 
   
 
   
 
   
 
 
 
 
 
	
  
	
  
	
  
	
  	
  
	
  
	
   	
  	
  
	
   	
  	
  
	
   	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
   	
  	
  
	
   	
  	
  
	
   	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
When	
  the	
  Trust	
  determines	
  its	
  cash	
  available	
  for	
  distribution,	
  it	
  uses	
  adjusted	
  cash	
  flows	
  from	
  operating	
  activities	
  (a	
  non-‐GAAP	
  
measure)	
  which	
  includes	
  cash	
  flows	
  from	
  operating	
  activities	
  of	
  our	
  investments	
  in	
  joint	
  ventures	
  that	
  are	
  equity	
  accounted	
  and	
  
excludes	
   fluctuations	
   in	
   working	
   capital,	
   transaction	
   costs	
   on	
   business	
   combinations	
   and	
   investment	
   in	
   lease	
   incentives	
   and	
  
initial	
   direct	
   leasing	
   costs.	
   Accordingly,	
   the	
   following	
   table	
   also	
   outlines	
   the	
   differences	
   between	
   adjusted	
   cash	
   flow	
   from	
  
operating	
  activities	
  and	
  distributions	
  declared.	
  

Net	
  income	
  	
  

$	
  

Cash	
  generated	
  from	
  (utilized	
  in)	
  operating	
  activities	
  (per	
  

Three	
  months	
  ended	
  December	
  31,	
  	
   
2013(1)	
  	
  
	
  59,756	
   $	
  

2014	
  
	
  7,306	
  

	
   $	
  

Year	
  ended	
  December	
  31,	
  
2013(1)	
  
2014	
  
	
  445,011	
  
	
  159,290	
  

	
   $	
  

	
  consolidated	
  financial	
  statements)	
  

	
  55,103	
  

	
  64,081	
  

	
  203,354	
  

	
  195,237	
  

Add:	
  

Investment	
  in	
  joint	
  venturesʼ	
  cash	
  flows	
  from	
  operating	
  

activities	
  

	
  3,091	
  

	
  2,392	
  

	
  37,596	
  

	
  38,861	
  

Cash	
  flows	
  from	
  operating	
  activities	
  (including	
  investment	
  

in	
  joint	
  ventures)	
  

Add	
  (deduct):	
  

Investment	
  in	
  lease	
  incentives	
  and	
  initial	
  direct	
  leasing	
  
	
  	
  	
  	
  costs	
  

	
   Change	
  in	
  non-‐cash	
  working	
  capital	
  
Adjusted	
  cash	
  flows	
  from	
  operating	
  activities	
  
Distributions	
  declared	
  
Adjusted	
  cash	
  flows	
  from	
  operating	
  activities	
  over	
  
	
   distributions	
  declared	
  

	
  58,194	
  

	
  66,473	
  

	
  240,950	
  

	
  234,098	
  

	
  18,645	
  
	
  (4,019)	
  
	
  72,820	
  
	
  62,622	
  

	
  5,027	
  
	
  1,157	
  
	
  72,657	
  
	
  59,989	
  

	
  51,001	
  
	
  (3,147)	
  
	
  288,804	
  
	
  242,220	
  

	
  29,180	
  
	
  12,204	
  
	
  275,482	
  
	
  235,751	
  

	
  10,198	
  

	
  12,668	
  

	
  46,584	
  

	
  39,731	
  

Excess	
  (shortfall)	
  of	
  net	
  income	
  over	
  distributions	
  declared	
  
Excess	
  (shortfall)	
  of	
  cash	
  generated	
  from	
  (utilized	
  in)	
  	
  
	
   operating	
  activities	
  (per	
  consolidated	
  financial	
  statements)	
  	
  
	
  (7,519)	
  
	
   over	
  distributions	
  declared	
  
(1)	
  Comparative	
  figures	
  have	
  been	
  reclassified	
  to	
  conform	
  to	
  the	
  current	
  period	
  presentation.	
  

	
  (55,316)	
  

$	
  

	
  (233)	
  

	
  (82,930)	
  

	
  209,260	
  

	
   $	
  

	
  4,092	
   $	
  

	
  (38,866)	
  

	
   $	
  

	
  (40,514)	
  

For	
   the	
   three	
   and	
   twelve	
   months	
   ended	
   December	
   31,	
   2014,	
   adjusted	
   cash	
   flows	
   from	
   operating	
   activities	
   exceeded	
  
distributions	
  declared	
   by	
  $10.2	
  million	
  and	
  $46.6	
  million,	
  respectively	
  (for	
  the	
  three	
  and	
  twelve	
  months	
  ended	
  December	
  31,	
  
2013	
  –	
  $12.7	
  million	
  and	
  $39.7	
  million,	
  respectively).	
  

For	
   the	
   three	
   and	
   twelve	
   months	
   ended	
   December	
   31,	
   2014,	
   actual	
   distributions	
   declared	
   exceeded	
   cash	
   generated	
   from	
  
(utilized	
   in)	
   operating	
   activities	
   (per	
   consolidated	
   financial	
   statements)	
   by	
   $7.5	
   million	
   and	
   $38.9	
   million,	
   respectively.	
   The	
  
shortfall	
  of	
  cash	
  generated	
  from	
  (utilized	
  in)	
  operating	
  activities	
  over	
  distributions	
  declared	
  is	
  mainly	
  due	
  to	
  the	
  fact	
  that	
  cash	
  
flows	
  from	
  operating	
  activities	
  of	
  our	
  investments	
  in	
  joint	
  ventures	
  that	
  are	
  equity	
  accounted	
  are	
  excluded	
  from	
  this	
  calculation	
  
despite	
  the	
  fact	
  that	
  it	
  forms	
  part	
  of	
  the	
  Trust’s	
  determination	
  of	
  its	
  cash	
  available	
  for	
   distribution.	
  For	
  the	
  three	
  and	
  twelve	
  
months	
   ended	
   December	
   31,	
   2014,	
   actual	
   distributions	
   declared	
   exceeded	
   cash	
   flows	
   from	
   operating	
   activities	
   (including	
  
investment	
  in	
  joint	
  ventures)	
  by	
  $4.4	
  million	
  and	
  $1.3	
  million,	
  respectively.	
  This	
  shortfall	
  was	
  mainly	
  driven	
  by	
  the	
  short-‐term	
  
fluctuations	
   in	
   our	
   investment	
   in	
   lease	
   incentives	
   and	
   initial	
   direct	
   leasing	
   costs	
   incurred	
   for	
   the	
   three	
   months	
   ended	
  	
  
December	
  31,	
  2014,	
  from	
  $11.9	
  million	
  at	
  September	
  30,	
  2014	
  to	
  $18.6	
  million	
  at	
  December	
  31,	
  2014.	
  These	
  investments	
  were	
  
funded	
   by	
   cash	
   and	
   cash	
   equivalents	
   and	
   our	
   existing	
   credit	
   facilities.	
   For	
   the	
   year	
   ended	
   December	
   31,	
   2013,	
   actual	
  
distributions	
   declared	
   exceeded	
   cash	
   flows	
   from	
   operating	
   activities	
   (including	
   investment	
   in	
   joint	
   ventures)	
   by	
   $1.7	
   million.	
  
This	
   shortfall	
   was	
   mainly	
   driven	
   by	
   the	
   short-‐term	
   fluctuations	
   in	
   our	
   investment	
   in	
   lease	
   incentives	
   and	
   initial	
   direct	
   leasing	
  
costs	
  incurred	
  for	
  the	
  year	
  ended	
  December	
  31,	
  2013.	
  These	
  investments	
  were	
  funded	
  by	
  cash	
  and	
  cash	
  equivalents	
  and	
  our	
  
existing	
  credit	
  facilities.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  47	
  

 
 
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
 
 
 
 
 
 
 
 
 
 
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
 
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
Of	
   the	
   distributions	
   declared	
   for	
   the	
   three	
   and	
   twelve	
   months	
   ended	
   December	
   31,	
   2014,	
   $17.9	
   million	
   and	
   $61.7	
   million,	
  
respectively,	
   were	
   reinvested	
   in	
   units	
   pursuant	
   to	
   the	
   DRIP.	
   Cash	
   generated	
   from	
   (utilized	
   in)	
   operating	
   activities	
   exceeded	
  
actual	
  distributions	
  declared	
  (excluding	
  the	
  amount	
  reinvested	
  in	
  units	
  pursuant	
  to	
  the	
  DRIP)	
  by	
  $10.4	
  million	
  and	
  $22.8	
  million,	
  
respectively.	
  Over	
  time,	
  reinvestments	
  pursuant	
  to	
  the	
  DRIP	
  will	
  increase	
  the	
  number	
  of	
  units	
  outstanding	
  which	
  may	
  result	
  in	
  
upward	
  pressure	
  on	
  the	
  total	
  amount	
  of	
  cash	
  distributions.	
  Our	
  Declaration	
  of	
  Trust	
  provides	
  our	
  trustees	
  with	
  the	
  discretion	
  to	
  
determine	
  the	
  percentage	
  payout	
  of	
  income	
  that	
  would	
  be	
  in	
  the	
  best	
  interest	
  of	
  the	
  Trust,	
  which	
  allows	
  for	
  any	
  unforeseen	
  
expenditures	
   and	
   the	
   variability	
   in	
   cash	
   distributions	
   as	
   a	
   result	
   of	
   additional	
   units	
   issued	
   pursuant	
   to	
   the	
   Trust’s	
   DRIP.	
  
Accordingly,	
  the	
  Trust	
  believes	
  this	
  does	
  not	
  constitute	
  an	
  economic	
  return	
  of	
  capital.	
  

For	
  the	
  three	
  and	
  twelve	
  months	
  ended	
  December	
  31,	
  2014,	
  distributions	
  declared	
  exceeded	
  net	
  income	
  by	
  $55.3	
  million	
  and	
  
$82.9	
  million,	
  respectively,	
  primarily	
  due	
  to	
  non-‐cash	
  components	
  of	
  net	
  income,	
  which	
  include	
  the	
  fair	
  value	
  adjustments	
  to	
  
investment	
  properties	
  of	
  $67.1	
  million	
  and	
  $124.3	
  million,	
  respectively,	
  and	
  fair	
  value	
  adjustments	
  to	
  financial	
  instruments	
  of	
  
$2.7	
   million	
   for	
   the	
   three	
   and	
   twelve	
   months	
   ended	
   December	
   31,	
   2014.	
   For	
   the	
   three	
   months	
   ended	
   December	
   31,	
   2013,	
  
distributions	
   declared	
   exceeded	
   net	
   income	
   by	
   $0.2	
   million,	
   primarily	
   due	
   to	
   non-‐cash	
   components	
   of	
   net	
   income,	
   which	
  
include	
  the	
  fair	
  value	
  loss	
  to	
  investment	
  properties	
  of	
  $12.6	
  million,	
  and	
  fair	
  value	
  gain	
  to	
  financial	
  instruments	
  of	
  $0.3	
  million	
  
for	
   the	
   three	
   months	
   ended	
   December	
   31,	
   2013.	
   For	
   the	
   year	
   ended	
   December	
   31,	
   2013,	
   net	
   income	
   exceeded	
   distributions	
  
declared	
   by	
   $209.3	
   million,	
   primarily	
   due	
   to	
   non-‐cash	
   components	
   of	
   net	
   income,	
   which	
   include	
   the	
   fair	
   value	
   gain	
   to	
  
investment	
   properties	
   of	
   $127.5	
   million,	
   and	
   fair	
   value	
   gain	
   to	
   financial	
   instruments	
   of	
   $34.8	
   million	
   for	
   the	
   year	
   ended	
  
December	
  31,	
  2013.	
  

Level	
  of	
  debt	
  (net	
  total	
  debt-‐to-‐gross	
  book	
  value	
  and	
  net	
  secured	
  debt-‐to-‐gross	
  book	
  value)	
  
Management	
  believes	
  these	
  non-‐GAAP	
  measurements	
  are	
  important	
  measures	
  in	
  the	
  management	
  of	
  our	
  debt	
  levels.	
  Net	
  total	
  
debt-‐to-‐gross	
   book	
   value	
   as	
   shown	
   below	
   is	
   determined	
   as	
   total	
   debt	
   (net	
   of	
   cash	
   on	
   hand),	
   which	
   includes	
   debt	
   related	
   to	
  
investment	
   in	
   joint	
   ventures	
   that	
   are	
   equity	
   accounted	
   and	
   debt	
   related	
   to	
   assets	
   held	
   for	
   sale,	
   divided	
   by	
   total	
   assets.	
   Net	
  
secured	
   debt-‐to-‐gross	
   book	
   value	
   as	
   shown	
   below	
   is	
   determined	
   as	
   secured	
   debt	
   (net	
   of	
   unsecured	
   debt	
   and	
   cash	
   on	
   hand),	
  
which	
  includes	
  debt	
  related	
  to	
  investment	
  in	
  joint	
  ventures	
  that	
  are	
  equity	
  accounted	
  and	
  debt	
  related	
  to	
  assets	
  held	
  for	
  sale,	
  
divided	
  by	
  total	
  assets.	
  Total	
  assets	
  include	
  assets	
  of	
  investment	
  in	
  joint	
  ventures	
  that	
  are	
  equity	
  accounted	
  and	
  the	
  reversal	
  of	
  
accumulated	
  depreciation	
  of	
  property	
  and	
  equipment	
  and	
  cash	
  on	
  hand.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  48	
  

	
  
	
  
In	
   compliance	
   with	
   Canadian	
   Securities	
   Administrators	
   Staff	
   Notice	
   52-‐306	
   (Revised),	
   “Non-‐GAAP	
   Financial	
   Measures”,	
   the	
  
following	
  tables	
  calculate	
  the	
  level	
  of	
  debt	
  (net	
  total	
  debt-‐to-‐gross	
  book	
  value	
  and	
  net	
  secured	
  debt-‐to-‐gross	
  book	
  value)	
  as	
  at	
  
December	
  31,	
  2014	
  and	
  December	
  31,	
  2013.	
  

As	
  at	
  December	
  31,	
  2014	
  

$	
  

Non-‐current	
  debt	
  
Current	
  debt	
  
Debt	
  before	
  undernoted	
  items	
  
Less:	
  Cash	
  on	
  hand(1)	
  
Total	
  debt	
  (net	
  of	
  cash	
  on	
  hand)	
  
Less:	
  Unsecured	
  debt	
  
Total	
  secured	
  debt	
  (net	
  of	
  cash	
  on	
  hand)	
  
Total	
  assets	
  
Add:	
  Accumulated	
  depreciation	
  of	
  property	
  and	
  equipment	
  
Less:	
  Cash	
  on	
  hand(1)	
  
Total	
  assets	
  (excluding	
  accumulated	
  depreciation	
  of	
  property	
  	
  

Amounts	
  per	
  
	
  consolidated	
  
financial	
  statements	
  

Share	
  of	
  amounts	
   	
  
from	
  investment	
   	
   	
  
in	
  joint	
  ventures	
  

	
  2,731,506	
   $	
  
	
  365,855	
  
	
  3,097,361	
  
	
  (5,466)	
  
	
  3,091,895	
  
	
  (533,860)	
  
	
  2,558,035	
  
	
  7,029,751(2)	
  	
  
	
  4,813	
  
	
  (5,466)	
  

	
  484,905	
   	
   $	
  
	
  12,075	
   	
   	
  

	
  496,980	
   	
  
	
  -‐	
   	
  
	
  496,980	
   	
  
	
  -‐	
   	
  
	
  496,980	
   	
  
	
  529,144	
   	
  
	
  -‐	
   	
  
	
  -‐	
   	
  

and	
  equipment	
  and	
  cash	
  on	
  hand)	
  

$	
  

	
  7,029,098	
   $	
  

	
  529,144	
   	
   $	
  

Net	
  total	
  debt-‐to-‐gross	
  book	
  value	
  
Net	
  secured	
  debt-‐to-‐gross	
  book	
  value	
  
(1)	
  Cash	
  on	
  hand	
  represents	
  cash	
  at	
  period-‐end,	
  excluding	
  cash	
  held	
  in	
  joint	
  ventures	
  and	
  co-‐owned	
  properties.	
  

(2)	
  Includes	
  net	
  assets	
  of	
  investment	
  in	
  joint	
  ventures	
  that	
  are	
  equity	
  accounted.	
  

Total	
  

	
  3,216,411	
  
	
  377,930	
  
	
  3,594,341	
  
	
  (5,466)	
  
	
  3,588,875	
  
	
  (533,860)	
  
	
  3,055,015	
  
	
  7,558,895(3)	
  
	
  4,813	
  
	
  (5,466)	
  

	
  7,558,242	
  
47.5%	
  
40.4%	
  

(3)	
  Total	
  assets	
  are	
  determined	
  as	
  total	
  assets,	
  including	
  assets	
  related	
  to	
  investment	
  in	
  joint	
  ventures	
  that	
  are	
  equity	
  accounted	
  and	
  assets	
  held	
  for	
  sale.	
  

As	
  at	
  December	
  31,	
  2013	
  

Amounts	
  per	
  
consolidated	
  
financial	
  statements	
  

Share	
  of	
  amounts	
  	
  
from	
  investment	
  	
  
in	
  joint	
  ventures	
  	
  

$	
  

Non-‐current	
  debt	
  
Current	
  debt	
  
Debt	
  before	
  undernoted	
  items	
  
Add:	
  Debt	
  related	
  to	
  assets	
  held	
  for	
  sale	
  
Less:	
  Cash	
  on	
  hand(1)	
  
Total	
  debt	
  (net	
  of	
  cash	
  on	
  hand)	
  
Less:	
  Unsecured	
  debt	
  
Total	
  secured	
  debt	
  (net	
  of	
  cash	
  on	
  hand)	
  
Total	
  assets	
  
Add:	
  Accumulated	
  depreciation	
  of	
  property	
  and	
  equipment	
  
Less:	
  Cash	
  on	
  hand(1)	
  
Total	
  assets	
  (excluding	
  accumulated	
  depreciation	
  of	
  property	
  	
  
	
   and	
  equipment	
  and	
  cash	
  on	
  hand)	
  
Net	
  total	
  debt-‐to-‐gross	
  book	
  value	
  
Net	
  secured	
  debt-‐to-‐gross	
  book	
  value	
  
(1)	
  Cash	
  on	
  hand	
  represents	
  cash	
  at	
  year-‐end,	
  excluding	
  cash	
  held	
  in	
  joint	
  ventures	
  and	
  co-‐owned	
  properties.	
  

	
  2,884,481	
  
	
  264,535	
  
	
  3,149,016	
  
	
  -‐	
  
	
  (23,436)	
  
	
  3,125,580	
  
	
  (385,532)	
  
	
  2,740,048	
  
	
  7,124,943(2)	
  	
  
	
  3,135	
  
	
  (23,436)	
  

	
  7,104,642	
  

$	
  

$	
  

	
  496,410	
   $	
  
	
  11,678	
   	
  
	
  508,088	
   	
  
	
  5,439	
   	
  
	
  -‐	
   	
  
	
  513,527	
   	
  
	
  -‐	
   	
  
	
  513,527	
   	
  
	
  542,799	
   	
  
	
  -‐	
   	
  
	
  -‐	
   	
  

$	
  

	
  542,799	
   $	
  

Total	
  

	
  3,380,891	
  
	
  276,213	
  
	
  3,657,104	
  
	
  5,439	
  
	
  (23,436)	
  
	
  3,639,107	
  
	
  (385,532)	
  
	
  3,253,575	
  
	
  7,667,742(3)	
  
	
  3,135	
  
	
  (23,436)	
  

	
  7,647,441	
  
47.6%	
  
42.5%	
  

(2)	
  Includes	
  net	
  assets	
  of	
  investment	
  in	
  joint	
  ventures	
  that	
  are	
  equity	
  accounted.	
  

(3)	
  Total	
  assets	
  are	
  determined	
  as	
  total	
  assets,	
  including	
  assets	
  related	
  to	
  investment	
  in	
  joint	
  ventures	
  that	
  are	
  equity	
  accounted	
  and	
  assets	
  held	
  for	
  sale.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  49	
  

	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
   	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
   	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
   	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
Interest	
  coverage	
  ratio	
  
Management	
   believes	
   this	
   non-‐GAAP	
   measurement	
   is	
   an	
   important	
   measure	
   in	
   determining	
   our	
   ability	
   to	
   cover	
   interest	
  
expense	
   based	
   on	
   our	
   operating	
   performance.	
   Interest	
   coverage	
   ratio	
   for	
   the	
   years	
   ended	
   December	
   31,	
   2014	
   and	
  	
  
December	
  31,	
  2013	
  includes	
  the	
  results	
  from	
  investment	
  in	
  joint	
  ventures	
  that	
  are	
  equity	
  accounted.	
  Interest	
  coverage	
  ratio	
  as	
  
shown	
   below	
   is	
   calculated	
   as	
   net	
   rental	
   income	
   plus	
   interest	
   and	
   fee	
   income,	
   less	
   general	
   and	
   administrative	
   expenses,	
   all	
  
divided	
  by	
  interest	
  expense	
  on	
  total	
  debt.	
  

In	
   compliance	
   with	
   Canadian	
   Securities	
   Administrators	
   Staff	
   Notice	
   52-‐306	
   (Revised),	
   “Non-‐GAAP	
   Financial	
   Measures”,	
   the	
  
following	
  tables	
  calculate	
  the	
  interest	
  coverage	
  ratio	
  for	
  the	
  years	
  ended	
  December	
  31,	
  2014	
  and	
  December	
  31,	
  2013.	
  

Net	
  rental	
  income	
  
Add:	
  Interest	
  and	
  fee	
  income	
  
Less:	
  General	
  and	
  administrative	
  expenses	
  
Total	
  
Interest	
  expense	
  –	
  debt	
  
Interest	
  coverage	
  ratio	
  (times)	
  

Net	
  rental	
  income	
  
Add:	
  Interest	
  and	
  fee	
  income	
  
Less:	
  General	
  and	
  administrative	
  expenses	
  
Total	
  
Interest	
  expense	
  –	
  debt	
  
Interest	
  coverage	
  ratio	
  (times)	
  

For	
  the	
  year	
  ended	
  December	
  31,	
  2014	
  

Amounts	
  per	
  	
  

consolidated	
  	
  

financial	
  statements	
   	
  

Share	
  of	
  amounts	
  	
   	
  

from	
  investment	
  	
   	
  

in	
  joint	
  ventures	
   	
  	
  

	
  401,508	
   	
   $	
  
	
  3,199	
   	
   	
  
	
  (24,393)	
  	
   	
  
	
  380,314	
   	
   	
  
	
  134,952	
   	
   $	
  

	
  60,442	
   	
   $	
  

	
  35	
   	
   	
  
	
  (3)	
  	
   	
  
	
  60,474	
   	
   	
  
	
  17,725	
   	
   $	
  

Total	
  
	
  461,950	
  
	
  3,234	
  
	
  (24,396)	
  
	
  440,788	
  
	
  152,677	
  
2.9	
  

For	
  the	
  year	
  ended	
  December	
  31,	
  2013	
  

Amounts	
  per	
  

consolidated	
  

financial	
  statements	
  

Share	
  of	
  amounts	
  	
   	
  

from	
  investment	
  	
   	
  

in	
  joint	
  ventures	
   	
  	
  

	
  391,500	
   	
   $	
  
	
  4,635	
   	
   	
  
	
  (23,859)	
  	
   	
  
	
  372,276	
   	
   	
  
	
  130,169	
   	
   $	
  

	
  61,388	
   	
   $	
  

	
  55	
   	
   	
  
	
  (202)	
  	
   	
  
	
  61,241	
   	
   	
  
	
  18,200	
   	
   $	
  

Total	
  
	
  452,888	
  
	
  4,690	
  
	
  (24,061)	
  
	
  433,517	
  
	
  148,369	
  
	
  2.9	
  

$	
  

$	
  

$	
  

$	
  

Net	
  average	
  debt-‐to-‐EBITDFV	
  	
  
Management	
  believes	
  this	
  non-‐GAAP	
  measurement	
  is	
  an	
  important	
  measure	
  in	
  determining	
  the	
  time	
  it	
  takes	
  the	
  Trust,	
  based	
  
on	
  its	
  historical	
  operating	
  performance,	
  to	
  repay	
  our	
  average	
  debt.	
  	
  	
  

Net	
   average	
   debt-‐to-‐EBITDFV	
   as	
   shown	
   below	
   is	
   calculated	
   as	
   total	
   average	
   debt	
   (net	
   of	
   cash	
   on	
   hand),	
   which	
   includes	
   debt	
  
related	
  to	
  investment	
  in	
  joint	
  ventures	
  that	
  are	
  equity	
  accounted	
  and	
  debt	
  related	
  to	
  assets	
  held	
  for	
  sale,	
  divided	
  by	
  annualized	
  
EBITDFV	
  for	
  the	
  current	
  quarter.	
  EBITDFV	
  –	
  annualized	
  is	
  calculated	
  as	
  net	
  income	
  for	
  the	
  period	
  adjusted	
  for:	
  lease	
  termination	
  
fees	
  and	
  other,	
  non-‐cash	
  items	
  included	
  in	
  investment	
  properties	
  revenue,	
  fair	
  value	
  adjustments	
  to	
  investment	
  properties	
  and	
  
financial	
   instruments,	
   share	
   of	
   net	
   income	
   and	
   dilution	
   gain	
   (loss)	
   from	
   Dream	
   Industrial	
   REIT,	
   distributions	
   received	
   from	
  
Dream	
  Industrial	
  REIT,	
  interest	
  expense,	
  depreciation	
  and	
  amortization,	
  net	
  gains	
  (losses)	
  on	
  transactions	
  and	
  other	
  activities,	
  
and	
  income	
  taxes.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  50	
  

	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
 
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
   	
  
	
  
	
   	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
 
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
   	
  
	
  
	
   	
  
Net	
  debt-‐to-‐adjusted	
  EBITDFV	
  
Management	
  believes	
  this	
  non-‐GAAP	
  measurement	
  is	
  an	
  important	
  measure	
  in	
  determining	
  the	
  time	
  it	
  takes	
  the	
  Trust,	
  on	
  a	
  go	
  
forward	
  basis,	
  based	
  on	
  its	
  normalized	
  operating	
  performance,	
  to	
  repay	
  our	
  debt.	
  	
  	
  

Net	
  debt-‐to-‐adjusted	
  EBITDFV	
  as	
  shown	
  below	
  is	
  calculated	
  as	
  total	
  debt	
  (net	
  of	
  cash	
  on	
  hand),	
  which	
  includes	
  debt	
  related	
  to	
  
investment	
  in	
  joint	
  ventures	
  that	
  are	
  equity	
  accounted	
  and	
  debt	
  related	
  to	
  assets	
  held	
  for	
  sale,	
  divided	
  by	
  adjusted	
  EBITDFV	
  –	
  
annualized.	
  Adjusted	
  EBITDFV	
  –	
  annualized	
  is	
  calculated	
  as	
  EBITDFV	
  –	
  annualized	
  plus	
  normalized	
  NOI	
  of	
  acquired	
  properties	
  for	
  
the	
  quarter.	
  

In	
   compliance	
   with	
   Canadian	
   Securities	
   Administrators	
   Staff	
   Notice	
   52-‐306	
   (Revised),	
   “Non-‐GAAP	
   Financial	
   Measures”,	
   the	
  
following	
   tables	
   calculate	
   the	
   annualized	
   net	
   average	
   debt-‐to-‐EBITDFV	
   and	
   annualized	
   net	
   debt-‐to-‐adjusted	
   EBITDFV	
   for	
   the	
  
periods	
  ended	
  December	
  31,	
  2014	
  and	
  December	
  31,	
  2013.	
  

Amounts	
  included	
  

Share	
  of	
  amounts	
  	
   	
  

December	
  31,	
  2014	
  	
  

$	
  

$	
  

$	
  

Non-‐current	
  debt	
  
Current	
  debt	
  
Debt	
  before	
  undernoted	
  items	
  
Less:	
  Weighted	
  average	
  debt	
  adjustment(1)	
  
Less:	
  Cash	
  on	
  hand(2)	
  
Total	
  weighted	
  average	
  debt	
  (net	
  of	
  cash	
  on	
  hand)	
  
Add-‐back:	
  Weighted	
  average	
  debt	
  adjustment(1)	
  
Total	
  debt	
  (net	
  of	
  cash	
  on	
  hand)	
  
Net	
  income	
  (loss)	
  for	
  the	
  period	
  
Lease	
  termination	
  fees	
  and	
  other	
  
Non-‐cash	
  items	
  included	
  in	
  investment	
  properties	
  revenue(3)	
  
Fair	
  value	
  adjustments	
  to	
  investment	
  properties	
  
Fair	
  value	
  adjustments	
  to	
  financial	
  instruments	
  
Share	
  of	
  net	
  income	
  and	
  dilution	
  gain	
  (loss)	
  from	
  Dream	
  Industrial	
  REIT	
  
Distributions	
  received	
  from	
  Dream	
  Industrial	
  REIT	
  
Interest	
  –	
  debt	
  
Interest	
  –	
  subsidiary	
  redeemable	
  units	
  
Amortization	
  of	
  external	
  management	
  contracts	
  and	
  	
  

in	
  consolidated	
  

financial	
  statements	
  

	
  2,731,506	
   	
   $	
  
	
  365,855	
   	
   	
  
	
  3,097,361	
   	
   	
  
	
  (41,386)	
  	
   	
  
	
  (5,466)	
  	
   	
  
	
  3,050,509	
   	
   $	
  
	
  41,386	
   	
   	
  
	
  3,091,895	
   	
   $	
  
	
  (3,037)	
  	
   	
  
	
  (546)	
  	
   	
  
	
  2,065	
   	
   	
  
	
  67,100	
   	
   	
  
	
  (2,689)	
  	
   	
  
	
  (3,699)	
  	
   	
  
	
  3,247	
   	
   	
  
	
  33,091	
   	
   	
  
	
  338	
   	
   	
  

from	
  investment	
  	
   	
  

in	
  joint	
  ventures	
  	
  	
  

	
  484,905	
   	
   $	
  

	
  12,075	
   	
  
	
  496,980	
   	
  
	
  -‐	
   	
  
	
  -‐	
   	
  

	
  496,980	
   	
   $	
  

	
  -‐	
   	
  

	
  496,980	
   	
   $	
  

	
  10,343	
   	
  
-‐	
  	
  
	
  (117)	
  	
  
	
  200	
   	
  
	
  -‐	
   	
  
	
  -‐	
   	
  
	
  -‐	
   	
  
	
  4,734	
   	
  
	
  -‐	
   	
  

depreciation	
  on	
  property	
  and	
  equipment	
  
Net	
  loss	
  on	
  transactions	
  and	
  other	
  activities	
  
Deferred	
  income	
  taxes	
  
EBITDFV	
  –	
  quarterly	
  
Normalized	
  NOI	
  of	
  acquired	
  properties	
  for	
  the	
  quarter	
  	
  
Adjusted	
  EBITDFV	
  –	
  quarterly	
  
EBITDFV	
  –	
  annualized	
  
Adjusted	
  EBITDFV	
  –	
  annualized	
  
Net	
  average	
  debt-‐to-‐EBITDFV	
  (years)	
  	
  	
  
Net	
  debt-‐to-‐adjusted	
  EBITDFV	
  (years)	
  	
  	
  
(1)	
  Weighted	
  average	
  debt	
  adjustment	
  reflects	
  outstanding	
  debt	
  at	
  period-‐end,	
  pro-‐rated	
  for	
  the	
  number	
  of	
  days	
  outstanding	
  during	
  the	
  period.	
  

	
  -‐	
   	
  
	
  133	
   	
  
	
  -‐	
   	
  
	
  15,293	
   	
   $	
  

	
  800	
   	
   	
  
	
  1,583	
   	
   	
  
	
  300	
   	
   	
  
	
  98,553	
   	
   $	
  

	
  15,293	
   	
   $	
  
	
   $	
  
	
   $	
  

	
  98,553	
   	
   $	
  

	
  -‐	
   	
   	
  

	
  -‐	
   	
   	
  

$	
  

$	
  

Total	
  	
  
	
  3,216,411	
   	
  
	
  377,930	
   	
  
	
  3,594,341	
   	
  
	
  (41,386)	
  	
  
	
  (5,466)	
  	
  
	
  3,547,489	
   	
  
	
  41,386	
   	
  
	
  3,588,875	
   	
  
	
  7,306	
   	
  
	
  (546)	
  	
  
	
  1,948	
   	
  
	
  67,300	
   	
  
	
  (2,689)	
  	
  
	
  (3,699)	
  	
  
	
  3,247	
   	
  
	
  37,825	
   	
  
	
  338	
   	
  

	
  800	
   	
  
	
  1,716	
   	
  
	
  300	
   	
  
	
  113,846	
   	
  
	
  -‐	
   	
  
	
  113,846	
   	
  
	
  455,384	
   	
  
	
  455,384	
   	
  
	
  7.8	
   	
  
	
  7.9	
   	
  

(2)	
  Cash	
  on	
  hand	
  represents	
  cash	
  at	
  period-‐end,	
  excluding	
  cash	
  held	
  in	
  joint	
  ventures	
  and	
  co-‐owned	
  properties.	
  

(3)	
  Includes	
  adjustments	
  for	
  straight-‐line	
  rent	
  and	
  amortization	
  of	
  lease	
  incentives.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  51	
  

	
  
	
  
	
  
	
  
	
   	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
 
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
   	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
   	
  
	
   	
  
	
  
	
   	
  
	
   	
  
	
  
	
   	
  
	
   	
  
	
  
	
   	
  
	
   	
  
	
   	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
  
	
   	
  
	
  
	
  
	
  
December	
  31,	
  2013	
  

Amounts	
  included	
  

Share	
  of	
  amounts	
  	
   	
  

in	
  consolidated	
  

from	
  investment	
  	
   	
  

financial	
  statements	
  

in	
  joint	
  ventures	
  	
  	
  

$	
  

$	
  

$	
  

	
  -‐	
   	
   	
  

	
  5,249	
   	
   	
  

	
  513,527	
   	
   $	
  

	
  496,410	
   	
   $	
  
	
  11,678	
   	
   	
  
	
  508,088	
   	
   	
  
	
  5,439	
   	
   	
  
	
  -‐	
   	
   	
  
	
  -‐	
   	
   	
  

	
  2,884,481	
   	
   $	
  
	
  264,535	
   	
   	
  
	
  3,149,016	
   	
   	
  
	
  -‐	
   	
   	
  
	
  (5,249)	
  	
   	
  
	
  (23,436)	
  	
   	
  
	
  3,120,331	
   	
   $	
  

Non-‐current	
  debt	
  
Current	
  debt	
  
Debt	
  before	
  undernoted	
  items	
  
Add:	
  Debt	
  related	
  to	
  assets	
  held	
  for	
  sale	
  
Less:	
  Weighted	
  average	
  debt	
  adjustment(1)	
  
Less:	
  Cash	
  on	
  hand(2)	
  
Total	
  weighted	
  average	
  debt	
  (net	
  of	
  cash	
  on	
  hand)	
  
Add-‐back:	
  Weighted	
  average	
  debt	
  adjustment(1)	
  
Total	
  debt	
  (net	
  of	
  cash	
  on	
  hand)	
  
Net	
  income	
  for	
  the	
  period	
  
Lease	
  termination	
  fees	
  and	
  other	
  
Non-‐cash	
  items	
  included	
  in	
  investment	
  properties	
  revenue(3)	
  
Fair	
  value	
  adjustments	
  to	
  investment	
  properties	
  
Fair	
  value	
  adjustments	
  to	
  financial	
  instruments	
  
Share	
  of	
  net	
  income	
  and	
  dilution	
  gain	
  (loss)	
  from	
  Dream	
  Industrial	
  REIT	
  
Distributions	
  received	
  from	
  Dream	
  Industrial	
  REIT	
  
Interest	
  –	
  debt	
  
Interest	
  –	
  subsidiary	
  redeemable	
  units	
  
Amortization	
  of	
  external	
  management	
  contracts	
  and	
  	
  
	
   depreciation	
  on	
  property	
  and	
  equipment	
  
Net	
  loss	
  on	
  transactions	
  and	
  other	
  activities	
  
Deferred	
  income	
  taxes	
  recovery	
  
EBITDFV	
  –	
  quarterly	
  
Normalized	
  NOI	
  of	
  acquired	
  properties	
  for	
  the	
  quarter	
  	
  
Adjusted	
  EBITDFV	
  –	
  quarterly	
  
EBITDFV	
  –	
  annualized	
  
Adjusted	
  EBITDFV	
  –	
  annualized	
  
Net	
  average	
  debt-‐to-‐EBITDFV	
  (years)	
  	
  
Net	
  debt-‐to-‐adjusted	
  EBITDFV	
  (years)	
  	
  
(1)	
  Weighted	
  average	
  debt	
  adjustment	
  reflects	
  outstanding	
  debt	
  at	
  period-‐end,	
  pro-‐rated	
  for	
  the	
  number	
  of	
  days	
  outstanding	
  during	
  the	
  period.	
  

	
  3,125,580	
   	
   $	
  
	
  54,341	
   	
   	
  
	
  (621)	
  	
   	
  
	
  (127)	
  	
   	
  
	
  7,208	
   	
   	
  
	
  (253)	
  	
   	
  
	
  (3,027)	
  	
   	
  
	
  2,849	
   	
   	
  
	
  33,857	
   	
   	
  
	
  1,981	
   	
   	
  

	
  513,527	
   	
   $	
  
	
  5,415	
   	
   	
  
	
  -‐	
   	
   	
  
	
  200	
   	
   	
  
	
  5,419	
   	
   	
  
	
  -‐	
   	
   	
  
	
  -‐	
   	
   	
  
	
  -‐	
   	
   	
  
	
  4,508	
   	
   	
  
	
  -‐	
   	
   	
  

	
  691	
   	
   	
  
	
  1,690	
   	
   	
  
	
  (865)	
  	
   	
  
	
  97,724	
   	
   $	
  

	
  15,609	
   	
   $	
  
	
   $	
  
	
   $	
  

	
  2	
   	
   	
  
	
  65	
   	
   	
  
	
  -‐	
   	
   	
  

	
  97,822	
   	
   $	
  

	
  15,609	
   	
   $	
  

	
  98	
   	
   	
  

	
  -‐	
   	
   	
  

$	
  

$	
  

Total	
  
	
  3,380,891	
  
	
  276,213	
  
	
  3,657,104	
  
	
  5,439	
  
	
  (5,249)	
  
	
  (23,436)	
  
	
  3,633,858	
  
	
  5,249	
  
	
  3,639,107	
  
	
  59,756	
  
	
  (621)	
  
	
  73	
  
	
  12,627	
  
	
  (253)	
  
	
  (3,027)	
  
	
  2,849	
  
	
  38,365	
  
	
  1,981	
  

	
  693	
  
	
  1,755	
  
	
  (865)	
  
	
  113,333	
  
	
  98	
  
	
  113,431	
  
	
  453,332	
  
	
  453,724	
  
	
  8.0	
  
	
  8.0	
  

(2)	
  Cash	
  on	
  hand	
  represents	
  cash	
  at	
  year-‐end,	
  excluding	
  cash	
  held	
  in	
  joint	
  ventures	
  and	
  co-‐owned	
  properties.	
  

(3)	
  Includes	
  adjustments	
  for	
  straight-‐line	
  rent	
  and	
  amortization	
  of	
  lease	
  incentives.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  52	
  

	
  
	
  
	
   	
  
	
   	
  
	
  
	
  
	
  
	
  
 
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
   	
  
	
   	
  
	
  
	
   	
  
	
  
	
  
	
  
	
  
	
  
	
   	
  
	
   	
  
	
  
	
   	
  
	
   	
  
	
  
	
   	
  
	
   	
  
	
  
	
   	
  
	
   	
  
	
   	
  
	
  
	
   	
  
	
   	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
  
SECTION	
  III	
  –	
  DISCLOSURE	
  CONTROLS	
  AND	
  PROCEDURES	
  	
  

At	
  December	
  31,	
  2014,	
  ﬁnancial	
  year-‐end,	
  the	
  Chief	
  Executive	
  Ofﬁcer	
  and	
  the	
  Chief	
  Financial	
  Ofﬁcer	
  (the	
  “Certifying	
  Ofﬁcers”),	
  
together	
  with	
  other	
  members	
  of	
  management,	
  have	
  evaluated	
  the	
  design	
  and	
  operational	
  effectiveness	
  of	
  Dream	
  Office	
  REIT’s	
  
disclosure	
  controls	
  and	
  procedures,	
  as	
  deﬁned	
  in	
  National	
  Instrument	
  52-‐109	
  –	
  Certification	
  of	
  Disclosure	
  in	
  Issuers’	
  Annual	
  and	
  
Interim	
  Filings	
  (“NI	
  52-‐109”).	
  The	
  Certifying	
  Ofﬁcers	
  have	
  concluded	
  that	
  the	
  disclosure	
  controls	
  and	
  procedures	
  are	
  adequate	
  
and	
  effective	
  in	
  order	
  to	
  provide	
  reasonable	
  assurance	
  that	
  material	
  information	
  has	
  been	
  accumulated	
  and	
  communicated	
  to	
  
management,	
   to	
   allow	
   timely	
   decisions	
   of	
   required	
   disclosures	
   by	
   Dream	
   Office	
   REIT	
   and	
   its	
   consolidated	
   subsidiary	
   entities,	
  
within	
  the	
  required	
  time	
  periods.	
  	
  

Dream	
   Office	
   REIT’s	
   internal	
   control	
   over	
   ﬁnancial	
   reporting	
   (as	
   defined	
   in	
   NI	
   52-‐109)	
   is	
   designed	
   to	
   provide	
   reasonable	
  
assurance	
  regarding	
  the	
  reliability	
  of	
  ﬁnancial	
  reporting	
  and	
  the	
  preparation	
   of	
  consolidated	
  ﬁnancial	
  statements	
  for	
  external	
  
purposes	
  in	
  accordance	
  with	
  IFRS.	
  Using	
  the	
  framework	
  established	
  in	
  “Risk	
  Management	
  and	
  Governance:	
  Guidance	
  on	
  Control	
  
(COCO	
  Framework)”,	
  published	
  by	
  the	
  Chartered	
  Professional	
  Accountants	
  Canada,	
  the	
  Certifying	
  Ofﬁcers,	
  together	
  with	
  other	
  
members	
   of	
   management,	
   have	
   evaluated	
   the	
   design	
   and	
   operation	
   of	
   Dream	
   Office	
   REIT’s	
   internal	
   control	
   over	
   ﬁnancial	
  
reporting.	
   Based	
   on	
   that	
   evaluation,	
   the	
   Certifying	
   Officers	
   have	
   concluded	
   that	
   Dream	
   Office	
   REIT’s	
   internal	
   control	
   over	
  
financial	
  reporting	
  was	
  effective	
  as	
  at	
  December	
  31,	
  2014.	
  	
  

There	
   were	
   no	
   changes	
   in	
   Dream	
   Office	
   REIT’s	
   internal	
   control	
   over	
   ﬁnancial	
   reporting	
   during	
   the	
   ﬁnancial	
   year	
   ended	
  
December	
   31,	
   2014	
   that	
   have	
   materially	
   affected,	
   or	
   are	
   reasonably	
   likely	
   to	
   materially	
   affect,	
   Dream	
   Office	
   REIT’s	
   internal	
  
control	
  over	
  ﬁnancial	
  reporting.	
  

SECTION	
  IV	
  –	
  RISKS	
  AND	
  OUR	
  STRATEGY	
  TO	
  MANAGE	
  	
  

Dream	
   Office	
   REIT	
   is	
   exposed	
   to	
   various	
   risks	
   and	
   uncertainties,	
   many	
   of	
   which	
   are	
   beyond	
   our	
   control.	
   For	
   a	
   full	
   list	
   and	
  
explanation	
   of	
   our	
   risks	
   and	
   uncertainties,	
   please	
   refer	
   to	
   our	
   2013	
   Annual	
   Report	
   or	
   our	
   Annual	
   Information	
   Form	
   dated	
  	
  
March	
  31,	
  2014,	
  filed	
  on	
  SEDAR	
  (www.sedar.com).	
  	
  	
  

REAL	
  ESTATE	
  OWNERSHIP	
  
Real	
   estate	
   ownership	
   is	
   generally	
   subject	
   to	
   numerous	
   factors	
   and	
   risks,	
   including	
   changes	
   in	
   general	
   economic	
   conditions	
  
(such	
  as	
  the	
  availability,	
  terms	
  and	
  cost	
  of	
  mortgage	
  ﬁnancings	
  and	
  other	
  types	
  of	
  credit),	
  local	
  economic	
  conditions	
  (such	
  as	
  an	
  
oversupply	
  of	
  ofﬁce	
  and	
  other	
  commercial	
  properties	
  or	
  a	
  reduction	
  in	
  demand	
  for	
  real	
  estate	
  in	
  the	
  area),	
  the	
  attractiveness	
  of	
  
properties	
  to	
  potential	
  tenants	
  or	
  purchasers,	
  competition	
  with	
  other	
  landlords	
  with	
  similar	
  available	
  space,	
  and	
  the	
  ability	
  of	
  
the	
  owner	
  to	
  provide	
  adequate	
  maintenance	
  at	
  competitive	
  costs.	
  	
  

An	
  investment	
  in	
  real	
  estate	
  is	
  relatively	
  illiquid.	
  Such	
  illiquidity	
  will	
  tend	
  to	
  limit	
  our	
  ability	
  to	
  vary	
  our	
  portfolio	
  promptly	
  in	
  
response	
  to	
  changing	
  economic	
  or	
  investment	
  conditions.	
  In	
  recessionary	
  times,	
  it	
  may	
  be	
  difﬁcult	
  to	
  dispose	
  of	
  certain	
  types	
  of	
  
real	
  estate.	
  The	
  costs	
  of	
  holding	
  real	
  estate	
  are	
  considerable,	
  and	
  during	
  an	
  economic	
  recession,	
  we	
  may	
  be	
  faced	
  with	
  ongoing	
  
expenditures	
   with	
   a	
   declining	
   prospect	
   of	
   incoming	
   receipts.	
   In	
   such	
   circumstances,	
   it	
   may	
   be	
   necessary	
   for	
   us	
   to	
   dispose	
   of	
  
properties	
  at	
  lower	
  prices	
  in	
  order	
  to	
  generate	
  sufﬁcient	
  cash	
  from	
  operations	
  and	
  make	
  distributions	
  and	
  interest	
  payments.	
  	
  

Certain	
   signiﬁcant	
   expenditures	
   (e.g.,	
   property	
   taxes,	
   maintenance	
   costs,	
   mortgage	
   payments,	
   insurance	
   costs	
   and	
   related	
  
charges)	
  must	
  be	
  made	
  throughout	
  the	
  period	
  of	
  ownership	
  of	
  real	
  property,	
  regardless	
  of	
  whether	
  the	
  property	
  is	
  producing	
  
sufﬁcient	
  income	
  to	
  pay	
  such	
  expenses.	
  In	
  order	
  to	
  retain	
  desirable	
  rentable	
  space	
  and	
  to	
  generate	
  adequate	
  revenue	
  over	
  the	
  
long	
   term,	
   we	
   must	
   maintain	
   or,	
   in	
   some	
   cases,	
   improve	
   each	
   property’s	
   condition	
   to	
   meet	
   market	
   demand.	
   Maintaining	
   a	
  
rental	
  property	
  in	
  accordance	
  with	
  market	
  standards	
  can	
  entail	
  signiﬁcant	
  costs,	
  which	
  we	
  may	
  not	
  be	
  able	
  to	
  pass	
  on	
  to	
  our	
  
tenants.	
  Numerous	
  factors,	
  including	
  the	
  age	
  of	
  the	
  relevant	
  building	
  structure,	
  the	
  material	
  and	
  substances	
  used	
  at	
  the	
  time	
  of	
  
construction,	
  or	
  currently	
  unknown	
  building	
  code	
  violations,	
  could	
  result	
  in	
  substantial	
  unbudgeted	
  costs	
  for	
  refurbishment	
  or	
  
modernization.	
  In	
  the	
  course	
  of	
  acquiring	
  a	
  property,	
  undisclosed	
  defects	
  in	
  design	
  or	
  construction	
  or	
  other	
  risks	
  might	
  not	
  have	
  
been	
   recognized	
   or	
   correctly	
   evaluated	
   during	
   the	
   pre-‐acquisition	
   due	
   diligence	
   process.	
   These	
   circumstances	
   could	
   lead	
   to	
  
additional	
  costs	
  and	
  could	
  have	
  an	
  adverse	
  effect	
  on	
  our	
  proceeds	
  from	
  sales	
  and	
  rental	
  income	
  of	
  the	
  relevant	
  properties.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  53	
  

ROLLOVER	
  OF	
  LEASES	
  
Upon	
  the	
  expiry	
  of	
  any	
  lease,	
  there	
  can	
  be	
  no	
  assurance	
  that	
  the	
  lease	
  will	
  be	
  renewed	
  or	
  the	
  tenant	
  replaced.	
  Furthermore,	
  the	
  
terms	
   of	
   any	
   subsequent	
   lease	
   may	
   be	
   less	
   favourable	
   than	
   those	
   of	
   the	
   existing	
   lease.	
   Our	
   cash	
   ﬂows	
   and	
   ﬁnancial	
   position	
  
would	
  be	
  adversely	
  affected	
  if	
  our	
  tenants	
  were	
  to	
  become	
  unable	
  to	
  meet	
  their	
  obligations	
  under	
  their	
  leases	
  or	
  if	
  a	
  signiﬁcant	
  
amount	
  of	
  available	
  space	
  in	
  our	
  properties	
  could	
  not	
  be	
  leased	
  on	
  economically	
  favourable	
  lease	
  terms.	
  In	
  the	
  event	
  of	
  default	
  
by	
  a	
  tenant,	
  we	
  may	
  experience	
  delays	
  or	
  limitations	
  in	
  enforcing	
  our	
  rights	
  as	
  lessor	
  and	
  incur	
  substantial	
  costs	
  in	
  protecting	
  
our	
   investment.	
   Furthermore,	
   at	
   any	
   time,	
   a	
   tenant	
   may	
   seek	
   the	
   protection	
   of	
   bankruptcy,	
   insolvency	
   or	
   similar	
   laws	
   which	
  
could	
   result	
   in	
   the	
   rejection	
   and	
   termination	
   of	
   the	
   lease	
   of	
   the	
   tenant	
   and,	
   thereby,	
   cause	
   a	
   reduction	
   in	
   the	
   cash	
   ﬂows	
  
available	
  to	
  us.	
  

CONCENTRATION	
  OF	
  PROPERTIES	
  AND	
  TENANTS	
  
Currently,	
  principally	
  all	
  of	
  our	
  properties	
  are	
  located	
  in	
  Canada	
  and,	
  as	
  a	
  result,	
  are	
  impacted	
  by	
  economic	
  and	
  other	
  factors	
  
speciﬁcally	
  affecting	
  the	
  real	
  estate	
  markets	
  in	
  Canada.	
  These	
  factors	
  may	
  differ	
  from	
  those	
  affecting	
  the	
  real	
  estate	
  markets	
  in	
  
other	
  regions.	
  Due	
  to	
  the	
  concentrated	
  nature	
  of	
  our	
  properties,	
  a	
  number	
  of	
  our	
  properties	
  could	
  experience	
  any	
  of	
  the	
  same	
  
conditions	
  at	
  the	
  same	
  time.	
  If	
  real	
  estate	
  conditions	
  in	
  Canada	
  decline	
  relative	
  to	
  real	
  estate	
  conditions	
  in	
  other	
  regions,	
  our	
  
cash	
   ﬂows	
   and	
   ﬁnancial	
   condition	
   may	
   be	
   more	
   adversely	
   affected	
   than	
   those	
   of	
   companies	
   that	
   have	
   more	
   geographically	
  
diversiﬁed	
  portfolios	
  of	
  properties.	
  	
  

FINANCING	
  
We	
   require	
   access	
   to	
   capital	
   to	
   maintain	
   our	
   properties	
   as	
   well	
   as	
   to	
   fund	
   our	
   growth	
   strategy	
   and	
   signiﬁcant	
   capital	
  
expenditures.	
  There	
  is	
  no	
  assurance	
  that	
  capital	
  will	
  be	
  available	
  when	
  needed	
  or	
  on	
  favourable	
  terms.	
  Our	
  access	
  to	
  third-‐party	
  
ﬁnancing	
   will	
   be	
   subject	
   to	
   a	
   number	
   of	
   factors,	
   including	
   general	
   market	
   conditions;	
   the	
   market’s	
   perception	
   of	
   our	
   growth	
  
potential;	
  our	
  current	
  and	
  expected	
  future	
  earnings;	
  our	
  cash	
  ﬂow	
  and	
  cash	
  distributions,	
  and	
  cash	
  interest	
  payments;	
  and	
  the	
  
market	
  price	
  of	
  our	
  Units.	
  	
  

A	
  signiﬁcant	
  portion	
  of	
  our	
  ﬁnancing	
  is	
  debt.	
  Accordingly,	
  we	
  are	
  subject	
  to	
  the	
  risks	
  associated	
  with	
  debt	
  ﬁnancing,	
  including	
  
the	
  risk	
  that	
  our	
  cash	
  ﬂows	
  will	
  be	
  insufﬁcient	
  to	
  meet	
  required	
  payments	
  of	
  principal	
  and	
  interest,	
  and	
  that,	
  on	
  maturities	
  of	
  
such	
  debt,	
  we	
  may	
  not	
  be	
  able	
  to	
  reﬁnance	
  the	
  outstanding	
  principal	
  under	
  such	
  debt	
  or	
  that	
  the	
  terms	
  of	
  such	
  reﬁnancing	
  will	
  
be	
  more	
  onerous	
  than	
  those	
  of	
  the	
  existing	
  debt.	
  If	
  we	
  are	
  unable	
  to	
  reﬁnance	
  debt	
  at	
  maturity	
  on	
  terms	
  acceptable	
  to	
  us	
  or	
  at	
  
all,	
  we	
  may	
  be	
  forced	
  to	
  dispose	
  of	
  one	
  or	
  more	
  of	
  our	
  properties	
  on	
  disadvantageous	
  terms,	
  which	
  may	
  result	
  in	
  losses	
  and	
  
could	
   alter	
   our	
   debt-‐to-‐equity	
   ratio	
   or	
   be	
   dilutive	
   to	
   unitholders.	
   Such	
   losses	
   could	
   have	
   a	
   material	
   adverse	
   effect	
   on	
   our	
  
ﬁnancial	
  position	
  or	
  cash	
  ﬂows.	
  	
  

The	
  degree	
  to	
  which	
  we	
  are	
  leveraged	
  could	
  have	
  important	
  consequences	
  to	
  our	
  operations.	
  A	
  high	
  level	
  of	
  debt	
  will	
  reduce	
  
the	
  amount	
  of	
  funds	
  available	
  for	
  the	
  payment	
  of	
  distributions	
  to	
  unitholders	
  and	
  interest	
  payments	
  on	
  our	
  debentures;	
  limit	
  
our	
   ﬂexibility	
   in	
   planning	
   for	
   and	
   reacting	
   to	
   changes	
   in	
   the	
   economy	
   and	
   in	
   the	
   industry,	
   and	
   increase	
   our	
   vulnerability	
   to	
  
general	
  adverse	
  economic	
  and	
  industry	
  conditions;	
  limit	
  our	
  ability	
  to	
  borrow	
  additional	
  funds,	
  dispose	
  of	
  assets,	
  encumber	
  our	
  
assets	
  and	
  make	
  potential	
  investments;	
  place	
  us	
  at	
  a	
  competitive	
  disadvantage	
  compared	
  to	
  other	
  owners	
  of	
  similar	
  real	
  estate	
  
assets	
   that	
   are	
   less	
   leveraged	
   and,	
   therefore,	
   may	
   be	
   able	
   to	
   take	
   advantage	
   of	
   opportunities	
   that	
   our	
   indebtedness	
   would	
  
prevent	
   us	
   from	
   pursuing;	
   make	
   it	
   more	
   likely	
   that	
   a	
   reduction	
   in	
   our	
   borrowing	
   base	
   following	
   a	
   periodic	
   valuation	
   (or	
  
redetermination)	
  could	
  require	
  us	
  to	
  repay	
  a	
  portion	
  of	
  then	
  outstanding	
  borrowings;	
  and	
  impair	
  our	
  ability	
  to	
  obtain	
  additional	
  
ﬁnancing	
  in	
  the	
  future	
  for	
  working	
  capital,	
  capital	
  expenditures,	
  acquisitions,	
  general	
  trust	
  or	
  other	
  purposes.	
  	
  

CHANGES	
  IN	
  LAW	
  
We	
   are	
   subject	
   to	
   applicable	
   federal,	
   provincial,	
   municipal,	
   local	
   and	
   common	
   laws	
   and	
   regulations	
   governing	
   the	
   ownership	
  
and	
  leasing	
  of	
  real	
  property,	
  employment	
  standards,	
  environmental	
  matters,	
  taxes	
  and	
  other	
  matters.	
  It	
  is	
  possible	
  that	
  future	
  
changes	
  in	
  such	
  laws	
  or	
  regulations,	
  or	
  changes	
  in	
  their	
  application,	
  enforcement	
  or	
  regulatory	
  interpretation,	
  could	
  result	
  in	
  
changes	
   in	
   the	
   legal	
   requirements	
   affecting	
   us	
   (including	
   with	
   retroactive	
   effect).	
   In	
   addition,	
   the	
   political	
   conditions	
   in	
   the	
  
jurisdictions	
  in	
  which	
  we	
  operate	
  are	
  also	
  subject	
  to	
  change.	
  Any	
  changes	
  in	
  investment	
  policies	
  or	
  shifts	
  in	
  political	
  attitudes	
  
may	
  adversely	
  affect	
  our	
  investments.	
  Any	
  changes	
  in	
  the	
  laws	
  to	
  which	
  we	
  are	
  subject	
  in	
  the	
  jurisdictions	
  in	
  which	
  we	
  operate	
  
could	
   materially	
   affect	
   our	
   rights	
   and	
   title	
   in	
   and	
   to	
   the	
   properties	
   and	
   the	
   revenues	
   we	
   are	
   able	
   to	
   generate	
   from	
   our	
  
investments.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  54	
  

	
  
	
  
	
  
INTEREST	
  RATES	
  
When	
   entering	
   into	
   ﬁnancing	
   agreements	
   or	
   extending	
   such	
   agreements,	
   we	
   depend	
   on	
   our	
   ability	
   to	
   agree	
   on	
   terms	
   for	
  
interest	
  payments	
  that	
  will	
  not	
  impair	
  our	
  desired	
  proﬁt,	
  and	
  on	
  amortization	
  schedules	
  that	
  do	
  not	
  restrict	
  our	
  ability	
  to	
  pay	
  
distributions	
   on	
   our	
   Units	
   and	
   interest	
   payments	
   on	
   our	
   debentures.	
   In	
   addition	
   to	
   existing	
   variable	
   rate	
   portions	
   of	
   our	
  
ﬁnancing	
  agreements,	
  we	
  may	
  enter	
  into	
  future	
  ﬁnancing	
  agreements	
  with	
  variable	
  interest	
  rates.	
  An	
  increase	
  in	
  interest	
  rates	
  
could	
  result	
  in	
  a	
  signiﬁcant	
  increase	
  in	
  the	
  amount	
  we	
  pay	
  to	
  service	
  debt,	
  which	
  could	
  limit	
  our	
  ability	
  to	
  pay	
  distributions	
  to	
  
unitholders	
  and	
  could	
  impact	
  the	
  market	
  price	
  of	
  the	
  Units	
  and/or	
  the	
  debentures.	
  We	
  have	
  implemented	
  an	
  active	
  hedging	
  
program	
  in	
  order	
  to	
  offset	
  the	
  risk	
  of	
  revenue	
  losses	
  and	
  to	
  provide	
  more	
  certainty	
  regarding	
  the	
  payment	
  of	
  distributions	
  to	
  
unitholders	
  and	
  cash	
  interest	
  payments	
  under	
  the	
  debentures	
  should	
  current	
  variable	
  interest	
  rates	
  increase.	
  However,	
  to	
  the	
  
extent	
   that	
   we	
   fail	
   to	
   adequately	
   manage	
   these	
   risks,	
   including	
   if	
   any	
   such	
   hedging	
   arrangements	
   do	
   not	
   effectively	
   or	
  
completely	
   hedge	
   increases	
   in	
   variable	
   interest	
   rates,	
   our	
   ﬁnancial	
   results,	
   our	
   ability	
   to	
   pay	
   distributions	
   to	
   unitholders	
   and	
  
cash	
   interest	
   payments	
   under	
   our	
   ﬁnancing	
   arrangements,	
   and	
   the	
   debentures	
   and	
   future	
   ﬁnancings	
   may	
   be	
   negatively	
  
affected.	
   Hedging	
   transactions	
   involve	
   inherent	
   risks.	
   Increases	
   in	
   interest	
   rates	
   generally	
   cause	
   a	
   decrease	
   in	
   demand	
   for	
  
properties.	
  Higher	
  interest	
  rates	
  and	
  more	
  stringent	
  borrowing	
  requirements,	
  whether	
  mandated	
  by	
  law	
  or	
  required	
  by	
  banks,	
  
could	
  have	
  a	
  signiﬁcant	
  negative	
  effect	
  on	
  our	
  ability	
  to	
  sell	
  any	
  of	
  our	
  properties.	
  

ENVIRONMENTAL	
  RISK	
  
As	
   an	
   owner	
   of	
   real	
   property,	
   we	
   are	
   subject	
   to	
   various	
   federal,	
   provincial	
   and	
   municipal	
   laws	
   relating	
   to	
   environmental	
  
matters.	
  Such	
  laws	
  provide	
  a	
  range	
  of	
  potential	
  liability,	
  including	
  potentially	
  signiﬁcant	
  penalties,	
  and	
  potential	
  liability	
  for	
  the	
  
costs	
  of	
  removal	
  or	
  remediation	
  of	
  certain	
  hazardous	
  substances.	
  The	
  presence	
  of	
  such	
  substances,	
  if	
  any,	
  could	
  adversely	
  affect	
  
our	
  ability	
  to	
  sell	
  or	
  redevelop	
  such	
  real	
  estate	
  or	
  to	
  borrow	
  using	
  such	
  real	
  estate	
  as	
  collateral	
  and,	
  potentially,	
  could	
  also	
  result	
  
in	
  civil	
  claims	
  against	
  us.	
  In	
  order	
  to	
  obtain	
  ﬁnancing	
  for	
  the	
  purchase	
  of	
  a	
  new	
  property	
  through	
  traditional	
  channels,	
  we	
  may	
  
be	
  requested	
  to	
  arrange	
  for	
  an	
  environmental	
  audit	
  to	
  be	
  conducted.	
  Although	
  such	
  an	
  audit	
  provides	
  us	
  and	
  our	
  lenders	
  with	
  
some	
  assurance,	
  we	
  may	
  become	
  subject	
  to	
  liability	
  for	
  undetected	
  pollution	
  or	
  other	
  environmental	
  hazards	
  on	
  our	
  properties	
  
against	
  which	
  we	
  cannot	
  insure,	
  or	
  against	
  which	
  we	
  may	
  elect	
  not	
  to	
  insure	
  where	
  premium	
  costs	
  are	
  disproportionate	
  to	
  our	
  
perception	
  of	
  relative	
  risk.	
  	
  

We	
  have	
  formal	
  policies	
  and	
  procedures	
  to	
  review	
  and	
  monitor	
  environmental	
  exposure.	
  These	
  policies	
  include	
  the	
  requirement	
  
to	
   obtain	
   a	
   Phase	
   I	
   Environmental	
   Site	
   Assessment,	
   conducted	
   by	
   an	
   independent	
   and	
   qualiﬁed	
   environmental	
   consultant,	
  
before	
  acquiring	
  any	
  real	
  property	
  or	
  any	
  interest	
  therein.	
  

JOINT	
  ARRANGEMENTS	
  
We	
  are	
  a	
  participant	
  in	
  jointly	
  controlled	
  entities	
  and	
  co-‐ownerships,	
  combined	
  (“joint	
  arrangements”)	
  with	
  third	
  parties.	
  A	
  joint	
  
arrangement	
  involves	
  certain	
  additional	
  risks,	
  including:	
  	
  

(i) 

(ii) 

(iii) 

(iv) 

the	
   possibility	
   that	
   such	
   third	
   parties	
   may	
   at	
   any	
   time	
   have	
   economic	
   or	
   business	
   interests	
   or	
   goals	
   that	
   will	
   be	
  
inconsistent	
   with	
   ours,	
   or	
   take	
   actions	
   contrary	
   to	
   our	
   instructions	
   or	
   requests	
   or	
   to	
   our	
   policies	
   or	
   objectives	
   with	
  
respect	
  to	
  our	
  real	
  estate	
  investments;	
  	
  

the	
  risk	
  that	
  such	
  third	
  parties	
  could	
  experience	
  ﬁnancial	
  difﬁculties	
  or	
  seek	
  the	
  protection	
  of	
  bankruptcy,	
  insolvency	
  or	
  
other	
  laws,	
  which	
  could	
  result	
  in	
  additional	
  ﬁnancial	
  demands	
  on	
  us	
  to	
  maintain	
  and	
  operate	
  such	
  properties	
  or	
  repay	
  
the	
  third	
  parties’	
  share	
  of	
  property	
  debt	
  guaranteed	
  by	
  us	
  or	
  for	
  which	
  we	
  will	
  be	
  liable,	
  and/or	
  result	
  in	
  our	
  suffering	
  
or	
  incurring	
  delays,	
  expenses	
  and	
  other	
  problems	
  associated	
  with	
  obtaining	
  court	
  approval	
  of	
  the	
  joint	
  arrangement;	
  

the	
   risk	
   that	
   such	
   third	
   parties	
   may,	
   through	
   their	
   activities	
   on	
   behalf	
   of	
   or	
   in	
   the	
   name	
   of	
   the	
   joint	
   arrangements,	
  
expose	
  or	
  subject	
  us	
  to	
  liability;	
  and	
  

the	
  need	
  to	
  obtain	
  third	
  parties’	
  consents	
  with	
  respect	
  to	
  certain	
  major	
  decisions,	
  including	
  the	
  decision	
  to	
  distribute	
  
cash	
  generated	
  from	
  such	
  properties	
  or	
  to	
  reﬁnance	
  or	
  sell	
  a	
  property.	
  In	
  addition,	
  the	
  sale	
  or	
  transfer	
  of	
  interests	
  in	
  
certain	
  of	
  the	
  joint	
  arrangements	
  may	
  be	
  subject	
  to	
  rights	
  of	
  ﬁrst	
  refusal	
  or	
  ﬁrst	
  offer,	
  and	
  certain	
  of	
  the	
  joint	
  venture	
  
and	
  partnership	
  agreements	
  may	
  provide	
  for	
  buy-‐sell	
  or	
  similar	
  arrangements.	
  Such	
  rights	
  may	
  be	
  triggered	
  at	
  a	
  time	
  
when	
  we	
  may	
  not	
  desire	
  to	
  sell	
  but	
  may	
  be	
  forced	
  to	
  do	
  so	
  because	
  we	
  do	
  not	
  have	
  the	
  cash	
  to	
  purchase	
  the	
  other	
  
party’s	
  interests.	
  Such	
  rights	
  may	
  also	
  inhibit	
  our	
  ability	
  to	
  sell	
  an	
  interest	
  in	
  a	
  property	
  or	
  a	
  joint	
  arrangement	
  within	
  
the	
  time	
  frame	
  or	
  otherwise	
  on	
  the	
  basis	
  we	
  desire.	
  

Our	
   investment	
   in	
   properties	
   through	
   joint	
   arrangements	
   is	
   subject	
   to	
   the	
   investment	
   guidelines	
   set	
   out	
   in	
   our	
   Declaration	
  	
  
of	
  Trust.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  55	
  

COMPETITION	
  
The	
   real	
   estate	
   market	
   in	
   Canada	
   is	
   highly	
   competitive	
   and	
   fragmented,	
   and	
   we	
   compete	
   for	
   real	
   property	
   acquisitions	
   with	
  
individuals,	
  corporations,	
  institutions	
  and	
  other	
  entities	
  that	
  may	
  seek	
  real	
  property	
  investments	
  similar	
  to	
  those	
  we	
  desire.	
  An	
  
increase	
  in	
  the	
  availability	
  of	
  investment	
  funds	
  or	
  an	
  increase	
  in	
  interest	
  in	
  real	
  property	
  investments	
  may	
  increase	
  competition	
  
for	
  real	
  property	
  investments,	
  thereby	
  increasing	
  purchase	
  prices	
  and	
  reducing	
  the	
  yield	
  on	
  them.	
  If	
  competing	
  properties	
  of	
  a	
  
similar	
  type	
  are	
  built	
  in	
  the	
  area	
  where	
  one	
  of	
  our	
  properties	
  is	
  located	
  or	
  if	
  similar	
  properties	
  located	
  in	
  the	
  vicinity	
  of	
  one	
  of	
  
our	
   properties	
   are	
   substantially	
   refurbished,	
   the	
   net	
   operating	
   income	
   derived	
   from	
   and	
   the	
   value	
   of	
   such	
   property	
   could	
  	
  
be	
  reduced.	
  	
  

Numerous	
  other	
  developers,	
  managers	
  and	
  owners	
  of	
  properties	
  will	
  compete	
  with	
  us	
  in	
  seeking	
  tenants.	
  To	
  the	
  extent	
  that	
  our	
  
competitors	
  own	
  properties	
  that	
  are	
  in	
  better	
  locations,	
  of	
  better	
  quality	
  or	
  less	
  leveraged	
  than	
  the	
  properties	
  owned	
  by	
   us,	
  
they	
  may	
  be	
  in	
  a	
  better	
  position	
  to	
  attract	
  tenants	
  who	
  might	
  otherwise	
  lease	
  space	
  in	
  our	
  properties.	
  To	
  the	
  extent	
  that	
  our	
  
competitors	
   are	
   better	
   capitalized	
   or	
   ﬁnancially	
   stronger,	
   they	
   would	
   be	
   in	
   a	
   better	
   position	
   to	
   withstand	
   an	
   economic	
  
downturn.	
  The	
  existence	
  of	
  competition	
  for	
  tenants	
  could	
  have	
  an	
  adverse	
  effect	
  on	
  our	
  ability	
  to	
  lease	
  space	
  in	
  our	
  properties	
  
and	
   on	
   the	
   rents	
   charged	
   or	
   concessions	
   granted,	
   and	
   could	
   materially	
   and	
   adversely	
   affect	
   our	
   cash	
   ﬂows,	
   operating	
   results	
  
and	
  ﬁnancial	
  condition.	
  

INSURANCE	
  
We	
  carry	
  general	
  liability,	
  umbrella	
  liability	
  and	
  excess	
  liability	
  insurance	
  with	
  limits	
  that	
  are	
  typically	
  obtained	
  for	
  similar	
  real	
  
estate	
   portfolios	
   in	
   Canada	
   and	
   otherwise	
   acceptable	
   to	
   our	
   trustees.	
   For	
   the	
   property	
   risks,	
   we	
   carry	
   “All	
   Risks”	
   property	
  
insurance	
   including,	
   but	
   not	
   limited	
   to,	
   ﬂood,	
   earthquake	
   and	
   loss	
   of	
   rental	
   income	
   insurance	
   (with	
   at	
   least	
   a	
   24-‐month	
  
indemnity	
   period).	
   We	
   also	
   carry	
   boiler	
   and	
   machinery	
   insurance	
   covering	
   all	
   boilers,	
   pressure	
   vessels,	
   HVAC	
   systems	
   and	
  
equipment	
  breakdown.	
  However,	
  certain	
  types	
  of	
  risks	
  (generally	
  of	
  a	
  catastrophic	
  nature	
  such	
  as	
  from	
  war	
  or	
  nuclear	
  accident)	
  
are	
  uninsurable	
  under	
  any	
  insurance	
  policy.	
  Furthermore,	
  there	
  are	
  other	
  risks	
  that	
  are	
  not	
  economically	
  viable	
  to	
  insure	
  at	
  this	
  
time.	
  We	
  partially	
  self-‐insure	
  against	
  terrorism	
  risk	
  for	
  our	
  entire	
  portfolio.	
  We	
  have	
  insurance	
  for	
  earthquake	
  risks,	
  subject	
  to	
  
certain	
   policy	
   limits,	
   deductibles	
   and	
   self-‐insurance	
   arrangements.	
   Should	
   an	
   uninsured	
   or	
   underinsured	
   loss	
   occur,	
   we	
   could	
  
lose	
  our	
  investment	
  in,	
  and	
  anticipated	
  proﬁts	
  and	
  cash	
  ﬂows	
  from,	
  one	
  or	
  more	
  of	
  our	
  properties,	
  but	
  we	
  would	
  continue	
  to	
  be	
  
obligated	
  to	
  repay	
  any	
  recourse	
  mortgage	
  indebtedness	
  on	
  such	
  properties.	
  We	
  do	
  not	
  carry	
  title	
  insurance	
  on	
  our	
  properties.	
  If	
  
a	
  loss	
  occurs	
  resulting	
  from	
  a	
  title	
  defect	
  with	
  respect	
  to	
  a	
  property	
  where	
  there	
  is	
  no	
  title	
  insurance	
  or	
  the	
  loss	
  is	
  in	
  excess	
  of	
  
insured	
  limits,	
  we	
  could	
  lose	
  all	
  or	
  part	
  of	
  our	
  investment	
  in,	
  and	
  anticipated	
  proﬁts	
  and	
  cash	
  ﬂows	
  from,	
  such	
  property.	
  	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  56	
  

	
  
	
  
SECTION	
  V	
  –	
  CRITICAL	
  ACCOUNTING	
  POLICIES	
  

CRITICAL	
  ACCOUNTING	
  JUDGMENTS,	
  ESTIMATES	
  AND	
  ASSUMPTIONS	
  IN	
  APPLYING	
  ACCOUNTING	
  POLICIES	
  	
  
Preparing	
   the	
   consolidated	
   ﬁnancial	
   statements	
   requires	
   management	
   to	
   make	
   judgments,	
   estimates	
   and	
   assumptions	
   that	
  
affect	
   the	
   amounts	
   reported.	
   Management	
   bases	
   its	
   judgments	
   and	
   estimates	
   on	
   historical	
   experience	
   and	
   other	
   factors	
   it	
  
believes	
  to	
  be	
  reasonable	
  under	
  the	
  circumstances,	
  but	
  which	
  are	
  inherently	
  uncertain	
  and	
  unpredictable,	
  the	
  result	
  of	
  which	
  
forms	
  the	
  basis	
  of	
  the	
  carrying	
  amounts	
  of	
  assets	
  and	
  liabilities.	
  However,	
  uncertainty	
  about	
  these	
  assumptions	
  and	
  estimates	
  
could	
  result	
  in	
  outcomes	
  that	
  could	
  require	
  a	
  material	
  adjustment	
  to	
  the	
  carrying	
  amount	
  of	
  the	
  affected	
  asset	
  or	
  liability	
  in	
  the	
  
future.	
  	
  

Critical	
  accounting	
  judgments	
  	
  
The	
   following	
   are	
   the	
   critical	
   accounting	
   judgments	
   used	
   in	
   applying	
   the	
   Trust’s	
   accounting	
   policies	
   that	
   have	
   the	
   most	
  
signiﬁcant	
  effect	
  on	
  the	
  amounts	
  in	
  the	
  consolidated	
  ﬁnancial	
  statements:	
  	
  

Investment	
  properties	
  	
  
Critical	
  judgments	
  are	
  made	
  in	
  respect	
  of	
  the	
  fair	
  values	
  of	
  investment	
  properties	
  and	
  the	
  investment	
  properties	
  held	
  in	
  equity	
  
accounted	
   investments.	
   The	
   fair	
   values	
   of	
   these	
   investments	
   are	
   reviewed	
   regularly	
   by	
   management	
   with	
   reference	
   to	
  
independent	
   property	
   valuations	
   and	
   market	
   conditions	
   existing	
   at	
   the	
   reporting	
   date,	
   using	
   generally	
   accepted	
   market	
  
practices.	
  The	
  independent	
  valuators	
  are	
  experienced,	
  nationally	
  recognized	
  and	
  qualiﬁed	
  in	
  the	
  professional	
  valuation	
  of	
  ofﬁce	
  
buildings	
  in	
  their	
  respective	
  geographic	
  areas.	
  Judgment	
  is	
  also	
  applied	
  in	
  determining	
  the	
  extent	
  and	
  frequency	
  of	
  independent	
  
appraisals.	
  At	
  each	
  annual	
  reporting	
  period,	
  a	
  select	
  number	
  of	
  properties,	
  determined	
  on	
  a	
  rotational	
  basis,	
  will	
  be	
  valued	
  by	
  
qualiﬁed	
   valuation	
   professionals.	
   For	
   properties	
   not	
   subject	
   to	
   independent	
   appraisals,	
   internal	
   appraisals	
   are	
   prepared	
   by	
  
management	
  during	
  each	
  reporting	
  period.	
  	
  

The	
  Trust	
  makes	
  judgments	
  with	
  respect	
  to	
  whether	
  lease	
  incentives	
  provided	
  in	
  connection	
  with	
  a	
  lease	
  enhance	
  the	
  value	
  of	
  
the	
   leased	
   space,	
   which	
   determines	
   whether	
   or	
   not	
   such	
   amounts	
   are	
   treated	
   as	
   tenant	
   improvements	
   and	
   added	
   to	
  
investment	
   properties.	
   Lease	
   incentives,	
   such	
   as	
   cash,	
   rent-‐free	
   periods	
   and	
   lessee-‐	
   or	
   lessor-‐owned	
   improvements,	
   may	
   be	
  
provided	
  to	
  lessees	
  to	
  enter	
  into	
  an	
  operating	
  lease.	
  Lease	
  incentives	
  that	
  do	
  not	
  provide	
  beneﬁts	
  beyond	
  the	
  initial	
  lease	
  term	
  
are	
  included	
  in	
  the	
  carrying	
  amount	
  of	
  investment	
  properties	
  and	
  are	
  amortized	
  as	
  a	
  reduction	
  of	
  rental	
  revenue	
  on	
  a	
  straight-‐
line	
  basis	
  over	
  the	
  term	
  of	
  the	
  lease.	
  	
  

Judgment	
  is	
  also	
  applied	
  in	
  determining	
  whether	
  certain	
  costs	
  are	
  additions	
  to	
  the	
  carrying	
  amount	
  of	
  the	
  investment	
  property	
  
and,	
   for	
   properties	
   under	
   development,	
   identifying	
   the	
   point	
   at	
   which	
   practical	
   completion	
   of	
   the	
   property	
   occurs	
   and	
  
identifying	
  the	
  directly	
  attributable	
  borrowing	
  costs	
  to	
  be	
  included	
  in	
  the	
  carrying	
  amount	
  of	
  the	
  development	
  property.	
  	
  

Business	
  combinations	
  	
  
Accounting	
  for	
  business	
  combinations	
  under	
  IFRS	
  3,	
  “Business	
  Combinations”	
  (“IFRS	
  3”),	
  only	
  applies	
  if	
  it	
  is	
  considered	
  that	
  a	
  
business	
   has	
   been	
   acquired.	
   Under	
   IFRS	
   3,	
   a	
   business	
   is	
   deﬁned	
   as	
   an	
   integrated	
   set	
   of	
   activities	
   and	
   assets	
   conducted	
   and	
  
managed	
   for	
   the	
   purpose	
   of	
   providing	
   a	
   return	
   to	
   investors	
   or	
   lower	
   costs	
   or	
   other	
   economic	
   beneﬁts	
   directly	
   and	
  
proportionately	
  to	
  the	
  Trust.	
  A	
  business	
  generally	
  consists	
  of	
  inputs,	
  processes	
  applied	
  to	
  those	
  inputs,	
  and	
  resulting	
  outputs	
  
that	
   are,	
   or	
   will	
   be,	
   used	
   to	
   generate	
   revenues.	
   In	
   the	
   absence	
   of	
   such	
   criteria,	
   a	
   group	
   of	
   assets	
   is	
   deemed	
   to	
   have	
   been	
  
acquired.	
   If	
   goodwill	
   is	
   present	
   in	
   a	
   transferred	
   set	
   of	
   activities	
   and	
   assets,	
   the	
   transferred	
   set	
   is	
   presumed	
   to	
   be	
   a	
   business.	
  
Judgment	
   is	
   used	
   by	
   management	
   in	
   determining	
   whether	
   the	
   acquisition	
   of	
   an	
   individual	
   property	
   qualiﬁes	
   as	
   a	
   business	
  
combination	
  in	
  accordance	
  with	
  IFRS	
  3	
  or	
  as	
  an	
  asset	
  acquisition.	
  	
  

When	
   determining	
   whether	
   the	
   acquisition	
   of	
   an	
   investment	
   property	
   or	
   a	
   portfolio	
   of	
   investment	
   properties	
   is	
   a	
   business	
  
combination	
  or	
  an	
  asset	
  acquisition,	
  the	
  Trust	
  applies	
  judgment	
  when	
  considering	
  the	
  following:	
  	
  

•  whether	
  the	
  investment	
  property	
  or	
  properties	
  are	
  capable	
  of	
  producing	
  outputs	
  
•  whether	
  the	
  market	
  participant	
  could	
  produce	
  outputs	
  if	
  missing	
  elements	
  exist	
  

In	
  particular,	
  the	
  Trust	
  considers	
  the	
  following:	
  

•  whether	
  employees	
  were	
  assumed	
  in	
  the	
  acquisition	
  
•  whether	
  an	
  operating	
  platform	
  has	
  been	
  acquired	
  

Dream	
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  |	
  	
  57	
  

Currently,	
   when	
   the	
   Trust	
   acquires	
   properties	
   or	
   a	
   portfolio	
   of	
   properties	
   and	
   not	
   legal	
   entities,	
   does	
   not	
   take	
   on	
   or	
   assume	
  
employees,	
  or	
  does	
  not	
  acquire	
  an	
  operating	
  platform,	
  it	
  classifies	
  the	
  acquisition	
  as	
  an	
  asset	
  acquisition.	
  

Impairment	
  	
  
The	
  Trust	
  assesses	
  the	
  possibility	
  and	
  amount	
  of	
  any	
  impairment	
  loss	
  or	
  write-‐down	
  as	
  it	
  relates	
  to	
  the	
  Investment	
  in	
  Dream	
  
Industrial	
  REIT,	
  amounts	
  receivable,	
  property	
  and	
  equipment,	
  external	
  management	
  contracts,	
  and	
  goodwill.	
  	
  

IAS	
   39,	
   “Financial	
   instruments:	
   Recognition	
   and	
   measurement”,	
   requires	
   management	
   to	
   use	
   judgment	
   in	
   determining	
   if	
   the	
  
Trust’s	
  financial	
  assets	
  are	
  impaired.	
  In	
  making	
  this	
  judgment,	
  the	
  Trust	
  evaluates,	
  among	
  other	
  factors,	
  the	
  duration	
  and	
  extent	
  
to	
  which	
  the	
  fair	
  value	
  of	
  the	
  investment	
  is	
  less	
  than	
  its	
  carrying	
  amount;	
  and	
  the	
  financial	
  health	
  of	
  and	
  short-‐term	
  business	
  
outlook	
  for	
  the	
  investee,	
  including	
  factors	
  such	
  as	
  industry	
  and	
  sector	
  performance,	
  changes	
  in	
  technology	
  and	
  operational	
  and	
  
financing	
  cash	
  flow.	
  

IAS	
   36,	
   “Impairment	
   of	
   Assets”	
   (“IAS	
   36”),	
   requires	
   management	
   to	
   use	
   judgment	
   in	
   determining	
   the	
   recoverable	
   amount	
   of	
  
assets	
   and	
   equity	
   accounted	
   investments	
   that	
   are	
   tested	
   for	
   impairment,	
   including	
   goodwill	
   and	
   the	
   investment	
   in	
   Dream	
  
Industrial	
   REIT.	
   Judgment	
   is	
   involved	
   in	
   estimating	
   the	
   fair	
   value	
   less	
   cost	
   to	
   sell	
   or	
   value-‐in-‐use	
   of	
   the	
   cash-‐generating	
   units	
  
(“CGUs”)	
   to	
   which	
   goodwill	
   has	
   been	
   allocated,	
   including	
   estimates	
   of	
   growth	
   rates,	
   discount	
   rates	
   and	
   terminal	
   rates.	
  
Judgment	
   is	
   also	
   involved	
   in	
   estimating	
   the	
   value-‐in-‐use	
   of	
   the	
   investment	
   in	
   Dream	
   Industrial	
   REIT,	
   including	
   estimates	
   of	
  
future	
  cash	
  flows,	
  discount	
  rates	
  and	
  terminal	
  rates.	
  The	
  values	
  assigned	
  to	
  these	
  key	
  assumptions	
  reflect	
  past	
  experience	
  and	
  
are	
  consistent	
  with	
  external	
  sources	
  of	
  information.	
  

The	
  Trust’s	
  goodwill	
  balance	
  is	
  allocated	
  to	
  the	
  office	
  properties	
  group	
  of	
  CGUs	
  by	
  geographical	
  segment	
  (herein	
  referred	
  to	
  as	
  
the	
   goodwill	
   CGU).	
   The	
   recoverable	
   amount	
   of	
   the	
   Trust’s	
   goodwill	
   CGU	
   is	
   determined	
   based	
   on	
   the	
   value-‐in-‐use	
   approach.	
  	
  
For	
  the	
  purpose	
  of	
  this	
  impairment	
  test,	
  the	
  Trust	
  uses	
  cash	
  flow	
  projections	
  forecasted	
  out	
  for	
  a	
  ten-‐year	
  period,	
  consistent	
  
with	
   the	
   internal	
   financial	
   budgets	
   approved	
   by	
   management	
   on	
   a	
   property-‐by-‐property	
   basis.	
   The	
   key	
   assumptions	
   used	
   in	
  
determining	
  the	
  value-‐in-‐use	
  of	
  the	
  goodwill	
  CGU	
  are	
  the	
  estimated	
  growth	
  rate,	
  discount	
  rate	
  and	
  terminal	
  rate.	
  In	
  arriving	
  at	
  
the	
   growth	
   rate,	
   the	
   Trust	
   considers	
   past	
   experience	
   and	
   inflation,	
   as	
   well	
   as	
   industry	
   trends.	
   The	
   Trust	
   utilizes	
   weighted	
  
average	
  cost	
  of	
  capital	
  (“WACC”)	
  to	
  determine	
  the	
  discount	
  rate	
  and	
  terminal	
  rate.	
  The	
  WACC	
  reflects	
  specific	
  risks	
  that	
  would	
  
be	
   attributable	
   to	
   the	
   Trust.	
   As	
   the	
   Trust	
   is	
   not	
   subject	
   to	
   taxation,	
   no	
   adjustment	
   is	
   required	
   to	
   adjust	
   the	
   WACC	
   on	
   a	
  	
  
pre-‐tax	
  basis.	
  

Estimates	
  and	
  assumptions	
  	
  
The	
   Trust	
   makes	
   estimates	
   and	
   assumptions	
   that	
   affect	
   the	
   carrying	
   amounts	
   of	
   assets	
   and	
   liabilities,	
   the	
   disclosure	
   of	
  
contingent	
   assets	
   and	
   liabilities,	
   and	
   the	
   reported	
   amount	
   of	
   earnings	
   for	
   the	
   period.	
   Actual	
   results	
   could	
   differ	
   from	
   these	
  
estimates.	
  The	
  estimates	
  and	
  assumptions	
  that	
  are	
  critical	
  in	
  determining	
  the	
  amounts	
  reported	
  in	
  the	
  consolidated	
  ﬁnancial	
  
statements	
  relate	
  to	
  the	
  following:	
  	
  

Valuation	
  of	
  investment	
  properties	
  
Critical	
   assumptions	
   relating	
   to	
   the	
   estimates	
   of	
   fair	
   values	
   of	
   investment	
   properties	
   include	
   the	
   receipt	
   of	
   contractual	
   rents,	
  
expected	
  future	
  market	
  rents,	
  renewal	
  rates,	
  maintenance	
  requirements,	
  discount	
  rates	
  that	
  reﬂect	
  current	
  market	
  uncertainties,	
  
capitalization	
  rates,	
  and	
  current	
  and	
  recent	
  property	
  investment	
  prices.	
  If	
  there	
  is	
  any	
  change	
  in	
  these	
  assumptions	
  or	
  regional,	
  
national	
  or	
  international	
  economic	
  conditions,	
  the	
  fair	
  value	
  of	
  investment	
  properties	
  may	
  change	
  materially.	
  

Valuation	
  of	
  ﬁnancial	
  instruments	
  	
  
The	
   Trust	
   makes	
   estimates	
   and	
   assumptions	
   relating	
   to	
   the	
   fair	
   value	
   measurement	
   of	
   the	
   subsidiary	
   redeemable	
   units,	
   the	
  
deferred	
   trust	
   units,	
   the	
   convertible	
   debenture	
   conversion	
   feature,	
   interest	
   rate	
   swaps	
   and	
   the	
   fair	
   value	
   disclosure	
   of	
   the	
  
convertible	
   debentures,	
   mortgages	
   and	
   term	
   debt.	
   The	
   critical	
   assumptions	
   underlying	
   the	
   fair	
   value	
   measurements	
   and	
  
disclosures	
  include	
  the	
  market	
  price	
  of	
  REIT	
  Units,	
  market	
  interest	
  rates	
  for	
  mortgages,	
  term	
  debt	
  and	
  unsecured	
  debentures,	
  
and	
  assessment	
  of	
  the	
  effectiveness	
  of	
  hedging	
  relationships.	
  

For	
   certain	
   ﬁnancial	
   instruments,	
   including	
   cash	
   and	
   cash	
   equivalents,	
   promissory	
   notes	
   receivable,	
   amounts	
   receivable,	
  
amounts	
  payable	
  and	
  accrued	
  liabilities,	
  deposits	
  and	
  distributions	
  payable,	
  the	
  carrying	
  amounts	
  approximate	
  fair	
  values	
  due	
  
to	
   their	
   immediate	
   or	
   short-‐term	
   maturity.	
   The	
   fair	
   values	
   of	
   mortgages,	
   term	
   debt	
   and	
   interest	
   rate	
   swaps	
   are	
   determined	
  
based	
  on	
  discounted	
  cash	
  ﬂows	
  using	
  discount	
  rates	
  that	
  reﬂect	
  current	
  market	
  conditions	
  for	
  instruments	
  with	
  similar	
  terms	
  
and	
  risks.	
  The	
  fair	
  value	
  of	
  convertible	
  debentures	
  is	
  determined	
  by	
  reference	
  to	
  quoted	
  market	
  prices	
  from	
  an	
  active	
  market.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  58	
  

CHANGES	
  IN	
  ACCOUNTING	
  POLICIES	
  AND	
  DISCLOSURE	
  AND	
  FUTURE	
  ACCOUNTING	
  POLICY	
  CHANGES	
  
Changes	
  in	
  accounting	
  policies	
  and	
  disclosures	
  
The	
  Trust	
  has	
  adopted	
  the	
  following	
  new	
  and	
  revised	
  standards,	
  along	
  with	
  any	
  consequential	
  amendments,	
  effective	
  January	
  1,	
  
2014.	
  These	
  changes	
  were	
  made	
  in	
  accordance	
  with	
  the	
  applicable	
  transitional	
  provisions.	
  

Consolidated	
  financial	
  statements	
  
Amendments	
  to	
  IFRS	
  10,	
  “Consolidated	
  Financial	
  Statements”,	
  IFRS	
  12,	
  “Disclosure	
  of	
  Interests	
  in	
  Other	
  Entities”	
  (“IFRS	
  12”)	
  and	
  
IAS	
   27,	
   “Separate	
   financial	
   statements	
   –	
   Investment	
   entities”	
   (“IAS	
   27”):	
   The	
   amendments	
   define	
   an	
   investment	
   entity	
   and	
  
introduce	
  an	
  exception	
  to	
  consolidating	
  particular	
  subsidiaries	
  for	
  investment	
  entities.	
  These	
  investments	
  require	
  an	
  investment	
  
entity	
  to	
  measure	
  those	
  subsidiaries	
  at	
  fair	
  value	
  through	
  profit	
  or	
  loss,	
  in	
  accordance	
  with	
  IFRS	
  9,	
  “Financial	
  Instruments”,	
  in	
  its	
  
consolidated	
  and	
  separate	
  financial	
  statements.	
  The	
  amendments	
  also	
  introduce	
  new	
  disclosure	
  requirements	
  for	
  investment	
  
entities	
   in	
   IFRS	
   12	
   and	
   IAS	
   27.	
   The	
   Trust	
   is	
   not	
   considered	
   to	
   be	
   an	
   investment	
   entity	
   and	
   thus,	
   the	
   Trust	
   adopted	
   these	
  
amendments	
  without	
  impact	
  to	
  the	
  consolidated	
  financial	
  statements	
  or	
  note	
  disclosures	
  effective	
  January	
  1,	
  2014.	
  	
  

Segment	
  reporting	
  
A	
  reportable	
  operating	
  segment	
  is	
  a	
  distinguishable	
  component	
  of	
  the	
  Trust	
  that	
  is	
  engaged	
  either	
  in	
  providing	
  related	
  rental	
  
space	
   or	
   services	
   (business	
   segment)	
   or	
   in	
   providing	
   rental	
   space	
   or	
   services	
   within	
   a	
   particular	
   economic	
   environment	
  
(geographical	
  segment),	
  which	
  is	
  subject	
  to	
  risks	
  and	
  rewards	
  that	
  are	
  different	
  from	
  those	
  of	
  other	
  reportable	
  segments.	
  The	
  
Trust’s	
   reportable	
   operating	
   segments	
   include	
   Western	
   Canada,	
   Calgary	
   downtown,	
   Calgary	
   suburban,	
   Toronto	
   downtown,	
  
Toronto	
  suburban,	
  and	
  Eastern	
  Canada,	
  which	
  are	
  based	
  on	
  internal	
  reporting	
  structure	
  to	
  management.	
  Operating	
  segments	
  
are	
  reported	
  in	
  a	
  manner	
  consistent	
  with	
  the	
  internal	
  reporting	
  provided	
  to	
  the	
  chief	
  operating	
  decision-‐maker,	
  determined	
  to	
  
be	
  the	
  Chief	
  Executive	
  Officer	
  (“CEO”)	
  of	
  the	
  Trust.	
  

Prior	
   to	
   January	
   1,	
   2014,	
   the	
   Trust	
   analyzed	
   its	
   operations	
   as	
   a	
   single	
   office	
   portfolio.	
   Beginning	
   January	
   1,	
   2014,	
   the	
   CEO	
  
analyzed	
  the	
  portfolio	
  based	
  on	
  the	
  aforementioned	
  geographical	
  segments.	
  The	
  comparative	
  amounts	
  have	
  been	
  reclassified	
  
to	
  conform	
  to	
  the	
  current	
  year’s	
  presentation.	
  

Accounting	
  for	
  levies	
  imposed	
  by	
  governments	
  
IFRIC	
   21,	
   “Levies”	
   (“IFRIC	
   21”),	
   provides	
   guidance	
   on	
   accounting	
   for	
   levies	
   in	
   accordance	
   with	
   IAS	
   37,	
   “Provisions,	
   Contingent	
  
Liabilities	
  and	
  Contingent	
  Assets”.	
  The	
  interpretation	
  defines	
  a	
  levy	
  as	
  an	
  outflow	
  from	
  an	
  entity	
  imposed	
  by	
  a	
  government	
  in	
  
accordance	
  with	
  legislation	
  and	
  confirms	
  that	
  an	
  entity	
  recognizes	
  a	
  liability	
  for	
  a	
  levy	
  only	
  when	
  the	
  triggering	
  event	
  specified	
  
in	
  the	
  legislation	
  occurs.	
  The	
  Trust	
  adopted	
  this	
  new	
  interpretation	
  effective	
  January	
  1,	
  2014	
  and	
  it	
  was	
  applied	
  retrospectively.	
  
This	
  new	
  interpretation	
  had	
  no	
  material	
  impact	
  on	
  the	
  amounts	
  recognized	
  in	
  the	
  Trust’s	
  consolidated	
  financial	
  statements	
  or	
  
note	
  disclosures	
  for	
  the	
  year	
  ended	
  December	
  31,	
  2014.	
  

Accounting	
  for	
  internal	
  leasing	
  costs	
  
Prior	
   to	
   January	
   1,	
   2014,	
   the	
   Trust	
   capitalized	
   costs	
   of	
   certain	
   internal	
   leasing	
   costs	
   within	
   initial	
   direct	
   leasing	
   costs	
   to	
  
investment	
  properties.	
  These	
  costs	
  would	
  not	
  have	
  been	
  incurred	
  if	
  no	
  leasing	
  activity	
  had	
  taken	
  place	
  and	
  are	
  reasonably	
  and	
  
directly	
   attributable	
   to	
   the	
   leasing	
   activity.	
   On	
   April	
   2,	
   2014,	
   IFRIC	
   issued	
   an	
   agenda	
   decision	
   indicating	
   that	
   certain	
   internal	
  
leasing	
   costs	
   such	
   as	
   salary	
   costs	
   of	
   permanent	
   staff	
   involved	
   in	
   negotiating	
   and	
   arranging	
   new	
   leases	
   do	
   not	
   qualify	
   as	
  
incremental	
   costs	
   in	
   accordance	
   with	
   IAS	
   17,	
   “Leases”.	
   As	
   a	
   result,	
   the	
   Trust	
   has	
   adopted	
   an	
   accounting	
   policy	
   effective	
  	
  
January	
   1,	
   2014	
   of	
   recognizing	
   certain	
   internal	
   leasing	
   costs	
   involved	
   in	
   negotiating	
   and	
   arranging	
   new	
   leases	
   in	
   the	
  
consolidated	
   statements	
   of	
   comprehensive	
   income	
   as	
   incurred.	
   This	
   accounting	
   policy	
   has	
   been	
   applied	
   retrospectively.	
   The	
  
impact	
  for	
  the	
  years	
  ended	
  December	
  31,	
  2014	
  and	
  December	
  31,	
  2013	
  is	
  an	
  increase	
  to	
  internal	
  leasing	
  costs	
  expense	
  included	
  
as	
   part	
   of	
   net	
   gains	
   (losses)	
   on	
   transactions	
   and	
   other	
   activities	
   of	
   $6.1	
   million	
   and	
   $6.5	
   million,	
   respectively,	
   and	
   a	
  
corresponding	
   increase	
   in	
   fair	
   value	
   adjustments	
   to	
   investment	
   properties	
   of	
   $6.1	
   million	
   and	
   $6.5	
   million,	
   respectively.	
   This	
  
change	
  did	
  not	
  impact	
  the	
  consolidated	
  balance	
  sheets.	
  External	
  direct	
  leasing	
  costs	
  continue	
  to	
  be	
  capitalized	
  to	
  initial	
  direct	
  
leasing	
  costs	
  within	
  investment	
  properties.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  59	
  

	
  
	
  
	
  
Future	
  accounting	
  policy	
  changes	
  	
  	
  
Revenue	
  recognition	
  
IFRS	
  15,	
  “Revenue	
  from	
  Contracts	
  with	
  Customers”	
  (“IFRS	
  15”),	
  provides	
  a	
  comprehensive	
  five-‐step	
  revenue	
  recognition	
  model	
  
for	
  all	
  contracts	
  with	
  customers.	
  The	
  IFRS	
  15	
  revenue	
  recognition	
  model	
  requires	
  management	
  to	
  exercise	
  significant	
  judgment	
  
and	
   make	
   estimates	
   that	
   affect	
   revenue	
   recognition.	
   IFRS	
   15	
   is	
   effective	
   for	
   annual	
   periods	
   beginning	
   on	
   or	
   after	
   January	
   1,	
  
2017,	
   with	
   earlier	
   application	
   permitted.	
   The	
   Trust	
   is	
   currently	
   evaluating	
   the	
   impact	
   of	
   adopting	
   this	
   standard	
   on	
   the	
  
consolidated	
  financial	
  statements.	
  

Financial	
  instruments	
  	
  
The	
   final	
   version	
   of	
   IFRS	
   9,	
   “Financial	
   Instruments”	
   (“IFRS	
   9”),	
   was	
   issued	
   by	
   the	
   IASB	
   in	
   July	
   2014	
   and	
   will	
   replace	
   IAS	
   39,	
  
“Financial	
  Instruments:	
  Recognition	
  and	
  Measurement”.	
  IFRS	
  9	
  introduces	
  a	
  model	
  for	
  classification	
  and	
  measurement,	
  a	
  single,	
  
forward-‐looking	
   “expected	
   loss”	
   impairment	
   model,	
   and	
   a	
   substantially	
   reformed	
   approach	
   to	
   hedge	
   accounting.	
   The	
   new	
  
single,	
  principle-‐based	
  approach	
  for	
  determining	
  the	
  classification	
  of	
  financial	
  assets	
  is	
  driven	
  by	
  cash	
  flow	
  characteristics	
  and	
  
the	
   business	
   model	
   in	
   which	
   an	
   asset	
   is	
   held.	
  The	
   new	
   model	
   also	
   results	
   in	
   a	
   single	
   impairment	
   model	
   being	
   applied	
   to	
   all	
  
financial	
  instruments,	
  which	
  will	
  require	
  more	
  timely	
  recognition	
  of	
  expected	
  credit	
  losses.	
  It	
  also	
  includes	
  changes	
  in	
  respect	
  of	
  
own	
   credit	
   risk	
   in	
   measuring	
   liabilities	
   elected	
   to	
   be	
   measured	
   at	
   fair	
   value,	
   so	
   that	
   gains	
   caused	
   by	
   the	
   deterioration	
   of	
   an	
  
entity’s	
   own	
   credit	
   risk	
   on	
   such	
   liabilities	
   are	
   no	
   longer	
   recognized	
   in	
   profit	
   or	
   loss.	
  IFRS	
   9	
   is	
   effective	
   for	
   annual	
   periods	
  
beginning	
  on	
   or	
  after	
  January	
  1,	
  2018;	
  however,	
  it	
  is	
  available	
  for	
   early	
  adoption.	
  In	
  addition,	
  the	
  own	
   credit	
  changes	
   can	
  be	
  
early	
  adopted	
  in	
  isolation	
  without	
  otherwise	
  changing	
  the	
  accounting	
  for	
  financial	
  instruments.	
  The	
  Trust	
  is	
  currently	
  evaluating	
  
the	
  impact	
  of	
  adopting	
  this	
  standard	
  on	
  the	
  consolidated	
  financial	
  statements.	
  

Presentation	
  of	
  financial	
  statements	
  
IAS	
   1,	
   “Presentation	
   of	
   Financial	
   Statements”	
   (“IAS	
   1”)	
   was	
   amended	
   by	
   the	
   IASB	
   to	
   clarify	
   guidance	
   on	
   materiality	
   and	
  
aggregation,	
   the	
   presentation	
   of	
   subtotals,	
   the	
   structure	
   of	
   financial	
   statements	
   and	
   disclosure	
   of	
   accounting	
   policies.	
   The	
  
amendment	
  gives	
  guidance	
  that	
  information	
  within	
  the	
  consolidated	
  balance	
  sheets	
  and	
  statements	
  of	
  comprehensive	
  income	
  
should	
   not	
   be	
   aggregated	
   or	
   disaggregated	
   in	
   a	
   manner	
   that	
   obscures	
   useful	
   information,	
   and	
   that	
   disaggregation	
   may	
   be	
  
required	
  in	
  the	
  statement	
  of	
  comprehensive	
  income	
  in	
  the	
  form	
  of	
  additional	
  subtotals	
  as	
  they	
  are	
  relevant	
  to	
  understanding	
  
the	
  entity’s	
  financial	
  position	
  or	
  performance.	
  The	
  amendments	
  to	
  IAS	
  1	
  are	
  effective	
  for	
  periods	
  beginning	
  on	
  or	
  after	
  January	
  
1,	
  2016.	
  The	
  Trust	
  is	
  currently	
  evaluating	
  the	
  impact	
  of	
  adopting	
  this	
  standard	
  on	
  the	
  consolidated	
  financial	
  statements.	
  

Equity	
  accounting	
  for	
  investments	
  in	
  associates	
  and	
  joint	
  ventures	
  
IAS	
  28,	
  “Investments	
  in	
  Associates	
  and	
  Joint	
  Ventures”	
  (“IAS	
  28”)	
  was	
  amended	
  by	
  the	
  IASB	
  to	
  allow	
  an	
  entity	
  which	
  is	
  not	
  an	
  
investment	
  entity,	
  but	
  has	
  interest	
  in	
  an	
  associate	
  or	
  joint	
  venture	
  which	
  is	
  an	
  investment	
  entity,	
  a	
  policy	
  choice	
  when	
  applying	
  
the	
  equity	
  method	
  of	
  accounting.	
  The	
  entity	
  may	
  choose	
  to	
  retain	
  the	
  fair	
  value	
  measurement	
  applied	
  by	
  the	
  investment	
  entity	
  
associate	
   or	
   joint	
   venture,	
   or	
   to	
   unwind	
   the	
   fair	
   value	
   measurement	
   and	
   instead	
   perform	
   a	
   consolidation	
   at	
   the	
   level	
   of	
   the	
  
investment	
   entity	
   associate	
   or	
   joint	
   venture.	
  The	
   amendments	
   to	
   IAS	
   28	
   are	
   effective	
   for	
   periods	
   beginning	
   on	
   or	
   after	
  	
  
January	
  1,	
  2016.	
  The	
  Trust	
  is	
  currently	
  evaluating	
  the	
  impact	
  of	
  adopting	
  this	
  standard	
  on	
  the	
  consolidated	
  financial	
  statements.	
  

Additional	
  information	
  	
  	
  
Additional	
   information	
   relating	
   to	
   Dream	
   Office	
   REIT,	
   including	
   the	
   latest	
   annual	
   information	
   form	
   of	
   Dream	
   Office	
   REIT,	
   is	
  
available	
  on	
  SEDAR	
  at	
  www.sedar.com.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  60	
  

SECTION	
  VI	
  –	
  SUPPLEMENTARY	
  INFORMATION	
  

The	
  following	
  tables	
  within	
  this	
  section	
  include	
  supplementary	
  information	
  on	
  our	
  portfolio	
  as	
  at	
  December	
  31,	
  2014.	
  

Asset	
  listing	
  

Property	
  

Ownership	
  

	
  Total	
  GLA	
  in	
  
square	
  feet	
  	
  

	
  Owned	
  share	
  
of	
  total	
  GLA	
  	
  
	
  in	
  square	
  feet	
  	
  

Year	
  
built/	
  
renovated	
  

	
  Total	
  site	
  
area	
  in	
  
acres	
  	
  

	
  Owned	
  
share	
  of	
  
site	
  area	
  	
  
in	
  acres	
  	
  

Description	
  of	
  asset	
  

HSBC	
  Bank	
  Place,	
  Edmonton	
  

100.0%	
  

	
  301,217	
  	
  

	
  301,217	
  	
  

1981	
  

	
  1.6	
  	
  

	
  1.6	
  	
   19-‐storey	
  downtown	
  office	
  building	
  

with	
  commercial	
  parkade	
  	
  

Enbridge	
  Place,	
  Edmonton	
  

Saskatoon	
  Square,	
  Saskatoon	
  

Station	
  Tower,	
  Surrey	
  

100.0%	
  

100.0%	
  

100.0%	
  

	
  262,456	
  	
  

	
  262,456	
  	
  

	
  228,312	
  	
  

	
  228,312	
  	
  

	
  219,314	
  	
  

	
  219,314	
  	
  

1981	
  

1980	
  

1994	
  

	
  0.7	
  	
  

	
  0.6	
  	
  

	
  1.0	
  	
  

	
  0.7	
  	
   22-‐storey	
  downtown	
  office	
  building	
  	
  

	
  0.6	
  	
   18-‐storey	
  downtown	
  office	
  building	
  	
  

	
  1.0	
  	
   18-‐storey	
  office	
  building	
  with	
  grade	
  

1900	
  Sherwood	
  Place,	
  Regina	
  

100.0%	
  

	
  185,104	
  	
  

	
  185,104	
  	
   1992/2003	
  

	
  3.0	
  	
  

level	
  retail	
  	
  

	
  3.0	
  	
   One	
  9-‐storey	
  and	
  one	
  2-‐storey	
  
downtown	
  office	
  building	
  	
  

Milner	
  Building,	
  Edmonton	
  

887	
  Great	
  Northern	
  Way,	
  
Vancouver	
  

100.0%	
  

100.0%	
  

	
  173,325	
  	
  

	
  173,325	
  	
  

	
  164,364	
  	
  

	
  164,364	
  	
  

1957	
  

1999	
  

	
  0.9	
  	
  

	
  2.3	
  	
  

	
  0.9	
  	
   12-‐storey	
  downtown	
  office	
  building	
  	
  

	
  2.3	
  	
   8-‐storey	
  office	
  building	
  	
  

Victoria	
  Tower,	
  Regina	
  

100.0%	
  

	
  144,165	
  	
  

	
  144,165	
  	
  

1976	
  

	
  0.8	
  	
  

	
  0.8	
  	
   15-‐storey	
  downtown	
  government	
  	
  

office	
  building	
  	
  

Baker	
  Centre,	
  Edmonton	
  

100.0%	
  

	
  143,994	
  	
  

	
  143,994	
  	
  

1958	
  

	
  0.7	
  	
  

	
  0.7	
  	
   16-‐storey	
  downtown	
  office	
  building	
  

with	
  parkade	
  	
  

Princeton	
  Tower,	
  Saskatoon	
  

100.0%	
  

	
  134,597	
  	
  

	
  134,597	
  	
  

1988	
  

	
  0.6	
  	
  

	
  0.6	
  	
   11-‐storey	
  downtown	
  office	
  building	
  

340-‐450	
  3rd	
  Avenue	
  N.,	
  
Saskatoon	
  

100.0%	
  

	
  130,415	
  	
  

	
  130,415	
  	
   1980/1993	
  

	
  1.1	
  	
  

	
  1.1	
  	
   2-‐storey	
  office	
  building	
  	
  	
  

with	
  grade	
  level	
  retail	
  	
  

HSBC	
  Building,	
  Edmonton	
  

100.0%	
  

	
  118,406	
  	
  

	
  118,406	
  	
  

1974	
  

	
  0.4	
  	
  

	
  0.4	
  	
   12-‐storey	
  downtown	
  office	
  building	
  

with	
  underground	
  parking	
  	
  

4259-‐4299	
  Canada	
  Way,	
  
Burnaby	
  

100.0%	
  

	
  118,022	
  	
  

	
  118,022	
  	
   1973/1998	
  

	
  3.2	
  	
  

	
  3.2	
  	
   Two	
  2-‐storey	
  suburban	
  office	
  buildings	
  	
  

13888	
  Wireless	
  Way,	
  Richmond	
  

100.0%	
  

	
  116,530	
  	
  

	
  116,530	
  	
  

Highfield	
  Place,	
  Edmonton	
  

Scotia	
  Centre,	
  Yellowknife	
  

Richmond	
  Place,	
  Richmond	
  

100.0%	
  

100.0%	
  

100.0%	
  

4400	
  Dominion	
  Street,	
  Burnaby	
  

100.0%	
  

2008	
  

1978	
  

1991	
  

1986	
  

	
  104,578	
  	
  

	
  104,578	
  	
  

	
  107,797	
  	
  

	
  107,797	
  	
  

	
  95,298	
  	
  

	
  93,095	
  	
  

	
  95,298	
  	
  

	
  93,095	
  	
   1977/2000	
  
and	
  2006	
  

	
  4.8	
  	
  

	
  0.3	
  	
  

	
  0.7	
  	
  

	
  0.9	
  	
  

	
  1.9	
  	
  

	
  4.8	
  	
   3-‐storey	
  suburban	
  office	
  building	
  	
  

	
  0.3	
  	
   10-‐storey	
  downtown	
  office	
  building	
  	
  

	
  0.7	
  	
   11-‐storey	
  office	
  building	
  	
  

	
  0.9	
  	
   9-‐storey	
  suburban	
  office	
  building	
  	
  

	
  1.9	
  	
   5-‐storey	
  suburban	
  office	
  building	
  	
  

2055	
  Premier	
  Way,	
  	
  
Strathcona	
  County	
  

Precambrian	
  Building,	
  
Yellowknife	
  

Northwest	
  Tower,	
  Yellowknife	
  

625	
  Agnes	
  Street,	
  	
  
New	
  Westminster	
  

2899	
  Broadmoor	
  Blvd.,	
  
Strathcona	
  County	
  

2693	
  Broadmoor	
  Blvd.,	
  
Strathcona	
  County	
  

1914	
  Hamilton	
  Street,	
  Regina	
  

2665	
  Renfrew	
  Street,	
  
Vancouver	
  

100.0%	
  

	
  91,137	
  	
  

	
  91,137	
  	
  

2007	
  

	
  4.3	
  	
  

	
  4.3	
  	
   2-‐storey	
  flex	
  office	
  building	
  	
  

100.0%	
  

	
  92,140	
  	
  

	
  92,140	
  	
  

1976	
  

	
  0.8	
  	
  

	
  0.8	
  	
   11-‐storey	
  office	
  building	
  	
  

100.0%	
  

100.0%	
  

	
  87,994	
  	
  

	
  85,541	
  	
  

	
  87,994	
  	
  

	
  85,541	
  	
  

1991	
  

1981	
  

	
  0.3	
  	
  

	
  0.6	
  	
  

	
  0.3	
  	
   11-‐storey	
  office	
  building	
  	
  

	
  0.6	
  	
   5-‐storey	
  suburban	
  office	
  building	
  	
  

100.0%	
  

	
  82,817	
  	
  

	
  82,817	
  	
  

1999	
  

	
  3.5	
  	
  

	
  3.5	
  	
   2-‐storey	
  suburban	
  office	
  building	
  	
  

100.0%	
  

	
  81,873	
  	
  

	
  81,873	
  	
  

2007	
  

	
  4.1	
  	
  

	
  4.1	
  	
   2-‐storey	
  suburban	
  office	
  building	
  	
  

100.0%	
  

100.0%	
  

	
  82,264	
  	
  

	
  81,662	
  	
  

	
  82,264	
  	
  

	
  81,662	
  	
  

1973	
  

2009	
  

	
  0.4	
  	
  

	
  3.3	
  	
  

	
  0.4	
  	
   14-‐storey	
  downtown	
  office	
  building	
  	
  

	
  3.3	
  	
   2-‐storey	
  suburban	
  office	
  building	
  	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  61	
  

	
  	
  
	
  	
  
	
  	
  
Property	
  

350-‐450	
  Lansdowne	
  Street,	
  
Kamloops	
  

2833	
  Broadmoor	
  Blvd.,	
  
Strathcona	
  County	
  

2261	
  Keating	
  Cross	
  Road,	
  
Victoria	
  

960	
  Quayside	
  Drive,	
  	
  
New	
  Westminster	
  

2755	
  Broadmoor	
  Blvd.,	
  
Sherwood	
  Park	
  

2257	
  &	
  2301	
  Premier	
  Way,	
  
Sherwood	
  Park	
  

2121	
  &	
  2181	
  Premier	
  Way,	
  
Sherwood	
  Park	
  

10199	
  -‐	
  101st	
  Street	
  NW,	
  
Edmonton	
  

2220	
  College	
  Avenue,	
  Regina	
  

Morgex	
  Building,	
  Edmonton	
  

Gallery	
  Building,	
  Yellowknife	
  

Harbour	
  Landing,	
  Phase	
  2,	
  
Regina	
  

13183	
  -‐	
  146th	
  Street	
  NW,	
  
Edmonton	
  

2400	
  College	
  Avenue,	
  Regina	
  

Royal	
  Centre,	
  Saskatoon	
  

2208	
  Scarth	
  Street,	
  Regina	
  

Royal	
  Centre,	
  Saskatoon	
  

2445	
  -‐	
  13th	
  Avenue,	
  Regina	
  

234	
  -‐	
  1st	
  Avenue	
  South,	
  
Saskatoon	
  

Western	
  Canada	
  

Telus	
  Tower,	
  Calgary	
  

IBM	
  Corporate	
  Park,	
  Calgary	
  

840	
  -‐	
  7th	
  Avenue	
  SW,	
  Calgary	
  

444	
  -‐	
  7th	
  Building,	
  Calgary	
  

McFarlane	
  Tower,	
  Calgary	
  

Life	
  Plaza,	
  Calgary	
  

Rocky	
  Mountain	
  Plaza,	
  Calgary	
  

Northland	
  Building,	
  Calgary	
  

606	
  4th	
  Building	
  &	
  Barclay	
  
Parkade,	
  Calgary	
  

	
  Total	
  GLA	
  in	
  
square	
  feet	
  	
  

	
  Owned	
  share	
  
of	
  total	
  GLA	
  	
  
	
  in	
  square	
  feet	
  	
  

Year	
  
built/	
  
renovated	
  

	
  Total	
  site	
  
area	
  in	
  
acres	
  	
  

	
  Owned	
  
share	
  of	
  
site	
  area	
  	
  
in	
  acres	
  	
  

Description	
  of	
  asset	
  

	
  190,773	
  	
  

	
  76,309	
  	
   1970/2008	
  

	
  11.9	
  	
  

	
  4.8	
  	
   One	
  1-‐storey,	
  one	
  2-‐storey	
  and	
  one	
  	
  

4-‐storey	
  retail	
  and	
  office	
  complex	
  	
  

Ownership	
  
(4)

40.0%

100.0%	
  

	
  75,254	
  	
  

	
  75,254	
  	
  

2000	
  

	
  3.2	
  	
  

	
  3.2	
  	
   2-‐storey	
  flex	
  office	
  building	
  	
  

(4)

40.0%

	
  181,693	
  	
  

	
  72,677	
  	
  

1999	
  

	
  4.9	
  	
  

Financial	
  Building,	
  Regina	
  

100.0%	
  

4370	
  Dominion	
  Street,	
  Burnaby	
  

100.0%	
  

Preston	
  Centre,	
  Saskatoon	
  

100.0%	
  

	
  65,764	
  	
  

	
  63,930	
  	
  

	
  61,867	
  	
  

	
  65,764	
  	
   1958/1992	
  

	
  63,930	
  	
   1983/1999	
  

	
  61,867	
  	
   1988/2003	
  

	
  0.6	
  	
  

	
  1.0	
  	
  

	
  3.1	
  	
  

	
  2.0	
  	
   One	
  2-‐storey	
  and	
  one	
  4-‐storey	
  
suburban	
  office	
  building	
  	
  

	
  0.6	
  	
   8-‐storey	
  downtown	
  office	
  building	
  	
  

	
  1.0	
  	
   6-‐storey	
  suburban	
  office	
  building	
  	
  

	
  3.1	
  	
   3-‐storey	
  suburban	
  office	
  building	
  with	
  

grade	
  level	
  retail	
  	
  

100.0%	
  

	
  61,694	
  	
  

	
  61,694	
  	
  

1988	
  

	
  1.8	
  	
  

	
  1.8	
  	
   4-‐storey	
  suburban	
  office	
  building	
  	
  

100.0%	
  

	
  61,302	
  	
  

	
  61,302	
  	
  

2005	
  

	
  2.9	
  	
  

	
  2.9	
  	
   2-‐storey	
  suburban	
  office	
  building	
  	
  

100.0%	
  

	
  153,299	
  	
  

	
  153,299	
  	
  

2003	
  

	
  8.7	
  	
  

	
  8.7	
  	
   2-‐storey	
  suburban	
  office	
  building	
  	
  

100.0%	
  

	
  151,456	
  	
  

	
  151,456	
  	
   2005-‐2006	
  

	
  7.8	
  	
  

	
  7.8	
  	
   2-‐storey	
  suburban	
  office	
  building	
  	
  

(4)

50.0%

100.0%	
  

100.0%	
  

100.0%	
  

100.0%	
  

	
  121,357	
  	
  

	
  60,679	
  	
  

1985	
  

	
  0.7	
  	
  

	
  0.4	
  	
   5-‐storey	
  downtown	
  office	
  building	
  	
  

	
  59,590	
  	
  

	
  53,000	
  	
  

	
  50,150	
  	
  

	
  38,738	
  	
  

	
  59,590	
  	
  

1976	
  

	
  53,000	
  	
   1982/1995	
  

	
  50,150	
  	
  

	
  38,738	
  	
  

2012	
  

2013	
  

	
  0.6	
  	
  

	
  4.8	
  	
  

	
  0.1	
  	
  

	
  2.3	
  	
  

	
  0.6	
  	
   7-‐storey	
  suburban	
  office	
  building	
  	
  

	
  4.8	
  	
   1-‐storey	
  suburban	
  office	
  building	
  	
  

	
  0.1	
  	
   3-‐storey	
  office	
  building	
  	
  

	
  2.3	
  	
   3-‐storey	
  suburban	
  office	
  building	
  	
  

100.0%	
  

	
  38,817	
  	
  

	
  38,817	
  	
  

2005	
  

	
  2.6	
  	
  

	
  2.6	
  	
   2-‐storey	
  suburban	
  office	
  building	
  	
  

100.0%	
  

100.0%	
  

100.0%	
  

100.0%	
  

100.0%	
  

100.0%	
  

	
  35,528	
  	
  

	
  32,116	
  	
  

	
  25,185	
  	
  

	
  16,423	
  	
  

	
  16,096	
  	
  

	
  9,567	
  	
  

	
  35,528	
  	
  

	
  32,116	
  	
  

	
  25,185	
  	
  

	
  16,423	
  	
  

	
  16,096	
  	
  

	
  9,567	
  	
  

94.4%	
  

5,090,016	
  	
  

	
  4,805,858	
  	
   	
  

	
  710,243	
  	
  

	
  355,122	
  	
  

	
  357,277	
  	
  

	
  357,277	
  	
  

1977	
  

1952	
  

1974	
  

1952	
  

1975	
  

1971	
  

1983	
  

2002	
  

	
  269,467	
  	
  

	
  269,467	
  	
   1979/2001	
  

	
  251,931	
  	
  

	
  251,931	
  	
   1963/1998	
  

	
  241,815	
  	
  

	
  241,815	
  	
   1979/2003	
  

	
  236,709	
  	
  

	
  236,709	
  	
   1980/1992	
  

	
  205,254	
  	
  

	
  205,254	
  	
  

	
  146,600	
  	
  

	
  146,600	
  	
  

1972	
  

1982	
  

	
  132,885	
  	
  

	
  132,885	
  	
   1969/1998	
  

(3)

50.0%

100.0%	
  

100.0%	
  

100.0%	
  

100.0%	
  

100.0%	
  

100.0%	
  

100.0%	
  

100.0%	
  

	
  0.5	
  	
  

	
  0.7	
  	
  

	
  3.2	
  	
  

	
  0.3	
  	
  

	
  0.4	
  	
  

	
  0.7	
  	
  

	
  0.5	
  	
   5-‐storey	
  suburban	
  office	
  building	
  	
  

	
  0.7	
  	
   Retail	
  component	
  of	
  office/	
  

retail	
  complex	
  	
  

	
  3.2	
  	
   2-‐storey	
  suburban	
  office	
  building	
  	
  

	
  0.3	
  	
   4-‐storey	
  downtown	
  office/	
  

retail	
  complex	
  	
  

	
  0.4	
  	
   3-‐storey	
  downtown	
  office	
  building	
  	
  

	
  0.7	
  	
   4-‐storey	
  parking	
  garage	
  with	
  grade	
  	
  

level	
  retail	
  	
  

	
  105.6	
  	
  

	
  95.3	
  	
   	
  

	
  1.7	
  	
  

	
  2.4	
  	
  

	
  0.4	
  	
  

	
  0.8	
  	
  

	
  0.7	
  	
  

	
  0.5	
  	
  

	
  0.9	
  	
  

	
  0.4	
  	
  

	
  0.3	
  	
  

	
  0.9	
  	
   28-‐storey	
  downtown	
  office	
  building	
  	
  

	
  2.4	
  	
   One	
  5-‐storey	
  and	
  two	
  6-‐storey	
  
downtown	
  office	
  buildings	
  	
  

	
  0.4	
  	
   20-‐storey	
  downtown	
  office	
  building	
  	
  

	
  0.8	
  	
   10-‐storey	
  downtown	
  office	
  building	
  	
  

	
  0.7	
  	
   18-‐storey	
  downtown	
  office	
  building	
  	
  

	
  0.5	
  	
   18-‐storey	
  downtown	
  office	
  building	
  	
  

	
  0.9	
  	
   14-‐storey	
  downtown	
  office	
  building	
  	
  

	
  0.4	
  	
   14-‐storey	
  downtown	
  office	
  building	
  	
  

	
  0.3	
  	
   14-‐storey	
  downtown	
  office	
  building	
  	
  

and	
  parkade	
  	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  62	
  

	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
Property	
  

Ownership	
  

Roslyn	
  Building,	
  Calgary	
  

Atrium	
  I,	
  Calgary	
  

Atrium	
  II,	
  Calgary	
  

510	
  -‐	
  5th	
  Street	
  SW,	
  Calgary	
  

Joffre	
  Place,	
  Calgary	
  

Dominion	
  Centre,	
  Calgary	
  

435	
  -‐	
  4th	
  Avenue	
  SW,	
  Calgary	
  

1035	
  -‐	
  7th	
  Ave	
  SW,	
  Calgary	
  

Mount	
  Royal	
  Place,	
  Calgary	
  

441	
  -‐	
  5th	
  Avenue	
  SW,	
  Calgary	
  

100.0%	
  

100.0%	
  

100.0%	
  

100.0%	
  

100.0%	
  

100.0%	
  

100.0%	
  

100.0%	
  

100.0%	
  

100.0%	
  

Calgary	
  Downtown	
  

89.9%	
  

3,500,979	
  	
  

	
  Total	
  GLA	
  in	
  
square	
  feet	
  	
  

	
  Owned	
  share	
  
of	
  total	
  GLA	
  	
  
	
  in	
  square	
  feet	
  	
  

Year	
  
built/	
  
renovated	
  

	
  Total	
  site	
  
area	
  in	
  
acres	
  	
  

	
  Owned	
  
share	
  of	
  
site	
  area	
  	
  
in	
  acres	
  	
  

Description	
  of	
  asset	
  

	
  131,763	
  	
  

	
  131,763	
  	
   1966/2003	
  

	
  109,793	
  	
  

	
  109,793	
  	
  

	
  109,392	
  	
  

	
  109,392	
  	
  

	
  109,181	
  	
  

	
  109,181	
  	
  

	
  107,261	
  	
  

	
  107,261	
  	
  

	
  99,014	
  	
  

	
  88,737	
  	
  

	
  75,129	
  	
  

	
  59,377	
  	
  

	
  59,151	
  	
  

	
  99,014	
  	
  

	
  88,737	
  	
  

	
  75,129	
  	
   1979/2002	
  

	
  59,377	
  	
   1979/2004	
  

	
  59,151	
  	
  
	
  3,145,858	
  	
   	
  

	
  149,660	
  	
  

	
  149,660	
  	
  

	
  149,327	
  	
  

	
  149,327	
  	
  

1978	
  

1979	
  

1981	
  

1980	
  

1979	
  

1978	
  

1973	
  

1981	
  

2000	
  

	
  0.5	
  	
  

	
  0.5	
  	
  

	
  0.4	
  	
  

	
  0.2	
  	
  

	
  0.6	
  	
  

	
  0.3	
  	
  

	
  0.4	
  	
  

	
  0.6	
  	
  

	
  0.5	
  	
  

	
  0.2	
  	
  

	
  12.3	
  	
  

	
  7.9	
  	
  

	
  0.5	
  	
   10-‐storey	
  downtown	
  office	
  building	
  	
  

	
  0.5	
  	
   8-‐storey	
  downtown	
  office	
  building	
  	
  

	
  0.4	
  	
   8-‐storey	
  downtown	
  office	
  building	
  	
  

	
  0.2	
  	
   18-‐storey	
  downtown	
  office	
  building	
  	
  

	
  0.6	
  	
   6-‐storey	
  downtown	
  office	
  building	
  	
  

	
  0.3	
  	
   11-‐storey	
  downtown	
  office	
  building	
  	
  

	
  0.4	
  	
   7-‐storey	
  downtown	
  office	
  building	
  	
  

	
  0.6	
  	
   6-‐storey	
  downtown	
  office	
  building	
  	
  

	
  0.5	
  	
   6-‐storey	
  downtown	
  office	
  building	
  	
  

	
  0.2	
  	
   10-‐storey	
  downtown	
  office	
  building	
  	
  
	
  11.5	
  	
   	
  

	
  7.9	
  	
   Two	
  2-‐storey	
  suburban	
  office	
  buildings	
  	
  

	
  -‐	
  	
  	
  	
  

	
  -‐	
  	
  	
  	
  8-‐storey	
  suburban	
  office	
  building	
  	
  

	
  87,250	
  	
  

	
  77,906	
  	
  

	
  73,541	
  	
  

	
  61,272	
  	
  

	
  87,250	
  	
  

2001	
  

	
  77,906	
  	
   1982/2002	
  
to	
  2003	
  

	
  73,541	
  	
  

	
  61,272	
  	
  

1981	
  

2000	
  

	
  5.1	
  	
  

	
  0.6	
  	
  

	
  2.3	
  	
  

	
  2.2	
  	
  

	
  5.1	
  	
   3-‐storey	
  suburban	
  office	
  building	
  	
  

	
  0.6	
  	
   5-‐storey	
  suburban	
  office	
  building	
  with	
  

grade	
  level	
  retail	
  	
  

	
  2.3	
  	
   4-‐storey	
  suburban	
  office	
  building	
  	
  

	
  2.2	
  	
   3-‐storey	
  office	
  building	
  	
  	
  

100.0%	
  

100.0%	
  

100.0%	
  

100.0%	
  

100.0%	
  

100.0%	
  

100.0%	
  

	
  54,846	
  	
  

	
  54,846	
  	
  

1982	
  

	
  0.3	
  	
  

	
  0.3	
  	
   6-‐storey	
  suburban	
  office	
  building	
  	
  

100.0%	
  

100.0%	
  
(4)

15.0%

87.2%	
  

(3)

66.7%

	
  50,577	
  	
  

	
  33,507	
  	
  

	
  130,798	
  	
  

868,684	
  	
  

	
  50,577	
  	
   1978/2001	
  

	
  33,507	
  	
  

	
  19,620	
  	
  

	
  757,506	
  	
   	
  

1981	
  

1977	
  

	
  1,578,741	
  	
  

	
  1,052,547	
  	
   1989/2011	
  

	
  2.6	
  	
  

	
  0.9	
  	
  

	
  2.0	
  	
  

	
  23.9	
  	
  

	
  2.4	
  	
  

	
  2.6	
  	
   2-‐storey	
  suburban	
  office	
  building	
  	
  

	
  0.9	
  	
   3-‐storey	
  suburban	
  office	
  building	
  	
  

	
  0.3	
  	
   8-‐storey	
  suburban	
  office	
  building	
  	
  

	
  22.2	
  	
   	
  

	
  1.6	
  	
   68-‐storey,	
  5-‐storey	
  and	
  3-‐storey	
  

downtown	
  office	
  buildings	
  with	
  below	
  
grade	
  retail	
  concourse	
  	
  

	
  2.1	
  	
   One	
  22-‐storey	
  and	
  one	
  20-‐storey	
  
downtown	
  office	
  building	
  	
  

Adelaide	
  Place,	
  Toronto	
  

100.0%	
  

	
  655,230	
  	
  

	
  655,230	
  	
   1982/2001	
  

	
  2.1	
  	
  

100.0%	
  

	
  413,933	
  	
  

	
  413,933	
  	
   1958/2001	
  

	
  1.3	
  	
  

	
  1.3	
  	
   17-‐storey	
  downtown	
  office	
  building	
  	
  

100.0%	
  

100.0%	
  
(3)

66.7%

	
  322,669	
  	
  

	
  322,669	
  	
  

	
  297,582	
  	
  

	
  297,582	
  	
  

1992	
  

1990	
  

	
  401,705	
  	
  

	
  267,817	
  	
   1951/2011	
  

	
  0.7	
  	
  

	
  1.3	
  	
  

	
  0.6	
  	
  

	
  0.7	
  	
   20-‐storey	
  downtown	
  office	
  building	
  	
  

	
  1.3	
  	
   17-‐storey	
  downtown	
  office	
  building	
  	
  

	
  0.4	
  	
   26-‐storey	
  downtown	
  office	
  building	
  	
  

100.0%	
  

	
  265,812	
  	
  

	
  265,812	
  	
   1958/1968	
  
and	
  2011	
  

	
  0.4	
  	
  

	
  0.4	
  	
   10-‐storey	
  commercial	
  office	
  building	
  	
  

100.0%	
  

100.0%	
  

	
  214,054	
  	
  

	
  247,743	
  	
  

	
  247,743	
  	
  

1989	
  

	
  214,054	
  	
   1875/2008	
  
to	
  2009	
  

	
  231,811	
  	
   1967/2008	
  
to	
  2009	
  

	
  0.6	
  	
  

	
  0.5	
  	
  

	
  0.6	
  	
   11-‐storey	
  downtown	
  office	
  building	
  	
  

	
  0.5	
  	
   13-‐storey	
  downtown	
  office	
  building	
  	
  

	
  0.5	
  	
  

	
  0.5	
  	
   18-‐storey	
  downtown	
  office	
  building	
  	
  

18	
  King	
  Street	
  East,	
  Toronto	
  

100.0%	
  

	
  231,811	
  	
  

330	
  Bay	
  Street,	
  Toronto	
  

100.0%	
  

	
  161,892	
  	
  

	
  161,892	
  	
  

1926	
  

	
  0.4	
  	
  

	
  0.4	
  	
   One	
  16-‐storey	
  and	
  one	
  11-‐storey	
  
downtown	
  office	
  building	
  	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  63	
  

Franklin	
  Atrium,	
  Calgary	
  

Airport	
  Corporate	
  Centre,	
  
Calgary	
  

2891	
  Sunridge	
  Way,	
  Calgary	
  

Kensington	
  House,	
  Calgary	
  

3115	
  -‐	
  12th	
  Street	
  NE,	
  Calgary	
  

14505	
  Bannister	
  Road,	
  SE,	
  
Calgary	
  

Braithwaite	
  Boyle	
  Centre,	
  
Calgary	
  

Franklin	
  Building,	
  Calgary	
  

2816	
  -‐	
  11th	
  Street	
  NE,	
  Calgary	
  

Centre	
  70,	
  Calgary	
  

Calgary	
  Suburban	
  

Scotia	
  Plaza	
  	
  
(40	
  King	
  Street	
  West),	
  Toronto	
  

State	
  Street	
  Financial	
  Centre,	
  
Toronto	
  

AIR	
  MILES	
  Tower,	
  Toronto	
  

655	
  Bay	
  Street,	
  Toronto	
  

Scotia	
  Plaza	
  	
  
(44	
  King	
  Street	
  West),	
  Toronto	
  

74	
  Victoria	
  St/137	
  Yonge	
  St,	
  
Toronto	
  

720	
  Bay	
  Street,	
  Toronto	
  

36	
  Toronto	
  Street,	
  Toronto	
  

	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
Property	
  

100	
  Yonge	
  Street,	
  Toronto	
  

20	
  Toronto	
  St/33	
  Victoria	
  St,	
  
Toronto	
  

Ownership	
  
(3)

66.7%

100.0%	
  

	
  157,852	
  	
  

8	
  King	
  Street	
  East,	
  Toronto	
  

100.0%	
  

	
  148,142	
  	
  

	
  Total	
  GLA	
  in	
  
square	
  feet	
  	
  

	
  Owned	
  share	
  
of	
  total	
  GLA	
  	
  
	
  in	
  square	
  feet	
  	
  

Year	
  
built/	
  
renovated	
  

	
  Total	
  site	
  
area	
  in	
  
acres	
  	
  

	
  Owned	
  
share	
  of	
  
site	
  area	
  	
  
in	
  acres	
  	
  

Description	
  of	
  asset	
  

	
  242,645	
  	
  

	
  161,771	
  	
  

1989	
  

	
  157,852	
  	
   1965/2009	
  
to	
  2011	
  

	
  148,142	
  	
   1914/2006	
  
to	
  2008	
  

	
  0.3	
  	
  

	
  0.4	
  	
  

	
  0.2	
  	
   17-‐storey	
  downtown	
  office	
  building	
  	
  	
  

	
  0.4	
  	
   15-‐storey	
  commercial	
  office	
  building	
  	
  

	
  0.2	
  	
  

	
  0.2	
  	
   21-‐storey	
  downtown	
  office	
  building	
  	
  

250	
  Dundas	
  Street	
  West,	
  
Toronto	
  

100.0%	
  

	
  121,593	
  	
  

	
  121,593	
  	
  

1983	
  

	
  0.6	
  	
  

	
  0.6	
  	
   8-‐storey	
  downtown	
  office	
  building	
  	
  

Victory	
  Building,	
  Toronto	
  

100.0%	
  

	
  101,421	
  	
  

425	
  Bloor	
  Street	
  East,	
  Toronto	
  

212	
  King	
  Street	
  West,	
  Toronto	
  

357	
  Bay	
  Street,	
  Toronto	
  

360	
  Bay	
  Street,	
  Toronto	
  

10	
  King	
  Street	
  East,	
  Toronto	
  

350	
  Bay	
  Street,	
  Toronto	
  

67	
  Richmond	
  Street	
  West,	
  
Toronto	
  

100.0%	
  

100.0%	
  

100.0%	
  

100.0%	
  

100.0%	
  

100.0%	
  

100.0%	
  

	
  83,527	
  	
  

	
  73,277	
  	
  

	
  63,529	
  	
  

	
  57,744	
  	
  

	
  57,476	
  	
  

	
  52,796	
  	
  

	
  50,158	
  	
  

366	
  Bay	
  Street,	
  Toronto	
  

100.0%	
  

	
  36,371	
  	
  

49	
  Ontario	
  Street,	
  Toronto	
  

56	
  Temperance	
  Street,	
  Toronto	
  

10	
  Lower	
  Spadina	
  Avenue,	
  
Toronto	
  

(4)

40.0%

100.0%	
  
(4)

40.0%

	
  87,105	
  	
  

	
  32,338	
  	
  

	
  60,255	
  	
  

	
  101,421	
  	
   1925/2007	
  
to	
  2008	
  

	
  83,527	
  	
  

1986	
  

	
  73,277	
  	
   1908/1980	
  

	
  63,529	
  	
   1921/2008	
  

	
  57,744	
  	
   1955/2007	
  
to	
  2009	
  

	
  57,476	
  	
   1965/2010	
  

	
  52,796	
  	
   1928/1987	
  

	
  50,158	
  	
  

1940	
  

	
  36,371	
  	
   1959/2006	
  
and	
  2009	
  

	
  34,842	
  	
  

1972	
  

	
  32,338	
  	
   1984/2008	
  

	
  24,102	
  	
  

1988	
  

	
  0.2	
  	
  

	
  0.2	
  	
   20-‐storey	
  downtown	
  office	
  building	
  	
  

	
  0.6	
  	
  

	
  0.4	
  	
  

	
  0.2	
  	
  

	
  0.1	
  	
  

	
  0.1	
  	
  

	
  0.1	
  	
  

	
  0.2	
  	
  

	
  0.6	
  	
   5-‐storey	
  downtown	
  office	
  building	
  	
  

	
  0.4	
  	
   6-‐storey	
  downtown	
  historical	
  office	
  

building	
  	
  

	
  0.2	
  	
   10-‐storey	
  downtown	
  office	
  building	
  	
  

	
  0.1	
  	
   10-‐storey	
  downtown	
  office	
  building	
  	
  

	
  0.1	
  	
   14-‐storey	
  downtown	
  office	
  building	
  	
  

	
  0.1	
  	
   13-‐storey	
  downtown	
  office	
  building	
  	
  

	
  0.2	
  	
   7-‐storey	
  downtown	
  office	
  building	
  	
  

	
  0.1	
  	
  

	
  0.1	
  	
   12-‐storey	
  downtown	
  office	
  building	
  	
  

	
  1.1	
  	
  

	
  0.1	
  	
  

	
  0.1	
  	
  

	
  0.4	
  	
   7-‐storey	
  downtown	
  office	
  building	
  	
  

	
  0.1	
  	
   10-‐storey	
  downtown	
  office	
  building	
  	
  

	
  0.0	
  	
   7-‐storey	
  downtown	
  office	
  building	
  	
  

83	
  Yonge	
  Street,	
  Toronto	
  

100.0%	
  

	
  11,504	
  	
  

	
  11,504	
  	
   1857/2006	
  

	
  0.1	
  	
  

	
  0.1	
  	
   3-‐storey	
  downtown	
  office	
  building	
  with	
  

Toronto	
  Downtown	
  

5915-‐5935	
  Airport	
  Road,	
  
Mississauga	
  

Aviva	
  Corporate	
  Centre,	
  
Toronto	
  

6655-‐6725	
  Airport	
  Road,	
  
Mississauga	
  

5001	
  Yonge	
  Street,	
  Toronto	
  

2075	
  Kennedy	
  Road,	
  Toronto	
  

5945-‐5955	
  Airport	
  Road,	
  
Mississauga	
  

50	
  Burnhamthorpe	
  Road	
  West,	
  
Mississauga	
  (Sussex	
  Centre)	
  

30	
  Eglinton	
  Avenue	
  West,	
  
Mississauga	
  

401	
  &	
  405	
  The	
  West	
  Mall,	
  
Toronto	
  (Commerce	
  West)	
  

300,	
  302	
  &	
  304	
  The	
  East	
  Mall,	
  
Toronto	
  (Valhalla	
  Executive	
  
Centre)	
  

86.7%	
  

6,228,905	
  	
  

	
  5,399,533	
  	
   	
  

100.0%	
  

	
  493,811	
  	
  

	
  493,811	
  	
  

1983	
  

	
  15.7	
  	
  

	
  10.5	
  	
  

100.0%	
  

	
  352,425	
  	
  

	
  352,425	
  	
  

1987	
  

	
  9.8	
  	
  

grade	
  level	
  retail	
  	
  

	
  13.8	
  	
   	
  

	
  10.5	
  	
   11-‐storey	
  suburban	
  office	
  building	
  	
  

	
  9.8	
  	
   3-‐storey,	
  2-‐storey	
  and	
  7-‐storey	
  
suburban	
  office	
  complex	
  	
  

100.0%	
  

	
  331,372	
  	
  

	
  331,372	
  	
  

1983	
  

	
  12.6	
  	
  

	
  12.6	
  	
   6-‐storey	
  and	
  7-‐storey	
  suburban	
  office	
  

buildings,	
  1-‐storey	
  and	
  2-‐storey	
  flex	
  
buildings	
  	
  

100.0%	
  

100.0%	
  

100.0%	
  

(4)

49.9%

	
  308,568	
  	
  

	
  308,568	
  	
  

	
  205,835	
  	
  

	
  205,835	
  	
  

	
  177,985	
  	
  

	
  177,985	
  	
  

1992	
  

1991	
  

1981	
  

	
  1.0	
  	
  

	
  5.4	
  	
  

	
  6.8	
  	
  

	
  1.0	
  	
   20-‐storey	
  office	
  building	
  	
  

	
  5.4	
  	
   13-‐storey	
  suburban	
  office	
  building	
  	
  

	
  6.8	
  	
   3-‐storey	
  suburban	
  office	
  complex	
  	
  

	
  350,997	
  	
  

	
  175,148	
  	
  

1987	
  

	
  2.1	
  	
  

	
  1.0	
  	
   15-‐storey	
  suburban	
  office	
  building	
  with	
  

retail	
  space	
  	
  

100.0%	
  

	
  165,012	
  	
  

	
  165,012	
  	
  

1989	
  

	
  6.3	
  	
  

	
  6.3	
  	
   8-‐storey	
  suburban	
  office	
  building	
  	
  

(4)

40.0%

(4)

49.9%

	
  411,842	
  	
  

	
  164,737	
  	
   1985/2007	
  

	
  4.6	
  	
  

	
  1.8	
  	
   Two	
  11-‐storey	
  suburban	
  office	
  buildings	
  	
  

	
  326,389	
  	
  

	
  162,868	
  	
  

1973	
  

	
  4.5	
  	
  

	
  2.2	
  	
   9-‐storey	
  and	
  two	
  6-‐storey	
  suburban	
  

office	
  buildings	
  	
  

625	
  Cochrane	
  Drive,	
  Markham	
  

100.0%	
  

	
  162,792	
  	
  

	
  162,792	
  	
  

1989	
  

	
  5.8	
  	
  

	
  5.8	
  	
   10-‐storey	
  suburban	
  office	
  building	
  	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  64	
  

	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
Property	
  

Ownership	
  

	
  Total	
  GLA	
  in	
  
square	
  feet	
  	
  

	
  Owned	
  share	
  
of	
  total	
  GLA	
  	
  
	
  in	
  square	
  feet	
  	
  

Year	
  
built/	
  
renovated	
  

	
  Total	
  site	
  
area	
  in	
  
acres	
  	
  

	
  Owned	
  
share	
  of	
  
site	
  area	
  	
  
in	
  acres	
  	
  

Description	
  of	
  asset	
  

100.0%	
  

	
  154,774	
  	
  

	
  154,774	
  	
  

1990	
  

	
  16.6	
  	
  

	
  16.6	
  	
   9-‐storey	
  suburban	
  office	
  building	
  	
  

	
  304,750	
  	
  

	
  152,070	
  	
  

1989	
  

	
  0.9	
  	
  

	
  0.5	
  	
   16-‐storey	
  suburban	
  office	
  building	
  with	
  

2645	
  Skymark	
  Ave.,	
  Mississauga	
  

100.0%	
  

	
  142,436	
  	
  

	
  142,436	
  	
  

1984	
  

	
  297,292	
  	
  

	
  148,349	
  	
   1989/2006	
  

Valleywood	
  Corporate	
  Centre,	
  
Markham	
  

90	
  Burnhamthorpe	
  Road	
  West,	
  
Mississauga	
  (Sussex	
  Centre)	
  

185	
  The	
  West	
  Mall,	
  Toronto	
  

(4)

49.9%

(4)

49.9%

6299	
  Airport	
  Road,	
  Mississauga	
  

100.0%	
  

1020	
  Birchmount	
  Road,	
  Toronto	
  

100.0%	
  

6303	
  Airport	
  Road,	
  Mississauga	
  

195	
  The	
  West	
  Mall,	
  Toronto	
  

191	
  The	
  West	
  Mall,	
  Toronto	
  

586	
  Argus	
  Road,	
  Oakville	
  

2810	
  Matheson	
  Boulevard	
  East,	
  
Mississauga	
  

100.0%	
  
(4)

49.9%

(4)

49.9%

100.0%	
  
(4)

49.9%

6509	
  Airport	
  Road,	
  Mississauga	
  

100.0%	
  

100.0%	
  

100.0%	
  
(4)

40.0%

(4)

40.0%

(4)

40.0%

(4)

40.0%

100.0%	
  

2550	
  Argentia	
  Road,	
  
Mississauga	
  

100	
  Gough	
  Road,	
  Markham	
  

6501	
  Mississauga	
  Road,	
  
Mississauga	
  

2010	
  Winston	
  Park	
  Drive,	
  
Oakville	
  

6531	
  Mississauga	
  Road,	
  
Mississauga	
  

80	
  Whitehall	
  Drive,	
  Markham	
  

3035	
  Orlando	
  Drive,	
  
Mississauga	
  

Toronto	
  Suburban	
  

700	
  De	
  la	
  Gauchetière	
  Street	
  
West,	
  Montréal	
  

445	
  Opus	
  Industrial	
  Boulevard,	
  
Mount	
  Juliet,	
  Nashville	
  

275	
  Dundas	
  Street	
  West,	
  
London	
  (London	
  City	
  Centre)	
  

200	
  Chemin	
  Sainte-‐Foy,	
  	
  
Québec	
  City	
  

retail	
  space	
  	
  

	
  4.6	
  	
   16-‐storey	
  suburban	
  office	
  building	
  	
  

	
  6.6	
  	
   2-‐storey	
  suburban	
  office	
  building	
  with	
  

warehouse	
  	
  

	
  2.1	
  	
   7-‐storey	
  suburban	
  office	
  building	
  	
  

	
  3.7	
  	
   1-‐storey	
  industrial	
  building	
  	
  

	
  1.8	
  	
   5-‐storey	
  suburban	
  office	
  building	
  	
  

	
  2.5	
  	
   11-‐storey	
  suburban	
  office	
  building	
  	
  

	
  2.5	
  	
   11-‐storey	
  suburban	
  office	
  building	
  	
  

	
  2.6	
  	
   2-‐storey	
  suburban	
  office	
  building	
  	
  

	
  2.6	
  	
   8-‐storey	
  suburban	
  office	
  building	
  with	
  

grade	
  level	
  retail	
  	
  

	
  2.9	
  	
   2-‐storey	
  suburban	
  office	
  building	
  	
  

	
  4.9	
  	
   2-‐storey	
  suburban	
  office	
  building	
  	
  

	
  9.2	
  	
   2-‐storey	
  suburban	
  data	
  centre	
  	
  

	
  3.0	
  	
   1-‐storey	
  suburban	
  office	
  building	
  	
  

	
  9.3	
  	
  

	
  6.6	
  	
  

	
  2.1	
  	
  

	
  3.7	
  	
  

	
  1.8	
  	
  

	
  5.1	
  	
  

	
  5.0	
  	
  

	
  2.6	
  	
  

	
  5.3	
  	
  

	
  2.9	
  	
  

	
  4.9	
  	
  

	
  9.2	
  	
  

	
  7.6	
  	
  

	
  90,779	
  	
  

	
  87,161	
  	
  

	
  80,325	
  	
  

	
  160,812	
  	
  

	
  158,260	
  	
  

	
  90,779	
  	
   1975/2007	
  

	
  87,161	
  	
  

1952	
  

	
  80,325	
  	
   1979/2007	
  

	
  80,245	
  	
  

	
  78,972	
  	
  

1984	
  

1985	
  

	
  74,570	
  	
  

	
  74,570	
  	
   1992/2011	
  

	
  140,123	
  	
  

	
  69,921	
  	
  

1989	
  

	
  60,000	
  	
  

	
  51,639	
  	
  

	
  60,000	
  	
   1981/2010	
  

	
  51,639	
  	
  

1987	
  

	
  111,840	
  	
  

	
  111,840	
  	
  

	
  84,725	
  	
  

	
  33,890	
  	
  

1980	
  

1982	
  

	
  79,137	
  	
  

	
  31,655	
  	
  

1990	
  

	
  3.8	
  	
  

	
  1.5	
  	
   5-‐storey	
  suburban	
  office	
  building	
  	
  

	
  71,192	
  	
  

	
  28,477	
  	
  

1978	
  

	
  6.5	
  	
  

	
  2.6	
  	
   1-‐storey	
  suburban	
  office	
  building	
  	
  

	
  60,805	
  	
  

	
  16,754	
  	
  

	
  24,322	
  	
  

	
  16,754	
  	
  

1990	
  

1991	
  

	
  1.1	
  	
  

	
  2.4	
  	
  

	
  0.4	
  	
   2-‐storey	
  suburban	
  office	
  building	
  	
  

	
  2.4	
  	
   1-‐storey	
  suburban	
  office	
  building	
  	
  

76.5%	
  

5,514,402	
  	
  

	
  4,218,732	
  	
  

	
  166.8	
  	
  

	
  136.2	
  	
   	
  

100.0%	
  

	
  956,725	
  	
  

	
  956,725	
  	
   1983/2003	
  
and	
  2010	
  

	
  1.6	
  	
  

	
  1.6	
  	
   28-‐storey	
  downtown	
  office	
  building	
  	
  

100.0%	
  

	
  717,160	
  	
  

	
  717,160	
  	
  

2010	
  

	
  16.5	
  	
  

	
  16.5	
  	
   1-‐storey	
  industrial	
  building	
  	
  

(4)

40.0%

	
  540,933	
  	
  

	
  216,373	
  	
  

1974	
  

	
  2.8	
  	
  

	
  1.1	
  	
   One	
  21-‐storey	
  and	
  one	
  23-‐storey	
  
downtown	
  office	
  building	
  	
  

100.0%	
  

	
  398,351	
  	
  

	
  398,351	
  	
   1970/2005	
  

	
  0.4	
  	
  

	
  0.4	
  	
   12-‐storey	
  office	
  building	
  with	
  parking	
  	
  

Market	
  Square,	
  Kitchener	
  

100.0%	
  

	
  241,341	
  	
  

	
  241,341	
  	
   1975/1986	
  

	
  4.0	
  	
  

	
  4.0	
  	
   3-‐storey	
  downtown	
  office/retail	
  

100	
  Frederick	
  Street,	
  Kitchener	
  

1	
  Riverside	
  Drive,Windsor	
  

100.0%	
  

100.0%	
  

	
  239,428	
  	
  

	
  239,428	
  	
   1981/2005	
  

	
  235,915	
  	
  

	
  235,915	
  	
  

2002	
  

	
  1.8	
  	
  

	
  1.8	
  	
  

building	
  	
  

	
  1.8	
  	
   10-‐storey	
  downtown	
  office	
  building	
  	
  

	
  1.8	
  	
   14-‐storey	
  office	
  building	
  with	
  ground	
  
floor	
  podium	
  and	
  below	
  grade	
  retail	
  	
  

50	
  Queen	
  Street	
  North,	
  
Kitchener	
  

100.0%	
  

	
  170,333	
  	
  

	
  170,333	
  	
   1978/2004	
  

	
  0.9	
  	
  

	
  0.9	
  	
   11-‐storey	
  downtown	
  office	
  building	
  	
  

55	
  King	
  Street	
  West,	
  Kitchener	
  

235	
  King	
  Street	
  East,	
  Kitchener	
  

100.0%	
  

100.0%	
  

	
  126,075	
  	
  

	
  126,075	
  	
  

	
  100,797	
  	
  

	
  100,797	
  	
  

1992	
  

1977	
  

	
  1.1	
  	
  

	
  0.6	
  	
  

	
  1.1	
  	
   12-‐storey	
  downtown	
  office	
  building	
  	
  

	
  0.6	
  	
   6-‐storey	
  downtown	
  office	
  building	
  with	
  

underground	
  parking	
  	
  

22	
  Frederick	
  Street,	
  Kitchener	
  

100.0%	
  

	
  95,855	
  	
  

	
  95,855	
  	
   1973/1999	
  

	
  0.7	
  	
  

	
  0.7	
  	
   12-‐storey	
  downtown	
  office	
  building	
  	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  65	
  

	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
Property	
  

Ownership	
  

	
  Total	
  GLA	
  in	
  
square	
  feet	
  	
  

	
  Owned	
  share	
  
of	
  total	
  GLA	
  	
  
	
  in	
  square	
  feet	
  	
  

Year	
  
built/	
  
renovated	
  

	
  Total	
  site	
  
area	
  in	
  
acres	
  	
  

	
  Owned	
  
share	
  of	
  
site	
  area	
  	
  
in	
  acres	
  	
  

Description	
  of	
  asset	
  

Accelerator	
  Building,	
  Waterloo	
  

180	
  Keil	
  Drive	
  South,	
  Chatham	
  

70	
  King	
  Street	
  East,	
  Kitchener	
  

2450	
  Rue	
  Girouard,	
  	
  
Saint-‐Hyacinthe	
  

12800	
  Foster	
  Street,	
  	
  
Overland	
  Park	
  

100.0%	
  

100.0%	
  

100.0%	
  

100.0%	
  

	
  92,862	
  	
  

	
  36,927	
  	
  

	
  9,485	
  	
  

	
  92,862	
  	
  

	
  36,927	
  	
  

2006	
  

2005	
  

	
  9,485	
  	
   1977/2009	
  

	
  231,500	
  	
  

	
  231,500	
  	
   1959/1967	
  

	
  5.5	
  	
  

	
  3.6	
  	
  

	
  0.9	
  	
  

	
  5.4	
  	
  

	
  5.5	
  	
   3-‐storey	
  office	
  building	
  	
  

	
  3.6	
  	
   1-‐storey	
  office	
  building	
  with	
  parking	
  	
  

	
  0.9	
  	
   1-‐storey	
  retail	
  restaurant	
  building	
  	
  

	
  5.4	
  	
   Two	
  5-‐storey	
  office	
  buildings	
  	
  

100.0%	
  

	
  185,178	
  	
  

	
  185,178	
  	
  

2006	
  

	
  10.0	
  	
  

	
  10.0	
  	
   5-‐storey	
  office	
  building	
  with	
  parking	
  	
  

400	
  Cumberland	
  Road,	
  Ottawa	
  

2200-‐2204	
  Walkley	
  Road,	
  
Ottawa	
  

130	
  Slater	
  Street,	
  Ottawa	
  

900	
  Place	
  D'Youville,	
  	
  
Québec	
  City	
  

100.0%	
  

100.0%	
  

100.0%	
  

100.0%	
  

	
  174,322	
  	
  

	
  174,322	
  	
   1972/2000	
  

	
  158,898	
  	
  

	
  158,898	
  	
  

1985	
  

	
  122,906	
  	
  

	
  122,906	
  	
  

1968	
  

	
  122,671	
  	
  

	
  122,671	
  	
   1956/1988	
  

	
  0.5	
  	
  

	
  7.1	
  	
  

	
  0.4	
  	
  

	
  0.5	
  	
  

	
  0.5	
  	
   11-‐storey	
  downtown	
  office	
  building	
  	
  

	
  7.1	
  	
   One	
  2-‐storey	
  and	
  one	
  5-‐storey	
  
suburban	
  office	
  building	
  	
  

	
  0.4	
  	
   13-‐storey	
  downtown	
  office	
  building	
  	
  

	
  0.5	
  	
   One	
  9-‐storey	
  and	
  one	
  8-‐storey	
  office	
  

building	
  	
  

Gateway	
  Business	
  Park,	
  Ottawa	
  

100.0%	
  

	
  120,995	
  	
  

	
  120,995	
  	
  

1987	
  

	
  6.0	
  	
  

	
  6.0	
  	
   Three	
  6-‐storey	
  suburban	
  office	
  

1125	
  Innovation	
  Drive,	
  Ottawa	
  

100.0%	
  

	
  115,771	
  	
  

	
  115,771	
  	
  

2000	
  

	
  7.0	
  	
  

buildings	
  	
  

	
  7.0	
  	
   One	
  3-‐storey	
  and	
  two	
  2-‐storey	
  
suburban	
  office	
  buildings	
  	
  

150	
  Metcalfe	
  Street,	
  Ottawa	
  

22	
  Varennes	
  Street,	
  Gatineau	
  

360	
  Laurier	
  Avenue	
  West,	
  
Ottawa	
  

580	
  Rue	
  Grande	
  Allée,	
  	
  
Québec	
  City	
  

100.0%	
  

100.0%	
  

100.0%	
  

	
  109,003	
  	
  

	
  109,003	
  	
  

	
  107,783	
  	
  

	
  107,783	
  	
  

1991	
  

2001	
  

	
  107,298	
  	
  

	
  107,298	
  	
   1966/2010	
  

	
  0.2	
  	
  

	
  4.3	
  	
  

	
  0.3	
  	
  

	
  0.2	
  	
   22-‐storey	
  downtown	
  office	
  building	
  	
  

	
  4.3	
  	
   2-‐storey	
  suburban	
  office	
  building	
  	
  

	
  0.3	
  	
   11-‐storey	
  downtown	
  office	
  building	
  	
  

100.0%	
  

	
  90,777	
  	
  

	
  90,777	
  	
  

1912	
  

	
  1.0	
  	
  

	
  1.0	
  	
   6-‐storey	
  office	
  building	
  with	
  parkade	
  	
  

250	
  King	
  Street,	
  Fredericton	
  

100.0%	
  

277	
  Pleasant	
  Street,	
  Dartmouth	
  

100.0%	
  

	
  80,162	
  	
  

	
  76,527	
  	
  

	
  80,162	
  	
  

	
  76,527	
  	
  

1999	
  

1971	
  

	
  1.4	
  	
  

	
  1.8	
  	
  

	
  1.4	
  	
   4-‐storey	
  office	
  building	
  	
  

	
  1.8	
  	
   5-‐storey	
  office	
  building	
  with	
  
underground	
  parking	
  	
  

219	
  Laurier	
  Avenue	
  West,	
  
Ottawa	
  

8550	
  Newman	
  Boulevard,	
  
Montréal	
  

236	
  Brownlow	
  Avenue,	
  
Dartmouth	
  

2625	
  Queensview	
  Drive,	
  
Ottawa	
  

1305	
  Chemin	
  Sainte-‐Foy,	
  
Québec	
  City	
  

Seven	
  Capella	
  Court,	
  Ottawa	
  

111	
  Ilsley	
  Avenue,	
  Dartmouth	
  

700	
  De	
  la	
  Gauchetière	
  Street	
  
West,	
  Montréal	
  

680	
  Broadway	
  Street,	
  
Tillsonburg	
  (Tillsonburg	
  
Gateway	
  Centre)	
  

141	
  Saint	
  Jean	
  Street,	
  	
  
Québec	
  City	
  

460	
  Two	
  Nations	
  Crossing,	
  
Fredericton	
  

(4)

40.0%

	
  187,783	
  	
  

	
  75,113	
  	
  

1965	
  

	
  0.3	
  	
  

	
  0.1	
  	
   14-‐storey	
  downtown	
  office	
  building	
  	
  

100.0%	
  

	
  66,397	
  	
  

	
  66,397	
  	
   2001/2005	
  

	
  2.8	
  	
  

	
  2.8	
  	
   2-‐storey	
  suburban	
  office	
  building	
  	
  

100.0%	
  

	
  60,739	
  	
  

	
  60,739	
  	
  

1987	
  

	
  4.2	
  	
  

	
  4.2	
  	
   1-‐storey	
  suburban	
  office	
  building	
  	
  

100.0%	
  

	
  46,156	
  	
  

	
  46,156	
  	
  

1983	
  

	
  2.7	
  	
  

	
  2.7	
  	
   2-‐storey	
  suburban	
  office	
  building	
  	
  

100.0%	
  

	
  36,542	
  	
  

	
  36,542	
  	
   1957/1991	
  

	
  0.3	
  	
  

	
  0.3	
  	
   5-‐storey	
  office	
  building	
  with	
  parking	
  	
  

100.0%	
  

100.0%	
  

79.2%	
  

(4)

49.9%

	
  31,362	
  	
  

	
  27,428	
  	
  

	
  32,788	
  	
  

	
  31,362	
  	
  

	
  27,428	
  	
  

2002	
  

1983	
  

	
  25,968	
  	
   1983/2003	
  
and	
  2010	
  

	
  1.3	
  	
  

	
  1.6	
  	
  

	
  1.6	
  	
  

	
  1.3	
  	
   3-‐storey	
  suburban	
  office	
  building	
  	
  

	
  1.6	
  	
   3-‐storey	
  suburban	
  office	
  building	
  	
  

	
  1.3	
  	
   3-‐level	
  retail	
  podium	
  	
  

	
  47,016	
  	
  

	
  23,461	
  	
  

2003	
  

	
  8.3	
  	
  

	
  4.1	
  	
   1-‐storey	
  neighbourhood	
  shopping	
  plaza	
  	
  

100.0%	
  

	
  22,333	
  	
  

	
  22,333	
  	
  

1920	
  

	
  0.2	
  	
  

	
  0.2	
  	
   3-‐storey	
  office/residential	
  building	
  	
  

(4)

40.0%

	
  50,945	
  	
  

	
  20,378	
  	
  

2008	
  

	
  3.7	
  	
  

	
  1.5	
  	
   3-‐storey	
  suburban	
  office	
  building	
  	
  

Dream	
  Office	
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  2014	
  Annual	
  Report	
  	
  |	
  	
  66	
  

	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
 
 
Property	
  

117	
  Kearney	
  Lake	
  Road,	
  Halifax	
  

55	
  Norfolk	
  Street	
  South,	
  Simcoe	
  

Ownership	
  
(4)

35.0%

(4)

40.0%

Eastern	
  Canada

(1)

(2)

Total

Redevelopment	
  properties:	
  

Bellanca	
  Building,	
  Yellowknife	
  

Redevelopment	
  properties	
  

Held	
  for	
  sale	
  properties:	
  

Capital	
  Centre,	
  Edmonton	
  

Held	
  for	
  sale	
  properties	
  

Total	
  including	
  redevelopment	
  
and	
  held	
  for	
  sale	
  properties	
  

	
  Total	
  GLA	
  in	
  
square	
  feet	
  	
  

	
  Owned	
  share	
  
of	
  total	
  GLA	
  	
  
	
  in	
  square	
  feet	
  	
  

Year	
  
built/	
  
renovated	
  

	
  Total	
  site	
  
area	
  in	
  
acres	
  	
  

	
  Owned	
  
share	
  of	
  
site	
  area	
  	
  
in	
  acres	
  	
  

Description	
  of	
  asset	
  

	
  36,353	
  	
  

	
  12,887	
  	
  

	
  12,724	
  	
  

1994	
  

	
  5,155	
  	
   1987/2000	
  

91.8%	
  

6,424,707	
  	
  

	
  5,895,174	
  	
   	
  

87.7%	
  

	
  27,627,693	
  	
  

	
  24,222,661	
  	
  

100.0%	
  

100.0%	
  	
  

(3)

25.0%

25.0%	
  	
  

	
  52,285	
  	
  

	
  52,285	
  	
  

	
  52,285	
  	
  

	
  52,285	
  	
  

1973	
  

	
  64,114	
  	
  

	
  16,029	
  	
  

1978	
  

	
  64,114	
  	
  

	
  16,029	
  	
  

	
  4.2	
  	
  

	
  0.6	
  	
  

	
  119.9	
  	
  

	
  444.2	
  	
  

	
  0.6	
  	
  

	
  0.6	
  	
  

	
  0.9	
  	
  

	
  0.9	
  	
  

	
  1.5	
  	
   1-‐storey	
  retail	
  plaza	
  	
  

	
  0.2	
  	
   2-‐storey	
  office/retail	
  complex	
  	
  

	
  108.2	
  	
   	
  

	
  387.2	
  	
   	
  

	
  0.6	
  	
   10-‐storey	
  office	
  building	
  	
  
	
  0.6	
  	
   	
  

	
  0.2	
  	
   2-‐storey	
  downtown	
  office	
  building	
  	
  

	
  0.2	
  	
   	
  

87.6%	
  	
  

27,744,092	
  	
  

	
  4,290,975	
  	
  

	
  445.7	
  	
  

	
  388.0	
  	
  

(1)	
  Includes	
  properties	
  in	
  southwestern	
  Ontario	
  and	
  U.S.	
  

(2)	
  Excludes	
  redevelopment	
  properties	
  and	
  held	
  for	
  sale	
  properties.	
  

(3)	
  Investment	
  in	
  joint	
  venture.	
  

(4)	
  Co-‐owned	
  property.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
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  Total	
  GLA	
  	
  
in	
  square	
  
feet	
  	
  

	
  Owned	
  share	
  of	
  
total	
  GLA	
  in	
  
square	
  feet	
  	
  

No.	
  of	
  
tenants	
  

Average	
  
tenant	
  size	
  
in	
  square	
  
feet	
  	
  

Average	
  	
  
lease	
  term	
  
remaining	
  	
  
in	
  years	
  	
  

Owned	
  share	
  
vacant	
  in	
  
square	
  feet	
  	
  

Occupancy

(1)

Owned	
  
share	
  
occupancy	
  
in	
  square	
  
feet	
  

	
  15,306	
  	
  

	
  52,491	
  	
  

	
  14,773	
  	
  

	
  11,078	
  	
  

	
  26,443	
  	
  

	
  34,665	
  	
  

	
  32,873	
  	
  

	
  72,083	
  	
  

	
  5,108	
  	
  

	
  7,003	
  	
  

	
  24,670	
  	
  

	
  5,370	
  	
  

	
  4,581	
  	
  

	
  58,265	
  	
  

	
  9,874	
  	
  

	
  7,454	
  	
  

	
  11,834	
  	
  

	
  4,771	
  	
  

	
  7,595	
  	
  

	
  11,337	
  	
  

	
  5,948	
  	
  

	
  5,976	
  	
  

	
  2.66	
  	
  

	
  3.93	
  	
  

	
  3.39	
  	
  

	
  5.20	
  	
  

	
  3.80	
  	
  

	
  2.85	
  	
  

	
  4.03	
  	
  

	
  3.76	
  	
  

	
  3.24	
  	
  

	
  4.98	
  	
  

	
  4.48	
  	
  

	
  1.88	
  	
  

	
  2.14	
  	
  

	
  3.31	
  	
  

	
  1.30	
  	
  

	
  7.52	
  	
  

	
  3.98	
  	
  

	
  3.58	
  	
  

	
  3.45	
  	
  

	
  4.55	
  	
  

	
  4.91	
  	
  

	
  3.41	
  	
  

	
  25,701	
  	
  

91.5%	
  

	
  275,516	
  	
  

	
  -‐	
  	
  

100.0%	
  

	
  262,456	
  	
  

	
  6,718	
  	
  

	
  19,908	
  	
  

	
  -‐	
  	
  

	
  -‐	
  	
  

	
  -‐	
  	
  

	
  -‐	
  	
  

	
  21,405	
  	
  

	
  15,551	
  	
  

	
  31,735	
  	
  

	
  11,016	
  	
  

	
  40,145	
  	
  

97.1%	
  

90.9%	
  

	
  221,594	
  	
  

	
  199,406	
  	
  

100.0%	
  

	
  185,104	
  	
  

100.0%	
  

	
  173,325	
  	
  

100.0%	
  

	
  164,364	
  	
  

100.0%	
  

	
  144,165	
  	
  

85.1%	
  

88.4%	
  

75.7%	
  

90.7%	
  

66.0%	
  

	
  122,589	
  	
  

	
  119,046	
  	
  

	
  98,680	
  	
  

	
  107,390	
  	
  

	
  77,877	
  	
  

	
  -‐	
  	
  

100.0%	
  

	
  116,530	
  	
  

	
  55,208	
  	
  

	
  3,446	
  	
  

	
  623	
  	
  

	
  2,442	
  	
  

47.2%	
  

96.8%	
  

99.3%	
  

97.4%	
  

	
  -‐	
  	
  

100.0%	
  

	
  12,781	
  	
  

	
  4,719	
  	
  

	
  13,834	
  	
  

86.1%	
  

94.6%	
  

83.8%	
  

	
  49,370	
  	
  

	
  104,351	
  	
  

	
  94,675	
  	
  

	
  90,653	
  	
  

	
  91,137	
  	
  

	
  79,359	
  	
  

	
  83,275	
  	
  

	
  71,707	
  	
  

	
  13,803	
  	
  

	
  1.93	
  	
  

	
  -‐	
  	
  

100.0%	
  

	
  82,817	
  	
  

	
  8,314	
  	
  

	
  2.17	
  	
  

	
  7,046	
  	
  

91.4%	
  

	
  74,827	
  	
  

	
  301,217	
  	
  

	
  262,456	
  	
  

	
  228,312	
  	
  

	
  219,314	
  	
  

	
  185,104	
  	
  

	
  173,325	
  	
  

	
  118,406	
  	
  

	
  118,022	
  	
  

	
  116,530	
  	
  

	
  104,578	
  	
  

	
  107,797	
  	
  

	
  95,298	
  	
  

	
  93,095	
  	
  

	
  91,137	
  	
  

	
  92,140	
  	
  

	
  87,994	
  	
  

	
  85,541	
  	
  

	
  301,217	
  	
  

	
  262,456	
  	
  

	
  228,312	
  	
  

	
  219,314	
  	
  

	
  185,104	
  	
  

	
  173,325	
  	
  

	
  164,364	
  	
  

	
  144,165	
  	
  

	
  143,994	
  	
  

	
  134,597	
  	
  

	
  130,415	
  	
  

	
  118,406	
  	
  

	
  118,022	
  	
  

	
  116,530	
  	
  

	
  104,578	
  	
  

	
  107,797	
  	
  

	
  95,298	
  	
  

	
  93,095	
  	
  

	
  91,137	
  	
  

	
  92,140	
  	
  

	
  87,994	
  	
  

	
  85,541	
  	
  

	
  82,817	
  	
  

	
  82,817	
  	
  

	
  81,873	
  	
  

	
  81,873	
  	
  

	
  82,264	
  	
  

	
  81,662	
  	
  

	
  190,773	
  	
  

	
  82,264	
  	
  

	
  81,662	
  	
  

	
  76,309	
  	
  

	
  18	
  	
  

	
  5	
  	
  

	
  15	
  	
  

	
  18	
  	
  

	
  7	
  	
  

	
  5	
  	
  

	
  5	
  	
  

	
  2	
  	
  

	
  24	
  	
  

	
  17	
  	
  

	
  4	
  	
  

	
  20	
  	
  

	
  17	
  	
  

	
  2	
  	
  

	
  5	
  	
  

	
  14	
  	
  

	
  8	
  	
  

	
  19	
  	
  

	
  12	
  	
  

	
  7	
  	
  

	
  14	
  	
  

	
  12	
  	
  

	
  6	
  	
  

	
  9	
  	
  

	
  7	
  	
  

	
  1	
  	
  

Occupancy	
  by	
  asset	
  

Property	
  

HSBC	
  Bank	
  Place,	
  Edmonton	
  

Enbridge	
  Place,	
  Edmonton	
  

Saskatoon	
  Square,	
  Saskatoon	
  

Station	
  Tower,	
  Surrey	
  

1900	
  Sherwood	
  Place,	
  Regina	
  

Milner	
  Building,	
  Edmonton	
  

887	
  Great	
  Northern	
  Way,	
  Vancouver	
  

	
  164,364	
  	
  

Victoria	
  Tower,	
  Regina	
  

Baker	
  Centre,	
  Edmonton	
  

Princeton	
  Tower,	
  Saskatoon	
  

	
  144,165	
  	
  

	
  143,994	
  	
  

	
  134,597	
  	
  

340-‐450	
  3rd	
  Avenue	
  N.,	
  Saskatoon	
  

	
  130,415	
  	
  

HSBC	
  Building,	
  Edmonton	
  

4259-‐4299	
  Canada	
  Way,	
  Burnaby	
  

13888	
  Wireless	
  Way,	
  Richmond	
  

Highfield	
  Place,	
  Edmonton	
  

Scotia	
  Centre,	
  Yellowknife	
  

Richmond	
  Place,	
  Richmond	
  

4400	
  Dominion	
  Street,	
  Burnaby	
  

2055	
  Premier	
  Way,	
  	
  
Strathcona	
  County	
  

Precambrian	
  Building,	
  Yellowknife	
  

Northwest	
  Tower,	
  Yellowknife	
  

625	
  Agnes	
  Street,	
  	
  
New	
  Westminster	
  

2899	
  Broadmoor	
  Blvd.,	
  Strathcona	
  
County	
  

2693	
  Broadmoor	
  Blvd.,	
  Strathcona	
  
County	
  

1914	
  Hamilton	
  Street,	
  Regina	
  

2665	
  Renfrew	
  Street,	
  Vancouver	
  

350-‐450	
  Lansdowne	
  Street,	
  
Kamloops

(5)

2833	
  Broadmoor	
  Blvd.,	
  Strathcona	
  
County	
  

Financial	
  Building,	
  Regina	
  

4370	
  Dominion	
  Street,	
  Burnaby	
  

Preston	
  Centre,	
  Saskatoon	
  

960	
  Quayside	
  Drive,	
  	
  
New	
  Westminster	
  

2755	
  Broadmoor	
  Blvd.,	
  	
  
Sherwood	
  Park	
  

2261	
  Keating	
  Cross	
  Road,	
  Victoria

(5)

	
  181,693	
  	
  

	
  11,752	
  	
  

	
  81,662	
  	
  

	
  30	
  	
  

	
  5,450	
  	
  

	
  2.17	
  	
  

	
  5.50	
  	
  

	
  4.95	
  	
  

	
  -‐	
  	
  

	
  -‐	
  	
  

	
  10,913	
  	
  

100.0%	
  

100.0%	
  

85.7%	
  

	
  82,264	
  	
  

	
  81,662	
  	
  

	
  65,396	
  	
  

	
  75,254	
  	
  

	
  75,254	
  	
  

	
  17	
  	
  

	
  3,908	
  	
  

	
  3.49	
  	
  

	
  8,817	
  	
  

88.3%	
  

	
  66,437	
  	
  

	
  65,764	
  	
  

	
  63,930	
  	
  

	
  61,867	
  	
  

	
  61,694	
  	
  

	
  72,677	
  	
  

	
  65,764	
  	
  

	
  63,930	
  	
  

	
  61,867	
  	
  

	
  61,694	
  	
  

	
  7	
  	
  

	
  3	
  	
  

	
  8	
  	
  

	
  13	
  	
  

	
  12	
  	
  

	
  21,542	
  	
  

	
  21,921	
  	
  

	
  4,428	
  	
  

	
  4,759	
  	
  

	
  4,869	
  	
  

	
  2.66	
  	
  

	
  1.07	
  	
  

	
  3.49	
  	
  

	
  5.10	
  	
  

	
  1.89	
  	
  

	
  12,361	
  	
  

83.0%	
  

	
  60,316	
  	
  

	
  -‐	
  	
  

100.0%	
  

	
  28,507	
  	
  

55.4%	
  

	
  -‐	
  	
  

100.0%	
  

	
  3,272	
  	
  

94.7%	
  

	
  65,764	
  	
  

	
  35,423	
  	
  

	
  61,867	
  	
  

	
  58,422	
  	
  

	
  61,302	
  	
  

	
  61,302	
  	
  

	
  16	
  	
  

	
  3,831	
  	
  

	
  3.16	
  	
  

	
  -‐	
  	
  

100.0%	
  

	
  61,302	
  	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  68	
  

	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
Harbour	
  Landing,	
  Phase	
  2,	
  Regina	
  

	
  38,738	
  	
  

Property	
  

2257	
  &	
  2301	
  Premier	
  Way,	
  
Sherwood	
  Park	
  

2121	
  &	
  2181	
  Premier	
  Way,	
  
Sherwood	
  Park	
  

10199	
  -‐	
  101st	
  Street	
  NW,	
  
Edmonton

(5)

2220	
  College	
  Avenue,	
  Regina	
  

Morgex	
  Building,	
  Edmonton	
  

Gallery	
  Building,	
  Yellowknife	
  

13183	
  -‐	
  146th	
  Street	
  NW,	
  
Edmonton	
  

2400	
  College	
  Avenue,	
  Regina	
  

Royal	
  Centre,	
  Saskatoon	
  

2208	
  Scarth	
  Street,	
  Regina	
  

Royal	
  Centre,	
  Saskatoon	
  

2445	
  -‐	
  13th	
  Avenue,	
  Regina	
  

234	
  -‐	
  1st	
  Avenue	
  South,	
  
Saskatoon	
  

Western	
  Canada	
  

Telus	
  Tower,	
  Calgary

(4)

IBM	
  Corporate	
  Park,	
  Calgary	
  

840	
  -‐	
  7th	
  Avenue	
  SW,	
  Calgary	
  

444	
  -‐	
  7th	
  Building,	
  Calgary	
  

McFarlane	
  Tower,	
  Calgary	
  

Life	
  Plaza,	
  Calgary	
  

	
  59,590	
  	
  

	
  53,000	
  	
  

	
  50,150	
  	
  

	
  38,817	
  	
  

	
  35,528	
  	
  

	
  32,128	
  	
  

	
  25,185	
  	
  

	
  16,411	
  	
  

	
  16,096	
  	
  

	
  9,567	
  	
  

	
  710,243	
  	
  

	
  357,277	
  	
  

	
  269,467	
  	
  

	
  251,931	
  	
  

	
  241,815	
  	
  

	
  236,709	
  	
  

Rocky	
  Mountain	
  Plaza,	
  Calgary	
  

	
  205,254	
  	
  

Northland	
  Building,	
  Calgary	
  

606	
  4th	
  Building	
  &	
  Barclay	
  
Parkade,	
  Calgary	
  

Roslyn	
  Building,	
  Calgary	
  

Atrium	
  I,	
  Calgary	
  

Atrium	
  II,	
  Calgary	
  

510	
  -‐	
  5th	
  Street	
  SW,	
  Calgary	
  

Joffre	
  Place,	
  Calgary	
  

Dominion	
  Centre,	
  Calgary	
  

435	
  -‐	
  4th	
  Avenue	
  SW,	
  Calgary	
  

1035	
  -‐	
  7th	
  Ave	
  SW,	
  Calgary	
  

Mount	
  Royal	
  Place,	
  Calgary	
  

441	
  -‐	
  5th	
  Avenue	
  SW,	
  Calgary	
  

	
  146,600	
  	
  

	
  132,885	
  	
  

	
  131,763	
  	
  

	
  109,793	
  	
  

	
  109,392	
  	
  

	
  109,181	
  	
  

	
  107,261	
  	
  

	
  99,014	
  	
  

	
  88,737	
  	
  

	
  75,129	
  	
  

	
  59,377	
  	
  

	
  59,151	
  	
  

	
  Total	
  GLA	
  	
  
in	
  square	
  
feet	
  	
  

	
  Owned	
  share	
  of	
  
total	
  GLA	
  in	
  
square	
  feet	
  	
  

No.	
  of	
  
tenants	
  

Average	
  
tenant	
  size	
  
in	
  square	
  
feet	
  	
  

Average	
  	
  
lease	
  term	
  
remaining	
  	
  
in	
  years	
  	
  

Owned	
  share	
  
vacant	
  in	
  
square	
  feet	
  	
  

Occupancy

(1)

Owned	
  
share	
  
occupancy	
  
in	
  square	
  
feet	
  

	
  153,299	
  	
  

	
  153,299	
  	
  

	
  15	
  	
  

	
  8,856	
  	
  

	
  3.36	
  	
  

	
  20,458	
  	
  

86.7%	
  

	
  132,841	
  	
  

	
  151,456	
  	
  

	
  151,456	
  	
  

	
  18	
  	
  

	
  8,414	
  	
  

	
  4.66	
  	
  

	
  -‐	
  	
  

100.0%	
  

	
  151,456	
  	
  

	
  121,357	
  	
  

	
  60,679	
  	
  

	
  65,532	
  	
  

	
  2.79	
  	
  

	
  27,913	
  	
  

54.0%	
  

	
  32,767	
  	
  

	
  1	
  	
  

	
  1	
  	
  

	
  1	
  	
  

	
  2	
  	
  

	
  2	
  	
  

	
  6	
  	
  

	
  4	
  	
  

	
  2	
  	
  

	
  3	
  	
  

	
  7	
  	
  

	
  4	
  	
  

	
  6	
  	
  

	
  59,590	
  	
  

	
  53,000	
  	
  

	
  25,075	
  	
  

	
  19,369	
  	
  

	
  6,470	
  	
  

	
  8,195	
  	
  

	
  16,064	
  	
  

	
  8,032	
  	
  

	
  2,344	
  	
  

	
  1,799	
  	
  

	
  1,595	
  	
  

	
  59,590	
  	
  

	
  53,000	
  	
  

	
  50,150	
  	
  

	
  38,738	
  	
  

	
  38,817	
  	
  

	
  35,528	
  	
  

	
  32,128	
  	
  

	
  25,185	
  	
  

	
  16,411	
  	
  

	
  16,096	
  	
  

	
  9,567	
  	
  

	
  355,122	
  	
  

	
  357,277	
  	
  

	
  269,467	
  	
  

	
  251,931	
  	
  

	
  241,815	
  	
  

	
  236,709	
  	
  

	
  205,254	
  	
  

	
  146,600	
  	
  

	
  132,885	
  	
  

	
  131,763	
  	
  

	
  109,793	
  	
  

	
  109,392	
  	
  

	
  109,181	
  	
  

	
  107,261	
  	
  

	
  99,014	
  	
  

	
  88,737	
  	
  

	
  75,129	
  	
  

	
  59,377	
  	
  

	
  59,151	
  	
  

	
  7	
  	
  

	
  10	
  	
  

	
  19	
  	
  

	
  5	
  	
  

	
  34	
  	
  

	
  35	
  	
  

	
  13	
  	
  

	
  22	
  	
  

	
  12	
  	
  

	
  14	
  	
  

	
  8	
  	
  

	
  13	
  	
  

	
  29	
  	
  

	
  12	
  	
  

	
  6	
  	
  

	
  15	
  	
  

	
  3	
  	
  

	
  19	
  	
  

	
  16	
  	
  

	
  100,968	
  	
  

	
  35,728	
  	
  

	
  11,105	
  	
  

	
  30,467	
  	
  

	
  6,918	
  	
  

	
  6,029	
  	
  

	
  14,948	
  	
  

	
  5,520	
  	
  

	
  8,441	
  	
  

	
  9,412	
  	
  

	
  13,724	
  	
  

	
  6,604	
  	
  

	
  3,759	
  	
  

	
  7,151	
  	
  

	
  15,239	
  	
  

	
  5,740	
  	
  

	
  23,903	
  	
  

	
  3,125	
  	
  

	
  3,043	
  	
  

	
  1.58	
  	
  

	
  4.75	
  	
  

	
  7.17	
  	
  

	
  8.62	
  	
  

	
  3.29	
  	
  

	
  0.84	
  	
  

	
  4.25	
  	
  

	
  3.71	
  	
  

	
  2.56	
  	
  

	
  1.13	
  	
  

	
  2.14	
  	
  

	
  3.68	
  	
  

	
  2.29	
  	
  

	
  3.66	
  	
  

	
  4.00	
  	
  

	
  6.78	
  	
  

	
  3.79	
  	
  

	
  2.82	
  	
  

	
  7.04	
  	
  

	
  3.85	
  	
  

	
  3.11	
  	
  

	
  1.76	
  	
  

	
  4.11	
  	
  

	
  4.97	
  	
  

	
  3.31	
  	
  

	
  4.75	
  	
  

	
  3.58	
  	
  

	
  3.80	
  	
  

	
  3.38	
  	
  

	
  3.64	
  	
  

	
  2.88	
  	
  

	
  3.82	
  	
  

	
  -‐	
  	
  

	
  -‐	
  	
  

	
  -‐	
  	
  

	
  -‐	
  	
  

	
  -‐	
  	
  

100.0%	
  

100.0%	
  

100.0%	
  

100.0%	
  

100.0%	
  

	
  2,747	
  	
  

92.3%	
  

	
  -‐	
  	
  

100.0%	
  

	
  1,088	
  	
  

95.7%	
  

	
  -‐	
  	
  

100.0%	
  

	
  8,900	
  	
  

44.7%	
  

	
  -‐	
  	
  

100.0%	
  

	
  59,590	
  	
  

	
  53,000	
  	
  

	
  50,150	
  	
  

	
  38,738	
  	
  

	
  38,817	
  	
  

	
  32,781	
  	
  

	
  32,128	
  	
  

	
  24,097	
  	
  

	
  16,411	
  	
  

	
  7,196	
  	
  

	
  9,567	
  	
  

	
  397,254	
  	
  

91.7%	
  

	
  4,408,605	
  	
  

	
  1,734	
  	
  

99.5%	
  

	
  353,388	
  	
  

	
  -‐	
  	
  

100.0%	
  

	
  357,277	
  	
  

	
  58,476	
  	
  

	
  99,598	
  	
  

	
  6,614	
  	
  

	
  25,706	
  	
  

	
  10,928	
  	
  

	
  25,153	
  	
  

	
  31,598	
  	
  

78.3%	
  

60.5%	
  

97.3%	
  

89.1%	
  

94.7%	
  

82.8%	
  

76.2%	
  

	
  210,991	
  	
  

	
  152,333	
  	
  

	
  235,201	
  	
  

	
  211,003	
  	
  

	
  194,326	
  	
  

	
  121,447	
  	
  

	
  101,287	
  	
  

	
  -‐	
  	
  

	
  -‐	
  	
  

100.0%	
  

	
  131,763	
  	
  

100.0%	
  

	
  109,793	
  	
  

	
  23,542	
  	
  

	
  158	
  	
  

	
  21,450	
  	
  

	
  7,581	
  	
  

	
  2,642	
  	
  

	
  3,420	
  	
  

78.5%	
  

99.9%	
  

80.0%	
  

92.3%	
  

97.0%	
  

95.4%	
  

	
  -‐	
  	
  

100.0%	
  

	
  10,465	
  	
  

82.3%	
  

	
  85,850	
  	
  

	
  109,023	
  	
  

	
  85,811	
  	
  

	
  91,433	
  	
  

	
  86,095	
  	
  

	
  71,709	
  	
  

	
  59,377	
  	
  

	
  48,686	
  	
  

	
  329,065	
  	
  

89.5%	
  

	
  2,816,793	
  	
  

	
  5,090,016	
  	
  

	
  4,805,858	
  	
  

	
  451	
  	
  

	
  10,266	
  	
  

Calgary	
  Downtown	
  

	
  3,500,979	
  	
  

	
  3,145,858	
  	
  

	
  292	
  	
  

	
  10,857	
  	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  69	
  

	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
Property	
  

	
  Total	
  GLA	
  	
  
in	
  square	
  
feet	
  	
  

	
  Owned	
  share	
  of	
  
total	
  GLA	
  in	
  
square	
  feet	
  	
  

No.	
  of	
  
tenants	
  

Average	
  
tenant	
  size	
  
in	
  square	
  
feet	
  	
  

Average	
  	
  
lease	
  term	
  
remaining	
  	
  
in	
  years	
  	
  

Owned	
  share	
  
vacant	
  in	
  
square	
  feet	
  	
  

Occupancy

(1)

Owned	
  
share	
  
occupancy	
  
in	
  square	
  
feet	
  

	
  868,684	
  	
  

	
  757,506	
  	
  

	
  1,578,741	
  	
  

	
  1,052,547	
  	
  

Franklin	
  Atrium,	
  Calgary	
  

	
  149,660	
  	
  

Airport	
  Corporate	
  Centre,	
  Calgary	
  

	
  149,327	
  	
  

2891	
  Sunridge	
  Way,	
  Calgary	
  

Kensington	
  House,	
  Calgary	
  

3115	
  -‐	
  12th	
  Street	
  NE,	
  Calgary	
  

14505	
  Bannister	
  Road,	
  SE,	
  Calgary	
  

Braithwaite	
  Boyle	
  Centre,	
  Calgary	
  

Franklin	
  Building,	
  Calgary	
  

2816	
  -‐	
  11th	
  Street	
  NE,	
  Calgary	
  

Centre	
  70,	
  Calgary

(5)

Calgary	
  Suburban	
  

Scotia	
  Plaza	
  	
  
(40	
  King	
  Street	
  West),	
  Toronto

(4)

Adelaide	
  Place,	
  Toronto	
  

State	
  Street	
  Financial	
  Centre,	
  
Toronto	
  

AIR	
  MILES	
  Tower,	
  Toronto	
  

655	
  Bay	
  Street,	
  Toronto	
  

Scotia	
  Plaza	
  	
  
(44	
  King	
  Street	
  West),	
  Toronto

(4)

	
  87,250	
  	
  

	
  77,906	
  	
  

	
  73,541	
  	
  

	
  61,272	
  	
  

	
  54,846	
  	
  

	
  50,577	
  	
  

	
  33,507	
  	
  

	
  130,798	
  	
  

	
  655,230	
  	
  

	
  413,933	
  	
  

	
  322,669	
  	
  

	
  297,582	
  	
  

	
  401,705	
  	
  

74	
  Victoria	
  St/137	
  Yonge	
  St,	
  Toronto	
  

	
  265,812	
  	
  

720	
  Bay	
  Street,	
  Toronto	
  

36	
  Toronto	
  Street,	
  Toronto	
  

18	
  King	
  Street	
  East,	
  Toronto	
  

330	
  Bay	
  Street,	
  Toronto	
  

100	
  Yonge	
  Street,	
  Toronto

(4)

20	
  Toronto	
  St/33	
  Victoria	
  St,	
  
Toronto	
  

8	
  King	
  Street	
  East,	
  Toronto	
  

250	
  Dundas	
  Street	
  West,	
  Toronto	
  

Victory	
  Building,	
  Toronto	
  

425	
  Bloor	
  Street	
  East,	
  Toronto	
  

212	
  King	
  Street	
  West,	
  Toronto	
  

357	
  Bay	
  Street,	
  Toronto	
  

360	
  Bay	
  Street,	
  Toronto	
  

10	
  King	
  Street	
  East,	
  Toronto	
  

350	
  Bay	
  Street,	
  Toronto	
  

67	
  Richmond	
  Street	
  West,	
  Toronto	
  

366	
  Bay	
  Street,	
  Toronto	
  

49	
  Ontario	
  Street,	
  Toronto

(5)

56	
  Temperance	
  Street,	
  Toronto	
  

	
  247,743	
  	
  

	
  214,054	
  	
  

	
  231,811	
  	
  

	
  161,892	
  	
  

	
  242,645	
  	
  

	
  157,852	
  	
  

	
  148,142	
  	
  

	
  121,593	
  	
  

	
  101,421	
  	
  

	
  83,527	
  	
  

	
  73,277	
  	
  

	
  63,529	
  	
  

	
  57,744	
  	
  

	
  57,476	
  	
  

	
  52,796	
  	
  

	
  50,158	
  	
  

	
  36,371	
  	
  

	
  87,105	
  	
  

	
  32,338	
  	
  

	
  149,660	
  	
  

	
  149,327	
  	
  

	
  87,250	
  	
  

	
  77,906	
  	
  

	
  73,541	
  	
  

	
  61,272	
  	
  

	
  54,846	
  	
  

	
  50,577	
  	
  

	
  33,507	
  	
  

	
  19,620	
  	
  

	
  655,230	
  	
  

	
  413,933	
  	
  

	
  322,669	
  	
  

	
  297,582	
  	
  

	
  267,817	
  	
  

	
  265,812	
  	
  

	
  247,743	
  	
  

	
  214,054	
  	
  

	
  231,811	
  	
  

	
  161,892	
  	
  

	
  161,771	
  	
  

	
  157,852	
  	
  

	
  148,142	
  	
  

	
  121,593	
  	
  

	
  101,421	
  	
  

	
  83,527	
  	
  

	
  73,277	
  	
  

	
  63,529	
  	
  

	
  57,744	
  	
  

	
  57,476	
  	
  

	
  52,796	
  	
  

	
  50,158	
  	
  

	
  36,371	
  	
  

	
  34,842	
  	
  

	
  32,338	
  	
  

	
  8	
  	
  

	
  11	
  	
  

	
  4	
  	
  

	
  16	
  	
  

	
  12	
  	
  

	
  4	
  	
  

	
  7	
  	
  

	
  3	
  	
  

	
  3	
  	
  

	
  41	
  	
  

	
  109	
  	
  

	
  65	
  	
  

	
  72	
  	
  

	
  9	
  	
  

	
  20	
  	
  

	
  23	
  	
  

	
  1	
  	
  

	
  5	
  	
  

	
  1	
  	
  

	
  34	
  	
  

	
  28	
  	
  

	
  38	
  	
  

	
  14	
  	
  

	
  29	
  	
  

	
  46	
  	
  

	
  19	
  	
  

	
  44	
  	
  

	
  9	
  	
  

	
  10	
  	
  

	
  25	
  	
  

	
  16	
  	
  

	
  21	
  	
  

	
  13	
  	
  

	
  5	
  	
  

	
  11	
  	
  

	
  2	
  	
  

	
  8	
  	
  

	
  17,332	
  	
  

	
  11,609	
  	
  

	
  21,813	
  	
  

	
  4,783	
  	
  

	
  4,757	
  	
  

	
  15,318	
  	
  

	
  5,916	
  	
  

	
  16,859	
  	
  

	
  6,111	
  	
  

	
  2,720	
  	
  

	
  7,067	
  	
  

	
  24,148	
  	
  

	
  8,734	
  	
  

	
  45,993	
  	
  

	
  15,981	
  	
  

	
  12,652	
  	
  

	
  401,705	
  	
  

	
  53,162	
  	
  

	
  247,743	
  	
  

	
  6,128	
  	
  

	
  8,277	
  	
  

	
  3,533	
  	
  

	
  17,302	
  	
  

	
  5,351	
  	
  

	
  2,865	
  	
  

	
  6,400	
  	
  

	
  2,183	
  	
  

	
  8,066	
  	
  

	
  7,328	
  	
  

	
  1,982	
  	
  

	
  3,243	
  	
  

	
  2,637	
  	
  

	
  3,747	
  	
  

	
  10,032	
  	
  

	
  2,902	
  	
  

	
  43,553	
  	
  

	
  3,621	
  	
  

	
  3.29	
  	
  

	
  5.09	
  	
  

	
  3.92	
  	
  

	
  2.15	
  	
  

	
  4.12	
  	
  

	
  5.22	
  	
  

	
  2.81	
  	
  

	
  2.93	
  	
  

	
  2.82	
  	
  

	
  3.48	
  	
  

	
  3.76	
  	
  

	
  8.01	
  	
  

	
  4.23	
  	
  

	
  8.24	
  	
  

	
  3.93	
  	
  

	
  4.13	
  	
  

	
  12.50	
  	
  

	
  5.85	
  	
  

	
  6.01	
  	
  

	
  3.78	
  	
  

	
  2.88	
  	
  

	
  3.51	
  	
  

	
  6.89	
  	
  

	
  4.97	
  	
  

	
  3.26	
  	
  

	
  4.54	
  	
  

	
  3.62	
  	
  

	
  2.81	
  	
  

	
  8.05	
  	
  

	
  2.01	
  	
  

	
  3.06	
  	
  

	
  3.34	
  	
  

	
  3.04	
  	
  

	
  2.32	
  	
  

	
  2.40	
  	
  

	
  3.05	
  	
  

	
  2.26	
  	
  

	
  11,001	
  	
  

	
  21,626	
  	
  

92.6%	
  

85.5%	
  

	
  138,659	
  	
  

	
  127,701	
  	
  

	
  -‐	
  	
  

100.0%	
  

	
  1,373	
  	
  

	
  16,457	
  	
  

98.2%	
  

77.6%	
  

	
  -‐	
  	
  

100.0%	
  

	
  13,437	
  	
  

75.5%	
  

	
  -‐	
  	
  

100.0%	
  

	
  15,173	
  	
  

	
  2,891	
  	
  

54.7%	
  

85.3%	
  

	
  87,250	
  	
  

	
  76,533	
  	
  

	
  57,084	
  	
  

	
  61,272	
  	
  

	
  41,409	
  	
  

	
  50,577	
  	
  

	
  18,334	
  	
  

	
  16,729	
  	
  

	
  81,958	
  	
  

89.2%	
  

	
  675,548	
  	
  

	
  6,090	
  	
  

99.4%	
  

	
  1,046,457	
  	
  

	
  26,381	
  	
  

96.0%	
  

	
  628,849	
  	
  

	
  -‐	
  	
  

100.0%	
  

	
  413,933	
  	
  

	
  3,044	
  	
  

	
  6,579	
  	
  

	
  -‐	
  	
  

	
  -‐	
  	
  

	
  -‐	
  	
  

99.1%	
  

97.8%	
  

	
  319,625	
  	
  

	
  291,003	
  	
  

100.0%	
  

	
  267,817	
  	
  

100.0%	
  

	
  265,812	
  	
  

100.0%	
  

	
  247,743	
  	
  

	
  5,703	
  	
  

97.3%	
  

	
  208,351	
  	
  

	
  54	
  	
  

100.0%	
  

	
  231,757	
  	
  

	
  27,623	
  	
  

	
  283	
  	
  

82.9%	
  

99.8%	
  

	
  134,269	
  	
  

	
  161,488	
  	
  

	
  2,684	
  	
  

98.3%	
  

	
  155,168	
  	
  

	
  16,337	
  	
  

89.0%	
  

	
  131,805	
  	
  

	
  -‐	
  	
  

100.0%	
  

	
  121,593	
  	
  

	
  5,370	
  	
  

	
  10,936	
  	
  

94.7%	
  

86.9%	
  

	
  -‐	
  	
  

100.0%	
  

	
  13,973	
  	
  

	
  5,864	
  	
  

	
  2,100	
  	
  

	
  4,086	
  	
  

78.0%	
  

89.8%	
  

96.3%	
  

92.3%	
  

	
  -‐	
  	
  

100.0%	
  

	
  4,453	
  	
  

87.8%	
  

	
  -‐	
  	
  

100.0%	
  

	
  96,051	
  	
  

	
  72,591	
  	
  

	
  73,277	
  	
  

	
  49,556	
  	
  

	
  51,880	
  	
  

	
  55,376	
  	
  

	
  48,710	
  	
  

	
  50,158	
  	
  

	
  31,918	
  	
  

	
  34,842	
  	
  

	
  3,374	
  	
  

89.6%	
  

	
  28,964	
  	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  70	
  

	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
Property	
  

10	
  Lower	
  Spadina	
  Avenue,	
  
Toronto

(5)

	
  Total	
  GLA	
  	
  
in	
  square	
  
feet	
  	
  

	
  Owned	
  share	
  of	
  
total	
  GLA	
  in	
  
square	
  feet	
  	
  

	
  60,255	
  	
  

	
  24,102	
  	
  

83	
  Yonge	
  Street,	
  Toronto	
  

	
  11,504	
  	
  

	
  11,504	
  	
  

Toronto	
  Downtown	
  

	
  6,228,905	
  	
  

	
  5,399,533	
  	
  

5915-‐5935	
  Airport	
  Road,	
  
Mississauga	
  

Aviva	
  Corporate	
  Centre,	
  Toronto	
  

6655-‐6725	
  Airport	
  Road,	
  
Mississauga	
  

5001	
  Yonge	
  Street,	
  Toronto	
  

2075	
  Kennedy	
  Road,	
  Toronto	
  

5945-‐5955	
  Airport	
  Road,	
  
Mississauga	
  

50	
  Burnhamthorpe	
  Road	
  West,	
  
Mississauga

(5)

30	
  Eglinton	
  Avenue	
  West,	
  
Mississauga	
  

401	
  &	
  405	
  The	
  West	
  Mall,	
  Toronto

(5)

300,	
  302	
  &	
  304	
  The	
  East	
  Mall,	
  
Toronto

(5)

625	
  Cochrane	
  Drive,	
  Markham	
  

Valleywood	
  Corporate	
  Centre,	
  
Markham	
  

90	
  Burnhamthorpe	
  Road	
  West,	
  
Mississauga

(5)

185	
  The	
  West	
  Mall,	
  Toronto

(5)

2645	
  Skymark	
  Ave.,	
  Mississauga	
  

6299	
  Airport	
  Road,	
  Mississauga	
  

1020	
  Birchmount	
  Road,	
  Toronto	
  

6303	
  Airport	
  Road,	
  Mississauga	
  

195	
  The	
  West	
  Mall,	
  Toronto

191	
  The	
  West	
  Mall,	
  Toronto

586	
  Argus	
  Road,	
  Oakville	
  

(5)

(5)

2810	
  Matheson	
  Boulevard	
  East,	
  
Mississauga

(5)

6509	
  Airport	
  Road,	
  Mississauga	
  

2550	
  Argentia	
  Road,	
  Mississauga	
  

100	
  Gough	
  Road,	
  Markham	
  

6501	
  Mississauga	
  Road,	
  
(5)
Mississauga

2010	
  Winston	
  Park	
  Drive,	
  Oakville

(5)

6531	
  Mississauga	
  Road,	
  
(5)
Mississauga

Average	
  
tenant	
  size	
  
in	
  square	
  
feet	
  	
  

Average	
  	
  
lease	
  term	
  
remaining	
  	
  
in	
  years	
  	
  

Owned	
  share	
  
vacant	
  in	
  
square	
  feet	
  	
  

No.	
  of	
  
tenants	
  

Occupancy

(1)

Owned	
  
share	
  
occupancy	
  
in	
  square	
  
feet	
  

	
  6	
  	
  

	
  4	
  	
  

	
  578	
  	
  

	
  50	
  	
  

	
  9	
  	
  

	
  9	
  	
  

	
  20	
  	
  

	
  11	
  	
  

	
  33	
  

	
  9,901	
  	
  

	
  3.29	
  	
  

	
  340	
  	
  

98.6%	
  

	
  23,762	
  	
  

	
  2,876	
  	
  

	
  10,519	
  	
  

	
  7,283	
  	
  

	
  39,158	
  	
  

	
  36,819	
  	
  

	
  15,301	
  	
  

	
  16,568	
  	
  

	
  3,870	
  

	
  5.15	
  	
  

	
  5.77	
  	
  

	
  4.78	
  	
  

	
  2.72	
  	
  

	
  1.56	
  	
  

	
  3.27	
  	
  

	
  2.53	
  	
  

4.59	
  

	
  -‐	
  	
  

100.0%	
  

	
  11,504	
  	
  

	
  145,274	
  	
  

97.3%	
  

	
  5,254,259	
  	
  

	
  129,682	
  	
  

73.7%	
  

	
  364,129	
  	
  

	
  -‐	
  	
  

	
  -‐	
  	
  

100.0%	
  

	
  352,425	
  	
  

100.0%	
  

	
  331,372	
  	
  

	
  2,547	
  	
  

	
  23,590	
  	
  

50,286	
  

99.2%	
  

88.5%	
  

71.7%	
  

	
  306,021	
  	
  

	
  182,245	
  	
  

127,699	
  

	
  493,811	
  	
  

	
  493,811	
  	
  

	
  352,425	
  	
  

	
  331,372	
  	
  

	
  308,568	
  	
  

	
  205,835	
  	
  

	
  177,985	
  	
  

	
  352,425	
  	
  

	
  331,372	
  	
  

	
  308,568	
  	
  

	
  205,835	
  	
  

	
  177,985	
  	
  

	
  350,997	
  	
  

	
  175,148	
  	
  

	
  33	
  	
  

	
  9,168	
  	
  

	
  5.32	
  	
  

	
  24,178	
  	
  

86.2%	
  

	
  150,970	
  	
  

	
  165,012	
  	
  

	
  165,012	
  	
  

	
  39	
  	
  

	
  3,504	
  	
  

	
  3.89	
  	
  

	
  28,359	
  	
  

82.8%	
  

	
  136,653	
  	
  

	
  411,842	
  	
  

	
  326,389	
  	
  

	
  162,792	
  	
  

	
  154,774	
  	
  

	
  164,737	
  	
  

	
  162,868	
  	
  

	
  162,792	
  	
  

	
  154,774	
  	
  

	
  23	
  	
  

	
  25	
  	
  

	
  13	
  	
  

	
  13	
  	
  

	
  17,906	
  	
  

	
  11,340	
  	
  

	
  12,522	
  	
  

	
  11,490	
  	
  

	
  4.17	
  	
  

	
  4.66	
  	
  

	
  4.05	
  	
  

	
  3.45	
  	
  

	
  -‐	
  	
  

100.0%	
  

	
  164,737	
  	
  

	
  21,396	
  	
  

86.9%	
  

	
  141,472	
  	
  

	
  -‐	
  	
  

100.0%	
  

	
  162,792	
  	
  

	
  5,408	
  	
  

96.5%	
  

	
  149,366	
  	
  

	
  304,750	
  	
  

	
  152,070	
  	
  

	
  18	
  	
  

	
  13,690	
  	
  

	
  5.80	
  	
  

	
  29,106	
  	
  

80.9%	
  

	
  122,964	
  	
  

	
  297,292	
  	
  

	
  142,436	
  	
  

	
  90,779	
  	
  

	
  87,161	
  	
  

	
  80,325	
  	
  

	
  160,812	
  	
  

	
  158,260	
  	
  

	
  74,570	
  	
  

	
  140,123	
  	
  

	
  60,000	
  	
  

	
  51,639	
  	
  

	
  111,840	
  	
  

	
  84,725	
  	
  

	
  79,137	
  	
  

	
  71,192	
  	
  

	
  148,349	
  	
  

	
  142,436	
  	
  

	
  90,779	
  	
  

	
  87,161	
  	
  

	
  80,325	
  	
  

	
  80,245	
  	
  

	
  78,972	
  	
  

	
  74,570	
  	
  

	
  69,921	
  	
  

	
  60,000	
  	
  

	
  51,639	
  	
  

	
  111,840	
  	
  

	
  33,890	
  	
  

	
  31,655	
  	
  

	
  28,477	
  	
  

	
  21	
  	
  

	
  2	
  	
  

	
  24	
  	
  

	
  1	
  	
  

	
  9	
  	
  

	
  1	
  	
  

	
  8	
  	
  

	
  5	
  	
  

	
  9	
  	
  

	
  1	
  	
  

	
  16	
  	
  

	
  1	
  	
  

	
  22	
  	
  

	
  9	
  	
  

	
  18	
  	
  

	
  12,772	
  	
  

	
  42,282	
  	
  

	
  3,256	
  	
  

	
  87,161	
  	
  

	
  8,606	
  	
  

	
  160,812	
  	
  

	
  18,467	
  	
  

	
  14,914	
  	
  

	
  14,312	
  	
  

	
  60,000	
  	
  

	
  2,690	
  	
  

	
  111,840	
  	
  

	
  3,172	
  	
  

	
  6,621	
  	
  

	
  2,866	
  	
  

	
  4.02	
  	
  

	
  6.62	
  	
  

	
  4.97	
  	
  

	
  4.00	
  	
  

	
  6.04	
  	
  

	
  6.01	
  	
  

	
  4.39	
  	
  

	
  2.49	
  	
  

5.96	
  

	
  6.01	
  	
  

	
  4.61	
  	
  

	
  1.67	
  	
  

2.71	
  

	
  3.47	
  	
  

	
  3.33	
  	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  71	
  

90.2%	
  

	
  133,840	
  	
  

	
  14,509	
  	
  

	
  57,872	
  	
  

	
  12,633	
  	
  

59.4%	
  

86.1%	
  

	
  -‐	
  	
  

100.0%	
  

	
  2,869	
  	
  

96.4%	
  

	
  -‐	
  	
  

100.0%	
  

	
  84,564	
  	
  

	
  78,146	
  	
  

	
  87,161	
  	
  

	
  77,456	
  	
  

	
  80,245	
  	
  

	
  5,253	
  	
  

93.3%	
  

	
  73,719	
  	
  

	
  -‐	
  	
  

100.0%	
  

	
  74,570	
  	
  

5,645	
  

91.9%	
  

64,276	
  

	
  -‐	
  	
  

100.0%	
  

	
  8,603	
  	
  

83.3%	
  

	
  60,000	
  	
  

	
  43,036	
  	
  

	
  -‐	
  	
  

100.0%	
  

	
  111,840	
  	
  

5,981	
  

82.4%	
  

27,909	
  

	
  7,819	
  	
  

	
  7,845	
  	
  

75.3%	
  

72.5%	
  

	
  23,836	
  	
  

	
  20,632	
  	
  

	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
Property	
  

80	
  Whitehall	
  Drive,	
  Markham

(5)

3035	
  Orlando	
  Drive,	
  Mississauga	
  

	
  Total	
  GLA	
  	
  
in	
  square	
  
feet	
  	
  

	
  Owned	
  share	
  of	
  
total	
  GLA	
  in	
  
square	
  feet	
  	
  

	
  60,805	
  	
  

	
  16,754	
  	
  

	
  24,322	
  	
  

	
  16,754	
  	
  

Toronto	
  Suburban	
  

	
  5,514,402	
  	
  

	
  4,218,732	
  	
  

	
  956,725	
  	
  

	
  956,725	
  	
  

Average	
  
tenant	
  size	
  
in	
  square	
  
feet	
  	
  

Average	
  	
  
lease	
  term	
  
remaining	
  	
  
in	
  years	
  	
  

Owned	
  share	
  
vacant	
  in	
  
square	
  feet	
  	
  

Occupancy

(1)

Owned	
  
share	
  
occupancy	
  
in	
  square	
  
feet	
  

	
  30,403	
  	
  

	
  16,754	
  	
  

11,071	
  

	
  67,018	
  	
  

	
  4.26	
  	
  

	
  7.42	
  	
  

3.90	
  

	
  6.16	
  	
  

	
  -‐	
  	
  

	
  -‐	
  	
  

100.0%	
  

	
  24,322	
  	
  

100.0%	
  

	
  16,754	
  	
  

443,581	
  

89.5%	
  

3,775,151	
  

	
  18,472	
  	
  

98.1%	
  

	
  938,253	
  	
  

No.	
  of	
  
tenants	
  

	
  2	
  	
  

	
  1	
  	
  

	
  446	
  	
  

	
  14	
  	
  

	
  717,160	
  	
  

	
  717,160	
  	
  

	
  1	
  	
  

	
  717,160	
  	
  

	
  11.25	
  	
  

	
  -‐	
  	
  

100.0%	
  

	
  717,160	
  	
  

	
  24,444	
  	
  

	
  199,176	
  	
  

	
  7.23	
  	
  

	
  15.33	
  	
  

	
  11,047	
  	
  

94.9%	
  

	
  205,326	
  	
  

	
  -‐	
  	
  

100.0%	
  

	
  398,351	
  	
  

50	
  Queen	
  Street	
  North,	
  Kitchener	
  

	
  170,333	
  	
  

700	
  De	
  la	
  Gauchetière	
  Street	
  West,	
  
Montréal	
  

445	
  Opus	
  Industrial	
  Boulevard,	
  
Mount	
  Juliet,	
  Nashville	
  

275	
  Dundas	
  Street	
  West,	
  London

(5)

200	
  Chemin	
  Sainte-‐Foy,	
  	
  
Québec	
  City	
  

Market	
  Square,	
  Kitchener	
  

100	
  Frederick	
  Street,	
  Kitchener	
  

1	
  Riverside	
  Drive,Windsor	
  

55	
  King	
  Street	
  West,	
  Kitchener	
  

235	
  King	
  Street	
  East,	
  Kitchener	
  

22	
  Frederick	
  Street,	
  Kitchener	
  

Accelerator	
  Building,	
  Waterloo	
  

180	
  Keil	
  Drive	
  South,	
  Chatham	
  

70	
  King	
  Street	
  East,	
  Kitchener	
  

2450	
  Rue	
  Girouard,	
  	
  
Saint-‐Hyacinthe	
  

12800	
  Foster	
  Street,	
  	
  
Overland	
  Park	
  

400	
  Cumberland	
  Road,	
  Ottawa	
  

2200-‐2204	
  Walkley	
  Road,	
  Ottawa	
  

130	
  Slater	
  Street,	
  Ottawa	
  

900	
  Place	
  D'Youville,	
  Québec	
  City	
  

Gateway	
  Business	
  Park,	
  Ottawa	
  

1125	
  Innovation	
  Drive,	
  Ottawa	
  

150	
  Metcalfe	
  Street,	
  Ottawa	
  

22	
  Varennes	
  Street,	
  Gatineau	
  

	
  540,933	
  	
  

	
  398,351	
  	
  

	
  241,341	
  	
  

	
  239,428	
  	
  

	
  235,915	
  	
  

	
  126,075	
  	
  

	
  100,797	
  	
  

	
  95,855	
  	
  

	
  92,862	
  	
  

	
  36,927	
  	
  

	
  9,485	
  	
  

	
  174,322	
  	
  

	
  158,898	
  	
  

	
  122,906	
  	
  

	
  122,671	
  	
  

	
  120,995	
  	
  

	
  115,771	
  	
  

	
  109,003	
  	
  

	
  107,783	
  	
  

360	
  Laurier	
  Avenue	
  West,	
  Ottawa	
  

	
  107,298	
  	
  

580	
  Rue	
  Grande	
  Allée,	
  	
  
Québec	
  City	
  

250	
  King	
  Street,	
  Fredericton	
  

277	
  Pleasant	
  Street,	
  Dartmouth	
  

	
  90,777	
  	
  

	
  80,162	
  	
  

	
  76,527	
  	
  

219	
  Laurier	
  Avenue	
  West,	
  Ottawa

(5)

	
  187,783	
  	
  

8550	
  Newman	
  Boulevard,	
  Montréal	
  

	
  66,397	
  	
  

236	
  Brownlow	
  Avenue,	
  Dartmouth	
  

2625	
  Queensview	
  Drive,	
  Ottawa	
  

1305	
  Chemin	
  Sainte-‐Foy,	
  	
  
Québec	
  City	
  

Seven	
  Capella	
  Court,	
  Ottawa	
  

111	
  Ilsley	
  Avenue,	
  Dartmouth	
  

	
  60,739	
  	
  

	
  46,156	
  	
  

	
  36,542	
  	
  

31,362	
  

27,428	
  

	
  231,500	
  	
  

	
  231,500	
  	
  

	
  185,178	
  	
  

	
  185,178	
  	
  

	
  1	
  	
  

	
  185,178	
  	
  

	
  5.92	
  	
  

	
  216,373	
  	
  

	
  398,351	
  	
  

	
  241,341	
  	
  

	
  239,428	
  	
  

	
  235,915	
  	
  

	
  170,333	
  	
  

	
  126,075	
  	
  

	
  100,797	
  	
  

	
  95,855	
  	
  

	
  92,862	
  	
  

	
  36,927	
  	
  

	
  9,485	
  	
  

	
  21	
  	
  

	
  2	
  	
  

	
  20	
  	
  

	
  15	
  	
  

	
  7	
  	
  

	
  12	
  	
  

	
  12	
  	
  

	
  3	
  	
  

	
  16	
  	
  

	
  4	
  	
  

	
  1	
  	
  

	
  1	
  	
  

	
  1	
  	
  

	
  11,910	
  	
  

	
  13,617	
  	
  

28,557	
  

	
  12,975	
  	
  

9,514	
  

	
  25,694	
  	
  

4,586	
  

	
  23,216	
  	
  

	
  36,927	
  	
  

	
  9,485	
  	
  

	
  3.87	
  	
  

	
  3.70	
  	
  

6.92	
  

	
  2.78	
  	
  

4.31	
  

	
  4.55	
  	
  

2.78	
  

	
  7.41	
  	
  

	
  3.33	
  	
  

	
  4.29	
  	
  

	
  231,500	
  	
  

	
  11.23	
  	
  

	
  174,322	
  	
  

	
  158,898	
  	
  

	
  122,906	
  	
  

	
  122,671	
  	
  

	
  120,995	
  	
  

	
  115,771	
  	
  

	
  109,003	
  	
  

	
  107,783	
  	
  

	
  107,298	
  	
  

	
  90,777	
  	
  

	
  80,162	
  	
  

	
  76,527	
  	
  

	
  75,113	
  	
  

	
  66,397	
  	
  

	
  60,739	
  	
  

	
  46,156	
  	
  

	
  36,542	
  	
  

31,362	
  

27,428	
  

	
  3	
  	
  

	
  3	
  	
  

	
  25	
  	
  

	
  4	
  	
  

	
  38	
  	
  

	
  4	
  	
  

	
  22	
  	
  

	
  1	
  	
  

	
  7	
  	
  

	
  16	
  	
  

	
  3	
  	
  

	
  5	
  	
  

	
  5	
  	
  

	
  6	
  	
  

	
  1	
  	
  

	
  5	
  	
  

	
  8	
  	
  

1	
  

5	
  

	
  58,107	
  	
  

	
  52,966	
  	
  

	
  4,451	
  	
  

	
  30,109	
  	
  

	
  3,151	
  	
  

	
  28,943	
  	
  

	
  4,827	
  	
  

	
  107,783	
  	
  

	
  15,328	
  	
  

	
  3,938	
  	
  

	
  26,721	
  	
  

	
  12,868	
  	
  

	
  37,557	
  	
  

	
  9,440	
  	
  

	
  21,430	
  	
  

	
  9,231	
  	
  

	
  3,556	
  	
  

31,362	
  

4,721	
  

	
  2.02	
  	
  

	
  2.74	
  	
  

	
  3.44	
  	
  

	
  10.25	
  	
  

	
  4.11	
  	
  

	
  6.05	
  	
  

	
  3.62	
  	
  

	
  2.84	
  	
  

	
  3.19	
  	
  

	
  2.09	
  	
  

	
  4.75	
  	
  

	
  3.27	
  	
  

	
  1.44	
  	
  

	
  2.01	
  	
  

	
  2.00	
  	
  

	
  3.60	
  	
  

	
  7.99	
  	
  

0.33	
  

1.90	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  72	
  

3,135	
  

	
  35,176	
  	
  

36,015	
  

	
  14,632	
  	
  

11,904	
  

	
  23,716	
  	
  

22,480	
  

	
  -‐	
  	
  

	
  -‐	
  	
  

	
  -‐	
  	
  

	
  -‐	
  	
  

	
  -‐	
  	
  

	
  -‐	
  	
  

	
  -‐	
  	
  

	
  11,625	
  	
  

	
  2,237	
  	
  

	
  1,253	
  	
  

98.7%	
  

85.3%	
  

84.7%	
  

91.4%	
  

90.6%	
  

76.5%	
  

76.5%	
  

100.0%	
  

100.0%	
  

100.0%	
  

238,206	
  

	
  204,252	
  	
  

199,900	
  

	
  155,701	
  	
  

114,171	
  

	
  77,081	
  	
  

73,375	
  

	
  92,862	
  	
  

	
  36,927	
  	
  

	
  9,485	
  	
  

100.0%	
  

	
  231,500	
  	
  

100.0%	
  

	
  185,178	
  	
  

100.0%	
  

	
  174,322	
  	
  

100.0%	
  

	
  158,898	
  	
  

90.5%	
  

98.2%	
  

99.0%	
  

	
  111,281	
  	
  

	
  120,434	
  	
  

	
  119,742	
  	
  

	
  -‐	
  	
  

100.0%	
  

	
  115,771	
  	
  

	
  2,814	
  	
  

97.4%	
  

	
  106,189	
  	
  

	
  -‐	
  	
  

	
  -‐	
  	
  

100.0%	
  

	
  107,783	
  	
  

100.0%	
  

	
  107,298	
  	
  

	
  27,776	
  	
  

69.4%	
  

	
  63,001	
  	
  

	
  -‐	
  	
  

100.0%	
  

	
  12,188	
  	
  

84.1%	
  

	
  -‐	
  	
  

100.0%	
  

	
  9,759	
  	
  

	
  39,309	
  	
  

85.3%	
  

35.3%	
  

	
  -‐	
  	
  

100.0%	
  

	
  8,091	
  	
  

77.9%	
  

-‐	
  

3,822	
  

100.0%	
  

86.1%	
  

	
  80,162	
  	
  

	
  64,339	
  	
  

	
  75,113	
  	
  

	
  56,638	
  	
  

	
  21,430	
  	
  

	
  46,156	
  	
  

	
  28,451	
  	
  

31,362	
  

23,606	
  

	
  	
  
	
  	
  
	
  
	
  
	
  
	
  Total	
  GLA	
  	
  
in	
  square	
  
feet	
  	
  

	
  Owned	
  share	
  of	
  
total	
  GLA	
  in	
  
square	
  feet	
  	
  

No.	
  of	
  
tenants	
  

Average	
  
tenant	
  size	
  
in	
  square	
  
feet	
  	
  

Average	
  	
  
lease	
  term	
  
remaining	
  	
  
in	
  years	
  	
  

Owned	
  share	
  
vacant	
  in	
  
square	
  feet	
  	
  

Occupancy

(1)

Owned	
  
share	
  
occupancy	
  
in	
  square	
  
feet	
  

	
  32,788	
  	
  

	
  25,968	
  	
  

	
  25	
  	
  

	
  932	
  	
  

	
  4.37	
  	
  

	
  7,521	
  	
  

71.0%	
  

	
  18,447	
  	
  

	
  47,016	
  	
  

	
  22,333	
  	
  

	
  23,461	
  	
  

	
  22,333	
  	
  

	
  50,945	
  	
  

	
  20,378	
  	
  

	
  11,754	
  	
  

	
  7,444	
  	
  

	
  8.16	
  	
  

	
  0.58	
  	
  

	
  50,945	
  	
  

	
  13.59	
  	
  

	
  -‐	
  	
  

	
  -‐	
  	
  

	
  -‐	
  	
  

100.0%	
  

	
  23,461	
  	
  

100.0%	
  

	
  22,333	
  	
  

100.0%	
  

	
  20,378	
  	
  

Property	
  

700	
  De	
  la	
  Gauchetière	
  Street	
  West,	
  
Montréal	
  

680	
  Broadway	
  Street,	
  Tillsonburg

(5)

141	
  Saint	
  Jean	
  Street,	
  	
  
Québec	
  City	
  

460	
  Two	
  Nations	
  Crossing,	
  
(5)
Fredericton

117	
  Kearney	
  Lake	
  Road,	
  Halifax

(5)

55	
  Norfolk	
  Street	
  South,	
  Simcoe

(5)

	
  36,353	
  	
  

	
  12,887	
  	
  

	
  12,724	
  	
  

	
  5,155	
  	
  

	
  2,555	
  	
  

	
  12,887	
  	
  

	
  6,424,707	
  	
  

	
  5,895,174	
  	
  

	
  340	
  	
  

17,941	
  

	
  3.85	
  	
  

	
  2.16	
  	
  

	
  6.66	
  	
  

	
  1,097	
  	
  

91.4%	
  

	
  11,627	
  	
  

	
  -‐	
  	
  

100.0%	
  

	
  5,155	
  	
  

304,069	
  

94.8%	
  

5,591,105	
  

27,627,693	
  	
  

	
  24,222,661	
  	
  

	
  2,216	
  	
  

11,592	
  

4.96	
  

1,701,201	
  

93.0%	
  

22,521,461	
  

Eastern	
  Canada

(2)

(3)

Total

	
  4	
  	
  

	
  3	
  	
  

	
  1	
  	
  

	
  13	
  	
  

	
  1	
  	
  

(1)  Occupancy	
  includes	
  in-‐place	
  and	
  committed.	
  

(2) 

Includes	
  properties	
  in	
  southwestern	
  Ontario	
  and	
  U.S.	
  

(3)  Excludes	
  redevelopment	
  properties	
  and	
  held	
  for	
  sale	
  properties.	
  

(4) 

Investment	
  in	
  joint	
  venture.	
  

(5)  Co-‐owned	
  property.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  73	
  

	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  Owned	
  area	
  of	
  
total	
  GLA	
  in	
  	
  
square	
  feet	
  	
  

Properties	
  	
  

City	
  	
  

Province	
  	
  

Largest	
  tenants	
  by	
  GLA	
  

Tenant	
  

Government	
  of	
  Canada	
  

Bank	
  of	
  Nova	
  Scotia	
  

	
  1,423,259	
  	
   2	
  Properties	
  

1	
  Property	
  
1	
  Property	
  
4	
  Properties	
  
1	
  Property	
  
3	
  Properties	
  	
  
2	
  Properties	
  

4	
  Properties	
  	
  
3	
  Properties	
  
6	
  Properties	
  
1	
  Property	
  
1	
  Property	
  
	
  984,404	
  	
   1	
  Property	
  
1	
  Property	
  
2	
  Properties	
  
7	
  Properties	
  
1	
  Property	
  
2	
  Properties	
  
2	
  Properties	
  

Nissan	
  North	
  America	
  Inc.	
  

	
  717,160	
  	
   445	
  Opus	
  Industrial	
  Boulevard	
  

Government	
  of	
  Ontario	
  

	
  670,003	
  	
   7	
  Properties	
  

Government	
  of	
  Québec	
  

Bell	
  Canada	
  

1	
  Property	
  
1	
  Property	
  

	
  663,922	
  	
   1	
  Property	
  

4	
  Properties	
  

	
  376,694	
  	
   Northwest	
  Tower	
  

350-‐450	
  Lansdowne	
  
Enbridge	
  Place	
  
Scotia	
  Plaza	
  

	
   Gateway	
  Business	
  Park	
  

700	
  De	
  la	
  Gauchetière	
  Street	
  West	
  

Government	
  of	
  Saskatchewan	
  

	
  343,001	
  	
   6	
  Properties	
  

Aviva	
  Canada	
  Inc.	
  

Government	
  of	
  Alberta	
  

Telus	
  

1	
  Property	
  

	
  335,900	
  	
   HSBC	
  Bank	
  Place	
  	
  

2200-‐2206	
  Eglinton	
  Avenue	
  East	
  

	
  304,079	
  	
   8	
  Properties	
  
3	
  Properties	
  
	
  287,803	
  	
   2261	
  Keating	
  Cross	
  Road	
  
Telus	
  Tower	
  

Government	
  of	
  British	
  Columbia	
  

	
  287,747	
  	
   Station	
  Tower	
  

Intact	
  Financial	
  Corporation	
  

	
  263,214	
  	
  

2	
  Properties	
  
4370	
  Dominion	
  Street	
  
Richmond	
  Place	
  
2261	
  Keating	
  Cross	
  Road	
  
350-‐450	
  Lansdowne	
  
IBM	
  Corporate	
  Park	
  
2450	
  Girouard	
  Street	
  West	
  

Enbridge	
  Pipelines	
  Inc.	
  
State	
  Street	
  Trust	
  Company	
  

	
  248,577	
  	
   Enbridge	
  Place	
  
	
  244,936	
  	
   State	
  Street	
  Financial	
  Centre	
  	
  
18	
  King	
  Street	
  East	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  74	
  

Yellowknife	
  
Surrey	
  
New	
  Westminster	
  
Saskatoon	
  
Regina	
  
Calgary	
  
Edmonton	
  

Toronto	
  
Kitchener	
  
Ottawa	
  
Gatineau	
  
Windsor	
  
Yellowknife	
  
Calgary	
  
Saskatoon	
  
Toronto	
  
Markham	
  
Mississauga	
  
Kitchener	
  
Mount	
  Juliet	
  

Toronto	
  
Ottawa	
  
Kitchener	
  

Montreal	
  
Québec	
  City	
  
Yellowknife	
  
Kamloops	
  
Edmonton	
  
Toronto	
  
Ottawa	
  
Montréal	
  
Regina	
  
Saskatoon	
  
Edmonton	
  
Toronto	
  
Calgary	
  
Edmonton	
  
Victoria	
  
Calgary	
  
Surrey	
  
New	
  Westminster	
  
Burnaby	
  
Richmond	
  
Victoria	
  
Kamloops	
  
Calgary	
  
Saint-‐Hyacinthe	
  
Edmonton	
  
Toronto	
  
Toronto	
  

Northwest	
  Territories	
  
British	
  Columbia	
  
British	
  Columbia	
  
Saskatchewan	
  
Saskatchewan	
  
Alberta	
  
Alberta	
  

Ontario	
  
Ontario	
  
Ontario	
  
Québec	
  
Ontario	
  
Northwest	
  Territories	
  
Alberta	
  
Saskatchewan	
  
Ontario	
  
Ontario	
  
Ontario	
  
Ontario	
  
Tennessee,	
  U.S.	
  

Ontario	
  
Ontario	
  
Ontario	
  

Quebec	
  
Quebec	
  
Northwest	
  Territories	
  
British	
  Columbia	
  
Alberta	
  
Ontario	
  
Ontario	
  
Québec	
  	
  
Saskatchewan	
  
Saskatchewan	
  
Alberta	
  
Ontario	
  
Alberta	
  
Alberta	
  
British	
  Columbia	
  
Alberta	
  
British	
  Columbia	
  
British	
  Columbia	
  
British	
  Columbia	
  
British	
  Columbia	
  
British	
  Columbia	
  
British	
  Columbia	
  
Alberta	
  
Québec	
  
Alberta	
  
Ontario	
  
Ontario	
  

	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
Tenant	
  
Winners	
  Merchants	
  International	
  

TD	
  Canada	
  Trust	
  

	
  Owned	
  area	
  of	
  
total	
  GLA	
  in	
  	
  
square	
  feet	
  	
  

Properties	
  	
  
	
  219,685	
  	
   1	
  Property	
  

2	
  Properties	
  

	
  209,400	
  	
   Saskatoon	
  Square	
  

SNC-‐Lavalin	
  Inc.	
  

Loyalty	
  Management	
  
Newalta	
  Corporation	
  
U.S.	
  Bank	
  National	
  Association	
  
IBM	
  Canada	
  Ltd.	
  

1914	
  Hamilton	
  Street	
  
300,	
  302	
  &	
  304	
  The	
  East	
  Mall	
  
55	
  King	
  Street	
  West	
  
275	
  Dundas	
  Street	
  West	
  

	
  207,351	
  	
   1	
  Property	
  
1	
  Property	
  
4	
  Properties	
  

	
  194,018	
  	
   AIR	
  MILES	
  Tower	
  
	
  187,297	
  	
   3	
  Properties	
  
	
  185,178	
  	
   12800	
  Foster	
  Street	
  
IBM	
  Corporate	
  Park	
  
	
  170,379	
  	
  
100	
  Gough	
  Road	
  
5001	
  Yonge	
  Street	
  

ATCO	
  Group	
  
AON	
  Canada	
  Inc.	
  
Dream	
  Office	
  Management	
  Corp.	
  

	
  168,169	
  	
   2	
  Properties	
  
	
  166,609	
  	
   700	
  De	
  la	
  Gauchetière	
  Street	
  West	
  
	
  160,096	
  	
   2	
  Properties	
  

1	
  Property	
  
1	
  Property	
  
1	
  Property	
  
2	
  Properties	
  
1	
  Property	
  
5	
  Properties	
  
2	
  Properties	
  
5	
  Properties	
  
1	
  Property	
  
4	
  Properties	
  
4	
  Properties	
  
1	
  Property	
  
1	
  Property	
  

The	
  City	
  of	
  Edmonton	
  
Government	
  of	
  Northwest	
  Territories	
  
Cenovus	
  Energy	
  Inc.	
  
Miller	
  Thomson	
  

Daimler	
  Chrysler	
  Canada	
  Inc.	
  
Borell	
  Management	
  
Nautilus	
  Fitness	
  &	
  Racquet	
  Centre	
  

Conex	
  Rental	
  Corp	
  &	
  Flint	
  Energy	
  
Hatch	
  Optima	
  Ltd.	
  
International	
  Financial	
  Data	
  Services	
  
Stantec	
  Consulting	
  Ltd.	
  

Minacs	
  Worldwide	
  Inc.	
  

	
  156,106	
  	
   HSBC	
  Bank	
  Place	
  
	
  142,202	
  	
   3	
  Properties	
  
	
  140,605	
  	
   Rocky	
  Mountain	
  Plaza	
  
	
  137,149	
  	
   Valleywood	
  Corporate	
  Centre	
  
	
   Accelerator	
  Building	
  

Scotia	
  Plaza	
  

	
  132,500	
  	
   1	
  Riverside	
  Drive	
  
	
  124,795	
  	
   Scotia	
  Plaza	
  
	
  117,893	
  	
   Market	
  Square	
  

5	
  Properties	
  
	
  113,801	
  	
   2	
  Properties	
  
	
  110,383	
  	
   840	
  -‐	
  7th	
  Avenue	
  SW	
  
	
  107,490	
  	
   State	
  Street	
  Financial	
  Centre	
  
	
  103,851	
  	
   Station	
  Tower	
  
	
   Market	
  Square	
  

2261	
  Keating	
  Cross	
  Road	
  
	
  103,658	
  	
   6655-‐6725	
  Airport	
  Road	
  

180	
  Keil	
  Drive	
  South	
  

Government	
  of	
  New	
  Brunswick	
  
Total	
  

	
  100,540	
  	
   2	
  Properties	
  

	
  10,609,854	
  	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  75	
  

City	
  	
  
Toronto	
  
Mississauga	
  
Saskatoon	
  
Regina	
  
Toronto	
  
Kitchener	
  
London	
  
Yellowknife	
  
Calgary	
  
Toronto	
  
Toronto	
  
Calgary	
  
Overland	
  Park	
  
Calgary	
  	
  
Markham	
  
Toronto	
  
Edmonton	
  
Montréal	
  
Yellowknife	
  
Surrey	
  
New	
  Westminster	
  
Richmond	
  
Saskatoon	
  
Regina	
  
Calgary	
  	
  
Edmonton	
  
Toronto	
  
Ottawa	
  
Mississauga	
  
Kitchener	
  
Windsor	
  
Montréal	
  
Edmonton	
  
Yellowknife	
  
Calgary	
  	
  
Markham	
  
Waterloo	
  
Toronto	
  
Windsor	
  
Toronto	
  
Kitchener	
  
Toronto	
  
Edmonton	
  
Calgary	
  
Toronto	
  
Surrey	
  
Kitchener	
  
Victoria	
  
Mississauga	
  
Chatham	
  
Fredericton	
  

Province	
  	
  
Ontario	
  
Ontario	
  
Saskatchewan	
  
Saskatchewan	
  
Ontario	
  
Ontario	
  
Ontario	
  
Northwest	
  Territories	
  
Alberta	
  
Ontario	
  
Ontario	
  
Alberta	
  
Kansas,	
  U.S.	
  	
  
Alberta	
  	
  
Ontario	
  
Ontario	
  
Alberta	
  
Québec	
  	
  
Northwest	
  Territories	
  
British	
  Columbia	
  
British	
  Columbia	
  
British	
  Columbia	
  
Saskatchewan	
  
Saskatchewan	
  
Alberta	
  
Alberta	
  
Ontario	
  
Ontario	
  
Ontario	
  
Ontario	
  
Ontario	
  
Québec	
  	
  
Alberta	
  
Northwest	
  Territories	
  
Alberta	
  	
  
Ontario	
  
Ontario	
  
Ontario	
  
Ontario	
  	
  
Ontario	
  
Ontario	
  
Ontario	
  
Alberta	
  
Alberta	
  
Ontario	
  
British	
  Columbia	
  
Ontario	
  
British	
  Columbia	
  
Ontario	
  
Ontario	
  
New	
  Brunswick	
  

	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
Cumulative	
  gross	
  revenue	
  

$109.2	
  million	
  	
  

Largest	
  tenants	
  by	
  annualized	
  gross	
  rent	
  
(Includes	
  all	
  tenants	
  where	
  projected	
  annualized	
  gross	
  contract	
  rent	
  exceeds	
  $1.0	
  million)	
   

Rank	
  

Tenant	
  

Cumulative	
  gross	
  revenue	
   Rank	
  

	
  	
  Tenant	
  

$385.5	
  million	
  	
  

	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  $2.5	
  million	
  or	
  greater:	
  
1.	
  
2.	
  
3.	
  
4.	
  
5.	
  
6.	
  
7.	
  
8.	
  
9.	
  
10.	
  
11.	
  
12.	
  
13.	
  
14.	
  

Bank	
  of	
  Nova	
  Scotia	
  
Government	
  of	
  Canada	
  
Government	
  of	
  Ontario	
  
Bell	
  Canada	
  
Government	
  of	
  Québec	
  
Telus	
  
Enbridge	
  Pipelines	
  Inc.	
  
State	
  Street	
  Trust	
  Company	
  
Government	
  of	
  Saskatchewan	
  
Government	
  of	
  British	
  Columbia	
  
Government	
  of	
  Alberta	
  
Newalta	
  Corporation	
  
Aviva	
  Canada	
  Inc.	
  
Borell	
  Management	
  

15.	
  
16.	
  
17.	
  
18.	
  
19.	
  
20.	
  
21.	
  
22.	
  
23.	
  
24.	
  
25.	
  
26.	
  
27.	
  
28.	
  
29.	
  
30.	
  
31.	
  
32.	
  
33.	
  
34.	
  
35.	
  
36.	
  
37.	
  
38.	
  
39.	
  
40.	
  
41.	
  
42.	
  
43.	
  
44.	
  
45.	
  

Loyalty	
  Management	
  
SNC-‐Lavalin	
  Inc.	
  
Dream	
  Office	
  Management	
  Corp.	
  
Miller	
  Thomson	
  
Government	
  of	
  Northwest	
  Territories	
  
Cenovus	
  Energy	
  
Winners	
  Merchants	
  International	
  
Cassels	
  Brock	
  Blackwell	
  
ATCO	
  Group	
  
Daimler	
  Chrysler	
  Canada	
  Inc.	
  
IBM	
  Canada	
  Ltd.	
  
TD	
  Canada	
  Trust	
  
The	
  City	
  of	
  Edmonton	
  
AON	
  Canada	
  Inc.	
  
Penn	
  West	
  Energy	
  Trust	
  
International	
  Financial	
  Data	
  Services	
  
Hatch	
  Optima	
  Ltd.	
  
U.S.	
  Bank	
  National	
  Association	
  
Intact	
  Financial	
  Corporation	
  
Discovery	
  Parks	
  Holdings	
  Ltd.	
  
Medcan	
  Health	
  Management	
  Inc.	
  
Nissan	
  North	
  America	
  Inc.	
  
Nautilus	
  Fitness	
  &	
  Racquet	
  Centre	
  
Royal	
  Bank	
  of	
  Canada	
  
Co-‐operators	
  Life	
  Insurance	
  
The	
  Art	
  Institute	
  of	
  Vancouver	
  
Stantec	
  Consulting	
  Ltd.	
  
CIBC	
  
Sage	
  Software	
  Canada	
  Ltd.	
  
Bank	
  of	
  Montreal	
  
Carswell	
  

	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  Between	
  $1.0	
  million	
  and	
  $2.5	
  million:	
  
46.	
  
47.	
  
48.	
  
49.	
  
50.	
  
51.	
  
52.	
  
53.	
  
54.	
  
55.	
  
56.	
  
57.	
  
58.	
  
59.	
  

	
  National	
  Bank	
  of	
  Canada	
  	
  
	
  Conex	
  Rental	
  	
  
	
  BDO	
  Dunwoody	
  	
  
	
  Gemini	
  Corporation	
  	
  
	
  Agence	
  Metropolitaine	
  de	
  Transport	
  	
  
	
  Ensign	
  Resource	
  Service	
  Group	
  	
  
	
  CB	
  Richard	
  Ellis	
  Limited	
  	
  
	
  Minacs	
  Worldwide	
  Inc.	
  	
  
	
  Livingston	
  International	
  Inc.	
  	
  
	
  Great	
  West	
  Life	
  Assurance	
  Co.	
  	
  
	
  Rogers	
  Communication	
  Inc.	
  	
  
	
  DBRS	
  	
  
	
  Bereskin	
  &	
  Parr	
  Management	
  	
  
	
  MCAP	
  Services	
  Corporation	
  	
  

60.	
  
61.	
  
62.	
  
63.	
  
64.	
  
65.	
  
66.	
  
67.	
  
68.	
  
69.	
  
70.	
  
71.	
  
72.	
  
73.	
  
74.	
  
75.	
  
76.	
  
77.	
  
78.	
  
79.	
  
80.	
  
81.	
  
82.	
  
83.	
  
84.	
  
85.	
  
86.	
  
87.	
  
88.	
  
89.	
  
90.	
  
91.	
  
92.	
  
93.	
  
94.	
  

	
  Encana	
  Corporation	
  	
  
	
  Government	
  of	
  Nova	
  Scotia	
  	
  
	
  Raymond	
  James	
  Ltd.	
  	
  
	
  Mark	
  Anthony	
  Group	
  	
  
	
  Maple	
  Leaf	
  Foods	
  	
  
	
  Government	
  of	
  New	
  Brunswick	
  	
  
	
  Delcan	
  Corporation	
  	
  
	
  Cardinia	
  Real	
  Estate	
  Canada	
  Inc.	
  	
  
	
  Visa	
  Canada	
  	
  
	
  Reg.	
  Municipality	
  of	
  Waterloo	
  	
  
	
  Canadian	
  Energy	
  Services	
  LP	
  	
  
	
  CGI	
  Group	
  	
  
	
  AMEC	
  Americas	
  Ltd	
  Energy	
  	
  
	
  Edward	
  D.	
  Jones	
  &	
  Co.	
  	
  
	
  Canadian	
  Western	
  Bank	
  	
  
	
  Saskatchewan	
  Telecommunication	
  	
  
	
  International	
  Civil	
  Aviation	
  Organization	
  	
  
	
  Conexus	
  Credit	
  Union	
  	
  
	
  Gardiner	
  Roberts	
  	
  
	
  Toronto	
  Central	
  Community	
  Care	
  	
  
	
  CAE	
  Professional	
  Services	
  Inc.	
  	
  
	
  Johnson	
  Inc.	
  	
  
	
  Trident	
  Exploration	
  Corp.	
  	
  
	
  Standard	
  Lands	
  Co	
  Inc.	
  	
  
	
  Care	
  Factor	
  Computer	
  Services	
  	
  
	
  Yellow	
  Pages	
  	
  
	
  Stewart	
  Weir	
  and	
  Co.	
  	
  
	
  Wells	
  Fargo	
  Foothill	
  Canada	
  	
  
	
  Exchange	
  Solutions	
  Inc.	
  	
  
	
  Dutton	
  Brock	
  	
  
	
  GCAN	
  Insurance	
  Company	
  	
  
	
  Jardine	
  Lloyd	
  Thompson	
  Canada	
  	
  
	
  IBI	
  Leaseholds	
  	
  
	
  Bantrel	
  	
  
	
  MKRT	
  Management	
  Corporation	
  	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  76	
  

 
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
 
Rank	
  

Tenant	
  

Cumulative	
  gross	
  revenue	
  

Rank	
  

	
  Tenant	
  

Cumulative	
  gross	
  revenue	
  

95.
96.
97.
98.
99.
100.	
  
101.	
  

102.	
  
103.	
  
104.	
  
105.	
  
106.	
  
107.	
  
108.	
  
109.	
  
110.	
  
111.	
  
112.	
  
113.	
  
114.	
  
115.	
  
116.	
  
117.	
  

IMV	
  Projects	
  Inc.
Precision	
  Drilling	
  Corp
BHP	
  Billiton	
  Diamonds
Wardrop	
  Engineering	
  Inc.
Wawanesa	
  Mutual	
  Insurance	
  
MLT	
  Management	
  Inc.	
  
Technicolor	
  Creative	
  Services	
  

Cambridge	
  Mercantile	
  Corp.	
  
Ontario	
  Bar	
  Association	
  
Family	
  Guidance	
  Group	
  Inc.	
  
HSBC	
  Bank	
  Canada	
  
Lafarge	
  Canada	
  Inc.	
  
Trader	
  Corporation	
  
Lindt	
  &	
  Sprungli	
  (Canada),	
  Inc.	
  
The	
  Insurance	
  Institute	
  of	
  Canada	
  
Sun	
  Life	
  Assurance	
  Company	
  
Connor,	
  Clark	
  &	
  Lunn	
  Financial	
  
City	
  of	
  Windsor	
  
Gilliland,	
  Gold,	
  Young	
  Consulting	
  Inc.
Smart	
  &	
  Biggar	
  Management	
  
Tartan	
  Engineering	
  
The	
  Record	
  
Inmet	
  Mining	
  Corporation	
  

All	
  tenants	
  with	
  annualized	
  owned	
  rent	
  in	
  excess	
  of	
  $2.5	
  million:	
  

Total	
  annualized	
  owned	
  net	
  rental	
  income	
  
Total	
  annualized	
  owned	
  gross	
  rental	
  income	
  
Total	
  GLA	
  in	
  square	
  feet	
  (owned	
  share)	
  
Average	
  base	
  rent	
  (PSF)	
  
Average	
  recoveries	
  (PSF)	
  

Entire	
  owned	
  portfolio:	
  

Total	
  annualized	
  owned	
  net	
  rental	
  income	
  
Total	
  annualized	
  owned	
  gross	
  rental	
  income	
  
Total	
  occupied	
  and	
  committed	
  GLA	
  in	
  square	
  feet	
  
Average	
  base	
  rent	
  (PSF)	
  
Average	
  recoveries	
  (PSF)	
  

$208.1	
  million	
  
$385.5	
  million	
  
	
  11,191,536	
  
$18.60	
  
$15.85	
  

$410.4	
  million	
  
$781.9	
  million	
  
22,521,461	
  
$18.22	
  
$16.50	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  77	
  

By	
  contractual	
  rent	
  

21.6%	
  

17.5%	
  

17.4%	
  

8.0%	
  

5.8%	
  

2.7%	
  

5.2%	
  

3.5%	
  

3.3%	
  

15.0%	
  

100.0%	
  

Portfolio	
  tenant	
  base	
  (by	
  NAICS	
  codes)	
  

Sector	
  

Finance	
  and	
  Insurance	
  
Public	
  Administration	
  
Professional,	
  Scientific	
  and	
  Technical	
  Services	
  
Mining	
  and	
  Oil	
  and	
  Gas	
  Extraction	
  
Information	
  and	
  Cultural	
  Industries	
  
Manufacturing	
  
Administrative	
  and	
  Support,	
  Waste	
  Management	
  and	
  Remediation	
  Services	
  
Real	
  Estate	
  and	
  Rental	
  and	
  Leasing	
  
Retail	
  Trade	
  
Other	
  

Total	
  

By	
  contractual	
  rent	
  

By	
  GLA	
  

19.7%	
  

18.1%	
  

17.3%	
  

6.5%	
  

6.2%	
  

5.6%	
  

5.3%	
  

3.0%	
  

3.0%	
  

15.3%	
  

100.0%	
  

Real	
  Estate	
  and	
  	
  
Rental	
  and	
  Leasing	
  
3.5%	
  

Retail	
  Trade	
  
3.3%	
  

Other	
  
15.0%	
  

Finance	
  and	
  Insurance	
  
21.6%	
  

Administrayve	
  and	
  	
  
Support,	
  Waste	
  
Management	
  and	
  
Remediayon	
  Services	
  
5.2%	
  

Manufacturing	
  
2.7%	
  

Informayon	
  and	
  Cultural	
  
Industries	
  
5.8%	
  

Public	
  Administrayon	
  
17.6%	
  

Mining	
  and	
  Oil	
  and	
  	
  
Gas	
  Extracyon	
  
8.0%	
  

Professional,	
  Scienyﬁc	
  	
  
and	
  Technical	
  Services	
  
17.4%	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  78	
  

Management’s	
  responsibility	
  for	
  the	
  consolidated	
  financial	
  statements	
  

The	
  accompanying	
  consolidated	
  financial	
  statements,	
  the	
  notes	
  thereto	
  and	
  other	
  financial	
  information	
  contained	
  in	
  this	
  Annual	
  
Report	
  have	
  been	
   prepared	
   by,	
  and	
  are	
   the	
  responsibility	
  of,	
  the	
  management	
  of	
  Dream	
  Office	
  Real	
  Estate	
   Investment	
  Trust.	
  
These	
   consolidated	
   financial	
   statements	
   have	
   been	
   prepared	
   in	
   accordance	
   with	
   International	
   Financial	
   Reporting	
   Standards,	
  
using	
  management’s	
  best	
  estimates	
  and	
  judgments	
  when	
  appropriate.	
  

The	
  Board	
  of	
  Trustees	
  is	
  responsible	
  for	
  ensuring	
  that	
  management	
  fulfills	
  its	
  responsibility	
  for	
  financial	
  reporting	
  and	
  internal	
  
control.	
   The	
   audit	
   committee,	
   which	
   comprises	
   trustees,	
   meets	
   with	
   management	
   as	
   well	
   as	
   the	
   external	
   auditors	
   to	
   satisfy	
  
itself	
  that	
  management	
  is	
  properly	
  discharging	
  its	
  financial	
  responsibilities	
  and	
  to	
  review	
  its	
  consolidated	
  financial	
  statements	
  
and	
   the	
   report	
   of	
   the	
   auditors.	
   The	
   audit	
   committee	
   reports	
   its	
   findings	
   to	
   the	
   Board	
   of	
   Trustees,	
   which	
   approves	
   the	
  
consolidated	
  financial	
  statements.	
  

PricewaterhouseCoopers	
  LLP,	
  the	
  independent	
  auditors,	
  have	
  audited	
  the	
  consolidated	
  financial	
  statements	
  in	
  accordance	
  with	
  
Canadian	
  generally	
  accepted	
  auditing	
  standards.	
  The	
  auditors	
  have	
  full	
  and	
  unrestricted	
  access	
  to	
  the	
  audit	
  committee,	
  with	
  or	
  
without	
  management	
  present.	
  

P.	
  Jane	
  Gavan	
  
Chief	
  Executive	
  Officer	
  

Mario	
  Barrafato	
  
Chief	
  Financial	
  Officer	
  

Toronto,	
  Ontario,	
  February	
  19,	
  2015	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  79	
  

Independent	
  auditor’s	
  report	
  	
  

To	
  the	
  Unitholders	
  of	
  Dream	
  Office	
  Real	
  Estate	
  Investment	
  Trust	
  
We	
   have	
   audited	
   the	
   accompanying	
   consolidated	
   financial	
   statements	
   of	
   Dream	
   Office	
   Real	
   Estate	
   Investment	
   Trust	
   and	
   its	
  
subsidiaries,	
   which	
   comprise	
   the	
   consolidated	
   balance	
   sheets	
   as	
   at	
   December	
   31,	
   2014	
   and	
   December	
   31,	
   2013	
   and	
   the	
  
consolidated	
  statements	
  of	
  comprehensive	
  income,	
  changes	
  in	
  equity	
  and	
  cash	
  flows	
  for	
  the	
  years	
  then	
  ended,	
  and	
  the	
  related	
  
notes,	
  which	
  comprise	
  a	
  summary	
  of	
  significant	
  accounting	
  policies	
  and	
  other	
  explanatory	
  information.	
  	
  

Management’s	
  responsibility	
  for	
  the	
  consolidated	
  financial	
  statements	
  
Management	
  is	
  responsible	
  for	
  the	
  preparation	
  and	
  fair	
  presentation	
  of	
  these	
  consolidated	
  financial	
  statements	
  in	
  accordance	
  
with	
   International	
   Financial	
   Reporting	
   Standards,	
   and	
   for	
   such	
   internal	
   control	
   as	
   management	
   determines	
   is	
   necessary	
   to	
  
enable	
   the	
   preparation	
   of	
   consolidated	
   financial	
   statements	
   that	
   are	
   free	
   from	
   material	
   misstatement,	
   whether	
   due	
   to	
   fraud	
  	
  
or	
  error.	
  

Auditor’s	
  responsibility	
  
Our	
  responsibility	
  is	
  to	
  express	
  an	
  opinion	
  on	
  these	
  consolidated	
  financial	
  statements	
  based	
  on	
  our	
  audits.	
  We	
  conducted	
  our	
  
audits	
  in	
  accordance	
  with	
  Canadian	
  generally	
  accepted	
  auditing	
  standards.	
  Those	
  standards	
  require	
  that	
  we	
  comply	
  with	
  ethical	
  
requirements	
   and	
   plan	
   and	
   perform	
   the	
   audit	
   to	
   obtain	
   reasonable	
   assurance	
   about	
   whether	
   the	
   consolidated	
   financial	
  
statements	
  are	
  free	
  from	
  material	
  misstatement.	
  

An	
   audit	
   involves	
   performing	
   procedures	
   to	
   obtain	
   audit	
   evidence	
   about	
   the	
   amounts	
   and	
   disclosures	
   in	
   the	
   consolidated	
  
financial	
   statements.	
   The	
   procedures	
   selected	
   depend	
   on	
   the	
   auditor’s	
   judgment,	
   including	
   the	
   assessment	
   of	
   the	
   risks	
   of	
  
material	
   misstatement	
   of	
   the	
   consolidated	
   financial	
   statements,	
   whether	
   due	
   to	
   fraud	
   or	
   error.	
   In	
   making	
   those	
   risk	
  
assessments,	
   the	
   auditor	
   considers	
   internal	
   control	
   relevant	
   to	
   the	
   entity’s	
   preparation	
   and	
   fair	
   presentation	
   of	
   the	
  
consolidated	
  financial	
  statements	
  in	
  order	
  to	
  design	
  audit	
  procedures	
  that	
  are	
  appropriate	
  in	
  the	
  circumstances,	
  but	
  not	
  for	
  the	
  
purpose	
   of	
   expressing	
   an	
   opinion	
   on	
   the	
   effectiveness	
   of	
   the	
   entity’s	
   internal	
   control.	
   An	
   audit	
   also	
   includes	
   evaluating	
   the	
  
appropriateness	
  of	
  accounting	
  policies	
  used	
  and	
  the	
  reasonableness	
  of	
  accounting	
  estimates	
  made	
  by	
  management,	
  as	
  well	
  as	
  
evaluating	
  the	
  overall	
  presentation	
  of	
  the	
  consolidated	
  financial	
  statements.	
  

Opinion	
  
We	
   believe	
   that	
   the	
   audit	
   evidence	
   we	
   have	
   obtained	
   in	
   our	
   audits	
   is	
   sufficient	
   and	
   appropriate	
   to	
   provide	
   a	
   basis	
   for	
   our	
  	
  
audit	
  opinion.	
  

In	
   our	
   opinion,	
   the	
   consolidated	
   financial	
   statements	
   present	
   fairly,	
   in	
   all	
   material	
   respects,	
   the	
   financial	
   position	
   of	
   Dream	
  
Office	
   Real	
   Estate	
   Investment	
   Trust	
   and	
   its	
   subsidiaries	
   as	
   at	
   December	
   31,	
   2014	
   and	
   December	
   31,	
   2013	
   and	
   their	
   financial	
  
performance	
  and	
  their	
  cash	
  flows	
  for	
  the	
  years	
  then	
  ended	
  in	
  accordance	
  with	
  International	
  Financial	
  Reporting	
  Standards.	
  

Chartered	
  Professional	
  Accountants,	
  Licensed	
  Public	
  Accountants	
  
Toronto,	
  Ontario,	
  February	
  19,	
  2015

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  80	
  

	
  
	
  
	
  
	
   December	
  31,	
  	
  

	
   December	
  31,	
  

Notes	
  

2014	
  

2013	
  

	
   $	
  

	
   $	
  

	
   $	
  

8	
  
9	
  
10	
  
11	
  

12	
  

20	
  

13	
  
14	
  
15	
  
23	
  
16	
  

13	
  
17	
  

19	
  
19	
  
19,	
  27	
  
19	
  

	
   $	
  

	
  6,139,070	
  
	
  191,691	
  
	
  553,141	
  
	
  106,803	
  
	
  6,990,705	
  

	
  16,565	
  
	
  8,593	
  
	
  10,920	
  
	
  36,078	
  
	
  2,968	
  
	
  7,029,751	
  

	
  2,731,506	
  
	
  15,151	
  
	
  17,082	
  
	
  6,183	
  
	
  18,935	
  
	
  2,788,857	
  

	
  365,855	
  
	
  97,522	
  
	
  463,377	
  
	
  3,252,234	
  

	
  3,171,794	
  
	
  601,495	
  
	
  4,228	
  
	
  3,777,517	
  
	
  7,029,751	
  

	
   $	
  

	
   $	
  

	
   $	
  

	
   $	
  

	
  6,241,685	
  
	
  166,317	
  
	
  527,255	
  
	
  104,822	
  
	
  7,040,079	
  

	
  28,476	
  
	
  9,450	
  
	
  31,017	
  
	
  68,943	
  
	
  15,921	
  
	
  7,124,943	
  

	
  2,884,481	
  
	
  101,978	
  
	
  18,535	
  
	
  5,167	
  
	
  18,867	
  
	
  3,029,028	
  

	
  264,535	
  
	
  108,242	
  
	
  372,777	
  
	
  3,401,805	
  

	
  3,039,189	
  
	
  682,265	
  
	
  1,684	
  
	
  3,723,138	
  
	
  7,124,943	
  

Consolidated	
  balance	
  sheets	
  

(in	
  thousands	
  of	
  Canadian	
  dollars)	
  

Assets	
  
NON-‐CURRENT	
  ASSETS	
  
Investment	
  properties	
  
Investment	
  in	
  Dream	
  Industrial	
  REIT	
  
Investment	
  in	
  joint	
  ventures	
  
Other	
  non-‐current	
  assets	
  

CURRENT	
  ASSETS	
  
Amounts	
  receivable	
  
Prepaid	
  expenses	
  and	
  other	
  assets	
  
Cash	
  and	
  cash	
  equivalents	
  

Assets	
  held	
  for	
  sale	
  
Total	
  assets	
  

Liabilities	
  
NON-‐CURRENT	
  LIABILITIES	
  
Debt	
  
Subsidiary	
  redeemable	
  units	
  
Deferred	
  Unit	
  Incentive	
  Plan	
  
Deferred	
  tax	
  liabilities,	
  net	
  
Other	
  non-‐current	
  liabilities	
  

CURRENT	
  LIABILITIES	
  
Debt	
  
Amounts	
  payable	
  and	
  accrued	
  liabilities	
  

Total	
  liabilities	
  
Equity	
  
Unitholders’	
  equity	
  
Retained	
  earnings	
  	
  
Accumulated	
  other	
  comprehensive	
  income	
  	
  
Total	
  equity	
  
Total	
  liabilities	
  and	
  equity	
  

See	
  accompanying	
  notes	
  to	
  the	
  consolidated	
  ﬁnancial	
  statements.	
  

On	
  behalf	
  of	
  the	
  Board	
  of	
  Trustees	
  of	
  Dream	
  Office	
  Real	
  Estate	
  Investment	
  Trust:	
  

JOANNE	
  FERSTMAN	
  	
  
Trustee	
  

MICHAEL	
  J.	
  COOPER	
  
Trustee	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  81	
  

	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
 	
  
Note	
  

	
  $	
  

9	
  
10	
  

25	
  

21	
  
21	
  

8	
  
22	
  
32  

23	
  

27	
  
27	
  

Year	
  ended	
  December	
  31,	
  

2014	
  
	
  705,279	
  
	
  (303,771)	
  
	
  401,508	
  

	
  $	
  

2013	
  
	
  687,172	
  
	
  (295,672)	
  
	
  391,500	
  

	
  15,965	
  
	
  37,611	
  
	
  3,199	
  
	
  56,775	
  

	
  15,697	
  
	
  84,382	
  
	
  4,635	
  
	
  104,714	
  

	
  (24,393)	
  

	
  (23,859)	
  

	
  (134,952)	
  
	
  (4,638)	
  

	
  (2,970)	
  
	
  (166,953)	
  

	
  (124,303)	
  
	
  2,749	
  
	
  (9,848)	
     

	
  (131,402)	
  
	
  159,928	
  
	
  (638)	
  
	
  159,290	
  

	
  (130,169)	
  
	
  (7,897)	
  

	
  (2,527)	
  
	
  (164,452)	
  

	
  85,745	
  
	
  34,840	
  
	
  (6,992)	
  
	
  113,593	
  
	
  445,355	
  
	
  (344)	
  
	
  445,011	
  

	
  (666)	
  
	
  3,210	
  
	
  2,544	
  
	
  161,834	
  

	
  $	
  

	
  39	
  
	
  1,942	
  
	
  1,981	
  
	
  446,992	
  

	
  $	
  

Consolidated	
  statements	
  of	
  comprehensive	
  income	
  

(in	
  thousands	
  of	
  Canadian	
  dollars)	
  
Investment	
  properties	
  revenue	
  
Investment	
  properties	
  operating	
  expenses	
  
Net	
  rental	
  income	
  	
  
Other	
  income	
  
Share	
  of	
  net	
  income	
  and	
  dilution	
  gain	
  (loss)	
  from	
  investment	
  in	
  Dream	
  Industrial	
  REIT	
  
Share	
  of	
  net	
  income	
  from	
  investment	
  in	
  joint	
  ventures	
  
Interest	
  and	
  fee	
  income	
  

Other	
  expenses	
  
General	
  and	
  administrative	
  
Interest:	
  
	
   Debt	
  

Subsidiary	
  redeemable	
  units	
  

Amortization	
  of	
  external	
  management	
  contracts	
  and	
  depreciation	
  on	
  property	
  	
  

and	
  equipment	
  

Fair	
  value	
  adjustments,	
  net	
  gains	
  (losses)	
  on	
  transactions	
  and	
  other	
  activities	
  
Fair	
  value	
  adjustments	
  to	
  investment	
  properties	
  
Fair	
  value	
  adjustments	
  to	
  financial	
  instruments	
  
Net	
  gains	
  (losses)	
  on	
  transactions	
  and	
  other	
  activities	
  

Income	
  before	
  income	
  taxes	
  	
  
Deferred	
  income	
  taxes	
  
Net	
  income	
  for	
  the	
  year	
  
Other	
  comprehensive	
  income	
  (loss)	
  
Items	
  that	
  will	
  be	
  reclassified	
  subsequently	
  to	
  net	
  income:	
  
	
   Unrealized	
  gain	
  (loss)	
  on	
  interest	
  rate	
  swaps	
  
	
   Unrealized	
  foreign	
  currency	
  translation	
  gain	
  

Comprehensive	
  income	
  for	
  the	
  year	
  

See	
  accompanying	
  notes	
  to	
  the	
  consolidated	
  ﬁnancial	
  statements.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  82	
  

	
  
   
   
 
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
   
   
   
 
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
 
 
   
   
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
 
	
  
	
  
	
  
  
 
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
Consolidated	
  statements	
  of	
  changes	
  in	
  equity	
  
(in	
  thousands	
  of	
  Canadian	
  dollars,	
  except	
  for	
  number	
  of	
  units)	
  

	
  Attributable	
  to	
  unitholders	
  of	
  the	
  Trust	
  

	
   Accumulated	
  

other	
  

Number	
  of	
  

	
   Unitholdersʼ	
  	
  

Retained	
  	
  

	
  comprehensive	
  

Year	
  ended	
  December	
  31,	
  2014	
  
Balance	
  at	
  January	
  1,	
  2014	
  
Net	
  income	
  for	
  the	
  year	
  
Distributions	
  paid	
  
Distributions	
  payable	
  
Distribution	
  Reinvestment	
  Plan	
  
Unit	
  Purchase	
  Plan	
  
Deferred	
  units	
  exchanged	
  for	
  REIT	
  A	
  Units	
  
REIT	
  B	
  Units	
  exchanged	
  for	
  REIT	
  A	
  Units	
  
Cancellation	
  of	
  REIT	
  A	
  Units	
  
Conversion	
  of	
  debentures	
  
Conversion	
  feature	
  on	
  converted	
  debentures	
  
Issue	
  costs	
  
Other	
  comprehensive	
  income	
  
Balance	
  at	
  December	
  31,	
  2014	
  

Note	
  

REIT	
  A	
  Units	
  
	
  103,420,221	
   $	
  

	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  2,236,530	
  
	
  4,765	
  
	
  157,608	
  
	
  2,936,023	
  
	
  (832,200)	
  
	
  13,628	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  

18	
  
18	
  
19	
  
19	
  
15	
  
19	
  
19	
  
19	
  

27	
  

	
  107,936,575	
   $	
  

equity	
  	
  
	
  3,039,189	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  63,248	
  
	
  135	
  
	
  4,338	
  
	
  85,350	
  
	
  (20,924)	
  
	
  500	
  
	
  (7)	
  
	
  (35)	
  
	
  -‐	
  
	
  3,171,794	
  

	
   $	
  

	
   $	
  

earnings	
  
	
  682,265	
  
	
  159,290	
  
	
  (219,667)	
  
	
  (20,393)	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  601,495	
  

	
   $	
  

	
   $	
  

income	
  	
  
	
  1,684	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  2,544	
  
	
  4,228	
  

	
   $	
  

	
   $	
  

Total	
  equity	
  
	
  3,723,138	
  
	
  159,290	
  
	
  (219,667)	
  
	
  (20,393)	
  
	
  63,248	
  
	
  135	
  
	
  4,338	
  
	
  85,350	
  
	
  (20,924)	
  
	
  500	
  
	
  (7)	
  
	
  (35)	
  
	
  2,544	
  
	
  3,777,517	
  

Attributable	
  to	
  unitholders	
  of	
  the	
  Trust	
  
	
   Accumulated	
  
other	
  

Year	
  ended	
  December	
  31,	
  2013	
  
Balance	
  at	
  January	
  1,	
  2013	
  
Net	
  income	
  for	
  the	
  year	
  
Distributions	
  paid	
  
Distributions	
  payable	
  
Public	
  offering	
  of	
  REIT	
  A	
  Units	
  
Distribution	
  Reinvestment	
  Plan	
  
Unit	
  Purchase	
  Plan	
  
Deferred	
  units	
  exchanged	
  for	
  REIT	
  A	
  Units	
  
Cancellation	
  of	
  REIT	
  A	
  Units	
  
Issue	
  costs	
  
Other	
  comprehensive	
  income	
  
Balance	
  at	
  December	
  31,	
  2013	
  

Number	
  of	
  

	
   Unitholdersʼ	
  

Retained	
  	
  

	
  comprehensive	
  

Note	
  

REIT	
  A	
  Units	
  
	
  97,634,941	
   $	
  

	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  6,353,750	
  
	
  1,509,148	
  
	
  12,212	
  
	
  44,970	
  
	
  (2,134,800)	
  
	
  -‐	
  
	
  -‐	
  

18	
  
18	
  
19	
  
19	
  
19	
  
15	
  
19	
  

27	
  

	
   	
  103,420,221	
   $	
  

equity	
  
	
  2,829,662	
   	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  230,006	
  
	
  47,899	
  
	
  429	
  
	
  1,641	
  
	
  (60,665)	
  
	
  (9,783)	
  
	
  -‐	
  
	
  3,039,189	
  

$	
  

	
   $	
  

earnings	
  
	
  467,034	
   	
  
	
  445,011	
  
	
  (210,287)	
  
	
  (19,493)	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  682,265	
  

$	
  

	
   $	
  

income	
  (loss)	
  
	
  (297)	
  	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  1,981	
  
	
  1,684	
  

$	
  

	
   $	
  

Total	
  equity	
  
	
  3,296,399	
  
	
  445,011	
  
	
  (210,287)	
  
	
  (19,493)	
  
	
  230,006	
  
	
  47,899	
  
	
  429	
  
	
  1,641	
  
	
  (60,665)	
  
	
  (9,783)	
  
	
  1,981	
  
	
  3,723,138	
  

See	
  accompanying	
  notes	
  to	
  the	
  consolidated	
  financial	
  statements.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  83	
  

 
	
  
 
 
 
 
 
 
 
 
 
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
 
	
  
	
  
 
	
  
	
  
	
  
 
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
 
 
 
 
 
Consolidated	
  statements	
  of	
  cash	
  flows	
  

(in	
  thousands	
  of	
  Canadian	
  dollars)	
  
Generated	
  from	
  (utilized	
  in)	
  operating	
  activities	
  
Net	
  income	
  for	
  the	
  year	
  
Non-‐cash	
  items:	
  

Share	
  of	
  net	
  income	
  and	
  dilution	
  gain	
  (loss)	
  from	
  investment	
  in	
  Dream	
  Industrial	
  REIT	
  
Share	
  of	
  net	
  income	
  from	
  investment	
  in	
  joint	
  ventures	
  

  Amortization	
  and	
  depreciation	
  

Fair	
  value	
  adjustments	
  to	
  investment	
  properties	
  
Fair	
  value	
  adjustments	
  to	
  financial	
  instruments	
  

  Other	
  adjustments	
  
Investment	
  in	
  lease	
  incentives	
  and	
  initial	
  direct	
  leasing	
  costs	
  
Interest	
  paid	
  on	
  subsidiary	
  redeemable	
  units	
  
Change	
  in	
  non-‐cash	
  working	
  capital	
  

Generated	
  from	
  (utilized	
  in)	
  investing	
  activities	
  
Investment	
  in	
  building	
  improvements	
  
Acquisition	
  of	
  investment	
  properties	
  
Acquisition	
  deposits	
  on	
  investment	
  properties	
  
Acquisition	
  of	
  equity	
  accounted	
  investments	
  
Net	
  proceeds	
  from	
  disposal	
  of	
  investment	
  properties	
  
Net	
  proceeds	
  from	
  disposal	
  of	
  equity	
  accounted	
  investments	
  
Investment	
  in	
  property	
  and	
  equipment	
  
Distributions	
  from	
  investment	
  in	
  Dream	
  Industrial	
  REIT	
  
Net	
  distributions	
  from	
  investment	
  in	
  joint	
  ventures	
  
Repayment	
  of	
  promissory	
  notes	
  receivable	
  
Change	
  in	
  restricted	
  cash	
  

Generated	
  from	
  (utilized	
  in)	
  financing	
  activities	
  
Borrowings	
  
Principal	
  repayments	
  
Lump	
  sum	
  repayments	
  
Financing	
  costs	
  	
  
Distributions	
  paid	
  on	
  Units	
  
Interest	
  paid	
  on	
  subsidiary	
  redeemable	
  units	
  
Cancellation	
  of	
  REIT	
  A	
  Units	
  
REIT	
  A	
  Units	
  issued	
  for	
  cash	
  
Debt	
  settlement	
  and	
  REIT	
  A	
  Units	
  issue	
  costs	
  

Increase	
  (decrease)	
  in	
  cash	
  and	
  cash	
  equivalents	
  
Foreign	
  exchange	
  gain	
  on	
  cash	
  held	
  in	
  foreign	
  currency	
  
Cash	
  and	
  cash	
  equivalents,	
  beginning	
  of	
  year	
  
Cash	
  and	
  cash	
  equivalents,	
  end	
  of	
  year	
  

See	
  accompanying	
  notes	
  to	
  the	
  consolidated	
  ﬁnancial	
  statements.	
  

	
   Notes	
  	
  

Year	
  ended	
  December	
  31,	
  
2013	
  

2014	
  

	
  $	
  

	
  159,290	
  

	
  $	
  

	
  445,011	
  

9	
  
10	
  	
  
26	
  
8	
  
22	
  
26	
  

21,	
  26	
  
26	
  

7	
  	
  

13	
  
13	
  
13	
  
13	
  
18	
  	
  
21,	
  26	
  
19	
  	
  
19	
  	
  

	
  $	
  

	
  (15,965)	
  
	
  (37,611)	
  
	
  11,287	
  
	
  124,303	
  
	
  (2,749)	
  
	
  3,081	
  
	
  (49,116)	
  
	
  5,186	
  
	
  5,648	
  
	
  203,354	
  

	
  (31,255)	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  14,957	
  
	
  12,843	
  
	
  (1,367)	
  
	
  11,795	
  
	
  11,725	
  
	
  -‐	
  
	
  (942)	
  
	
  17,756	
  

	
  460,054	
  
	
  (67,135)	
  
	
  (427,501)	
  
	
  (3,007)	
  
	
  (175,912)	
  
	
  (5,186)	
  
	
  (20,924)	
  
	
  135	
  
	
  (1,927)	
  
	
  (241,403)	
  
	
  (20,293)	
  
	
  196	
  
	
  31,017	
  
	
  10,920	
  

	
  $	
  

	
  (15,697)	
  
	
  (84,382)	
  
	
  5,399	
  
	
  (85,745)	
  
	
  (34,840)	
  
	
  (1,933)	
  
	
  (31,034)	
  
	
  7,524	
  
	
  (9,066)	
  
	
  195,237	
  

	
  (26,903)	
  
	
  (485,060)	
  
	
  (15,813)	
  
	
  (33,021)	
  
	
  11,469	
  
	
  -‐	
  
	
  (4,876)	
  
	
  10,345	
  
	
  2,700	
  
	
  42,000	
  
	
  (452)	
  
	
  (499,611)	
  

	
  1,197,881	
  
	
  (65,837)	
  
	
  (788,269)	
  
	
  (4,492)	
  
	
  (180,444)	
  
	
  (7,524)	
  
	
  (60,665)	
  
	
  230,435	
  
	
  (9,783)	
  
	
  311,302	
  
	
  6,928	
  
	
  75	
  
	
  24,014	
  
	
  31,017	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  84	
  

	
  
	
   
 
 
 
 
	
  
	
  
	
  
	
   	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
 
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
 
	
  
	
  	
  
	
  
	
  
 
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
Notes	
  to	
  the	
  consolidated	
  financial	
  statements	
  
(All	
  dollar	
  amounts	
  in	
  thousands	
  of	
  Canadian	
  dollars,	
  except	
  for	
  unit	
  or	
  per	
  unit	
  amounts)	
  

Note	
  1	
  
ORGANIZATION	
  	
  
Dream	
  Office	
  Real	
  Estate	
  Investment	
  Trust	
  (“Dream	
  Office	
  REIT”	
  or	
  the	
  “Trust”),	
  formerly	
  known	
  as	
  Dundee	
  REIT,	
  is	
  an	
  open-‐
ended	
  investment	
  trust	
  created	
  pursuant	
  to	
  a	
  Declaration	
  of	
  Trust,	
  as	
  amended	
  and	
  restated,	
  under	
  the	
  laws	
  of	
  the	
  Province	
  of	
  
Ontario.	
   The	
   consolidated	
   ﬁnancial	
   statements	
   of	
   Dream	
   Office	
   REIT	
   include	
   the	
   accounts	
   of	
   Dream	
   Office	
   REIT	
   and	
   its	
  
consolidated	
  subsidiaries.	
  Dream	
  Office	
  REIT’s	
  portfolio	
  comprises	
  ofﬁce	
  properties	
  located	
  in	
  urban	
  centres	
  across	
  Canada	
  and	
  
the	
  United	
  States	
  (“U.S.”).	
  A	
  subsidiary	
  of	
  Dream	
  Office	
  REIT	
  performs	
  the	
  property	
  management	
  function.	
  

The	
  Trust’s	
  registered	
  ofﬁce	
  is	
  30	
  Adelaide	
  Street	
  East,	
  Suite	
  1600,	
  Toronto,	
  Ontario,	
  Canada	
  M5C	
  3H1.	
  The	
  Trust	
  is	
  listed	
  on	
  the	
  
Toronto	
   Stock	
   Exchange	
   under	
   the	
   symbol	
   “D.UN”.	
   Dream	
   Office	
   REIT’s	
   consolidated	
   ﬁnancial	
   statements	
   for	
   the	
   year	
   ended	
  
December	
  31,	
  2014	
  were	
  authorized	
  for	
  issuance	
  by	
  the	
  Board	
  of	
  Trustees	
  on	
  February	
  19,	
  2015,	
  after	
  which	
  they	
  may	
  only	
  be	
  
amended	
  with	
  the	
  Board	
  of	
  Trustees’	
  approval.	
  

For	
  simplicity,	
  throughout	
  the	
  Notes,	
  reference	
  is	
  made	
  to	
  the	
  units	
  of	
  the	
  Trust	
  as	
  follows:	
  

•  “REIT	
  A	
  Units”,	
  meaning	
  the	
  REIT	
  Units,	
  Series	
  A	
  	
  
•  “REIT	
  B	
  Units”,	
  meaning	
  the	
  REIT	
  Units,	
  Series	
  B	
  	
  
•  “REIT	
  Units”,	
  meaning	
  the	
  REIT	
  Units,	
  Series	
  A,	
  and	
  REIT	
  Units,	
  Series	
  B,	
  collectively	
  	
  
•  “Units”,	
  meaning	
  REIT	
  Units,	
  Series	
  A,	
  REIT	
  Units,	
  Series	
  B,	
  and	
  Special	
  Trust	
  Units,	
  collectively	
  
•  “subsidiary	
  redeemable	
  units”,	
  meaning	
  the	
  LP	
  Class	
  B	
  Units,	
  Series	
  1,	
  limited	
  partnership	
  units	
  of	
  Dream	
  Office	
  LP	
  (formerly	
  

known	
  as	
  Dundee	
  Properties	
  Limited	
  Partnership)	
  

At	
  December	
  31,	
  2014	
  and	
  December	
  31,	
  2013,	
  Dream	
  Unlimited	
  Corp.,	
  indirectly	
  through	
  its	
  subsidiaries,	
  held	
  773,939	
  REIT	
  A	
  
Units	
  and	
  383,823	
  subsidiary	
  redeemable	
  units.	
  	
  

Note	
  2	
  
SUMMARY	
  OF	
  SIGNIFICANT	
  ACCOUNTING	
  POLICIES	
  
The	
  principal	
  accounting	
  policies	
  applied	
  in	
  the	
  preparation	
  of	
  these	
  consolidated	
  financial	
  statements	
  are	
  set	
  out	
  below.	
  These	
  
policies	
  have	
  been	
  consistently	
  applied	
  to	
  all	
  years	
  presented,	
  unless	
  otherwise	
  stated.	
  

Basis	
  of	
  presentation	
  and	
  statement	
  of	
  compliance	
  
The	
   consolidated	
   financial	
   statements	
   have	
   been	
   prepared	
   in	
   accordance	
   with	
   International	
   Financial	
   Reporting	
   Standards	
  
(“IFRS”)	
  as	
  issued	
  by	
  the	
  International	
  Accounting	
  Standards	
  Board	
  (“IASB”).	
  

Basis	
  of	
  consolidation	
  
The	
  consolidated	
  ﬁnancial	
  statements	
  comprise	
  the	
  ﬁnancial	
  statements	
  of	
  Dream	
  Office	
  REIT	
  and	
  its	
  subsidiaries.	
  Subsidiaries	
  
are	
  fully	
  consolidated	
  from	
  the	
  date	
  of	
  acquisition,	
  the	
  date	
  on	
  which	
  the	
  Trust	
  obtains	
  control,	
  and	
  continue	
  to	
  be	
  consolidated	
  
until	
   the	
   date	
   such	
   control	
   ceases.	
   Control	
   exists	
   when	
   the	
   Trust	
   is	
   exposed	
   to,	
   or	
   has	
   rights	
   to,	
   variable	
   returns	
   from	
   its	
  
involvement	
   with	
   the	
   entity	
   and	
   has	
   the	
   ability	
   to	
   affect	
   those	
   returns	
   through	
   its	
   power	
   over	
   the	
   entity.	
   All	
   intercompany	
  
balances,	
  income	
  and	
  expenses,	
  and	
  unrealized	
  gains	
  and	
  losses	
  resulting	
  from	
  intercompany	
  transactions	
  are	
  eliminated	
  in	
  full.	
  

Equity	
  accounted	
  investments	
  
Equity	
   accounted	
   investments	
   are	
   investments	
   over	
   which	
   the	
   Trust	
   has	
   significant	
   influence,	
   but	
   not	
   control.	
   Generally,	
   the	
  
Trust	
   is	
   considered	
   to	
   exert	
   significant	
   influence	
   when	
   it	
   holds	
   more	
   than	
   a	
   20%	
   interest	
   in	
   an	
   entity.	
   However,	
   determining	
  
significant	
  influence	
  is	
  a	
  matter	
  of	
  judgment	
  and	
  specific	
  circumstances	
  and,	
  from	
  time	
  to	
  time,	
  the	
  Trust	
  may	
  hold	
  an	
  interest	
  
of	
  more	
  than	
  20%	
  in	
  an	
  entity	
  without	
  exerting	
  significant	
  influence.	
  Conversely,	
  the	
  Trust	
  may	
  hold	
  an	
  interest	
  of	
  less	
  than	
  20%	
  
and	
   exert	
   significant	
   influence	
   through	
   representation	
   on	
   the	
   Board	
   of	
   Trustees,	
   direction	
   of	
   management	
   or	
   through	
  
contractual	
  agreements.	
  	
  	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  85	
  

The	
  financial	
  results	
  of	
  the	
  Trust’s	
  equity	
  accounted	
  investments	
  are	
  included	
  in	
  the	
  Trust’s	
  consolidated	
  financial	
  statements	
  
using	
  the	
  equity	
  method,	
  whereby	
  the	
  investment	
  is	
  carried	
  on	
  the	
  consolidated	
  balance	
  sheets	
  at	
  cost,	
  adjusted	
  for	
  the	
  Trust’s	
  
proportionate	
   share	
   of	
   post-‐acquisition	
   proﬁts	
   and	
   losses	
   and	
   for	
   post-‐acquisition	
   changes	
   in	
   excess	
   of	
   the	
   Trust’s	
   carrying	
  
amount	
   of	
   its	
   investment	
   over	
   the	
   net	
   assets	
   of	
   the	
   equity	
   accounted	
   investments,	
   less	
   any	
   identiﬁed	
   impairment	
   loss.	
   The	
  
Trust’s	
   share	
   of	
   proﬁts	
   and	
   losses	
   is	
   recognized	
   in	
   the	
   share	
   of	
   net	
   earnings	
   from	
   equity	
   accounted	
   investments	
   in	
   the	
  
consolidated	
   statements	
   of	
   comprehensive	
   income.	
   Dilution	
   gains	
   and	
   losses	
   arising	
   from	
   changes	
   in	
   the	
   Trust’s	
   interest	
   in	
  
equity	
  accounted	
  investments	
  are	
  recognized	
  in	
  earnings.	
  If	
  the	
  Trust’s	
  investment	
  is	
  reduced	
  to	
  zero,	
  additional	
  losses	
  are	
  not	
  
provided	
  for,	
  and	
  a	
  liability	
  is	
  not	
  recognized,	
  unless	
  the	
  Trust	
  has	
  incurred	
  legal	
  or	
  constructive	
  obligations,	
  or	
  made	
  payments	
  
on	
  behalf	
  of	
  the	
  equity	
  accounted	
  investment.	
  

At	
   each	
   reporting	
   date,	
   the	
   Trust	
   evaluates	
   whether	
   there	
   is	
   objective	
   evidence	
   that	
   its	
   interest	
   in	
   an	
   equity	
   accounted	
  
investment	
   is	
   impaired.	
   The	
   entire	
   carrying	
   amount	
   of	
   the	
   equity	
   accounted	
   investment	
   is	
   compared	
   to	
   the	
   recoverable	
  
amount,	
  which	
  is	
  the	
  higher	
  of	
  the	
  value-‐in-‐use	
  or	
  fair	
  value	
  less	
  costs	
  to	
  sell.	
  The	
  recoverable	
  amount	
  of	
  each	
  investment	
  is	
  
considered	
  separately.	
  	
  

Where	
  the	
  Trust	
  transacts	
  with	
  its	
  equity	
  accounted	
  investments,	
  unrealized	
  proﬁts	
  and	
  losses	
  are	
  eliminated	
  to	
  the	
  extent	
  of	
  
the	
  Trust’s	
  interest	
  in	
  the	
  investment.	
  Balances	
  outstanding	
  between	
  the	
  Trust	
  and	
  equity	
   accounted	
  investments	
  in	
  which	
  it	
  
has	
  an	
  interest	
  are	
  not	
  eliminated	
  in	
  the	
  consolidated	
  balance	
  sheets.	
  

Joint	
  arrangements	
  
The	
   Trust	
   enters	
   into	
   joint	
   arrangements	
   via	
   joint	
   operations	
   and	
   joint	
   ventures.	
   A	
   joint	
   arrangement	
   is	
   a	
   contractual	
  
arrangement	
   pursuant	
   to	
   which	
   the	
   Trust	
   and	
   other	
   parties	
   undertake	
   an	
   economic	
   activity	
   that	
   is	
   subject	
   to	
   joint	
   control,	
  
whereby	
   the	
   strategic	
   ﬁnancial	
   and	
   operating	
   policy	
   decisions	
   relating	
   to	
   the	
   activities	
   of	
   the	
   joint	
   arrangement	
   require	
   the	
  
unanimous	
  consent	
  of	
  the	
  parties	
  sharing	
  control,	
  and	
  that	
  is	
  referred	
  to	
  as	
  joint	
  operations.	
  Joint	
  arrangements	
  that	
  involve	
  
the	
  establishment	
  of	
  a	
  separate	
  entity	
  in	
  which	
  each	
  party	
  to	
  the	
  venture	
  has	
  rights	
  to	
  the	
  net	
  assets	
  of	
  the	
  arrangements	
  are	
  
referred	
   to	
   as	
   joint	
   ventures.	
   In	
   a	
   co-‐ownership	
   arrangement	
   the	
   Trust	
   owns	
   jointly	
   one	
   or	
   more	
   investment	
   properties	
   with	
  
another	
  party	
  and	
  has	
  direct	
  rights	
  to	
  the	
  investment	
  property,	
  and	
  obligations	
  for	
  the	
  liabilities	
  relating	
  to	
  the	
  co-‐ownership.	
  

The	
   Trust	
   reports	
   its	
   interests	
   in	
   joint	
   ventures	
   using	
   the	
   equity	
   method	
   of	
   accounting	
   as	
   previously	
   described	
   under	
   “Equity	
  
accounted	
  investments”.	
  The	
  Trust	
  reports	
  its	
  interests	
  in	
  co-‐ownerships	
  as	
  joint	
  operations	
  by	
  accounting	
  for	
  its	
  share	
  of	
  the	
  
assets,	
   liabilities,	
   revenues	
   and	
   expenses.	
   Under	
   this	
   method,	
   the	
   Trust’s	
   consolidated	
   financial	
   statements	
   reflect	
   only	
   the	
  
Trust’s	
   proportionate	
   share	
   of	
   the	
   assets,	
   its	
   share	
   of	
   any	
   liabilities	
   incurred	
   jointly	
   with	
   the	
   other	
   venturers	
   as	
   well	
   as	
   any	
  
liabilities	
   incurred	
   directly,	
   its	
   share	
   of	
   any	
   revenues	
   earned	
   or	
   expenses	
   incurred	
   by	
   the	
   joint	
   operation	
   and	
   any	
   expenses	
  
incurred	
  directly.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  86	
  

Note	
  3	
  
ACCOUNTING	
  POLICIES	
  SELECTED	
  AND	
  APPLIED	
  FOR	
  SIGNIFICANT	
  TRANSACTIONS	
  AND	
  EVENTS	
  	
  
The	
  signiﬁcant	
  accounting	
  policies	
  used	
  in	
  the	
  preparation	
  of	
  these	
  consolidated	
  financial	
  statements	
  are	
  described	
  below:	
  	
  

Investment	
  properties	
  	
  
Investment	
  properties	
  are	
  initially	
  recorded	
  at	
  cost,	
  including	
  related	
  transaction	
  costs	
  in	
  connection	
  with	
  asset	
  acquisitions	
  and	
  
include	
  ofﬁce	
  properties	
  held	
  to	
  earn	
  rental	
  income	
  and/or	
  for	
  capital	
  appreciation	
  and	
  properties	
  that	
  are	
  being	
  constructed	
  or	
  
developed	
  for	
  future	
  use	
  as	
  investment	
  properties.	
  	
  Subsequent	
  to	
  initial	
  recognition,	
  investment	
  properties	
  are	
  accounted	
  for	
  
at	
   fair	
   value.	
   Investment	
   properties	
   and	
   properties	
   under	
   development	
   are	
   measured	
   at	
   fair	
   value,	
   determined	
   based	
   on	
  
available	
   market	
   evidence,	
   at	
   the	
   consolidated	
   balance	
   sheet	
   dates.	
   Related	
   fair	
   value	
   gains	
   and	
   losses	
   are	
   recorded	
   in	
  
comprehensive	
  income	
  in	
  the	
  period	
  in	
  which	
  they	
  arise.	
  The	
  fair	
  value	
  of	
  each	
  investment	
  property	
  is	
  based	
  on,	
  among	
  other	
  
things,	
  rental	
  income	
  from	
  current	
  leases	
  and	
  assumptions	
  about	
  rental	
  income	
  from	
  future	
  leases	
  reﬂecting	
  market	
  conditions	
  
at	
  the	
  consolidated	
  balance	
  sheet	
   dates,	
  less	
  future	
  estimated	
  cash	
  outﬂows	
  in	
  respect	
  of	
  such	
  properties.	
  To	
  determine	
  fair	
  
value,	
  the	
  Trust	
  ﬁrst	
  considers	
  whether	
  it	
  can	
  use	
  current	
  prices	
  in	
  an	
  active	
  market	
  for	
  a	
  similar	
  property	
  in	
  the	
  same	
  location	
  
and	
   condition,	
   which	
   is	
   subject	
   to	
   similar	
   leases	
   and	
   other	
   contracts.	
   The	
   Trust	
   has	
   concluded	
   there	
   is	
   insufﬁcient	
   market	
  
evidence	
   on	
   which	
   to	
   base	
   investment	
   property	
   valuation	
   using	
   this	
   approach,	
   and	
   has	
   therefore	
   determined	
   that	
   using	
   the	
  
income	
  approach	
  is	
  more	
  appropriate.	
  The	
  income	
  approach	
  is	
  one	
  in	
  which	
  the	
  fair	
  value	
  is	
  estimated	
  by	
  capitalizing	
  the	
  net	
  
rental	
  income	
  that	
  the	
  property	
  can	
  reasonably	
  be	
  expected	
  to	
  produce	
  over	
  its	
  remaining	
  economic	
  life.	
  The	
  income	
  approach	
  
is	
  derived	
  from	
  the	
  overall	
  capitalization	
  rate	
  method,	
  whereby	
  the	
  net	
  operating	
  income	
  is	
  capitalized	
  at	
  the	
  requisite	
  overall	
  
capitalization	
   rate.	
   Active	
   properties	
   under	
   development	
   are	
   measured	
   using	
   a	
   discounted	
   cash	
   ﬂow	
   model,	
   net	
   of	
   costs	
   to	
  
complete,	
   as	
   of	
   the	
   consolidated	
   balance	
   sheet	
   dates.	
   Development	
   sites	
   in	
   the	
   planning	
   phases	
   are	
   measured	
   using	
  
comparable	
  market	
  prices	
  for	
  similar	
  assets.	
  	
  

The	
  initial	
  cost	
  of	
  properties	
  under	
  development	
  includes	
  the	
  acquisition	
  cost	
  of	
  the	
  property,	
  direct	
  development	
  costs,	
  realty	
  
taxes	
   and	
   borrowing	
   costs	
   directly	
   attributable	
   to	
   properties	
   under	
   development.	
   Borrowing	
   costs	
   associated	
   with	
   direct	
  
expenditures	
  on	
  properties	
  under	
  development	
  are	
  capitalized.	
  The	
  amount	
  of	
  capitalized	
  borrowing	
  costs	
  is	
  determined	
  ﬁrst	
  
by	
  reference	
  to	
  project-‐specific	
  borrowings,	
  where	
  relevant,	
  and	
  otherwise	
  by	
  applying	
  a	
  weighted	
  average	
  cost	
  of	
  borrowings	
  
to	
   eligible	
   expenditures	
   after	
   adjusting	
   for	
   borrowings	
   associated	
   with	
   other	
   speciﬁc	
   developments.	
   Where	
   borrowings	
   are	
  
associated	
   with	
   speciﬁc	
   developments,	
   the	
   amount	
   capitalized	
   is	
   the	
   gross	
   cost	
   incurred	
   on	
   those	
   borrowings	
   less	
   any	
  
investment	
   income	
   arising	
   on	
   their	
   temporary	
   investment.	
   Borrowing	
   costs	
   are	
   capitalized	
   from	
   the	
   commencement	
   of	
   the	
  
development	
  until	
  the	
  date	
  of	
  practical	
  completion	
  when	
  the	
  property	
  is	
  substantially	
  ready	
  for	
   its	
  intended	
  use	
  or	
  sale.	
  The	
  
capitalization	
  of	
  borrowing	
  costs	
  is	
  suspended	
  if	
  there	
  are	
  prolonged	
  periods	
  when	
  development	
  activity	
  is	
  interrupted.	
  Practical	
  
completion	
   is	
   when	
   the	
   property	
   is	
   capable	
   of	
   operating	
   in	
   the	
   manner	
   intended	
   by	
   management.	
   Generally,	
   this	
   occurs	
   on	
  
completion	
  of	
  construction	
  and	
  receipt	
  of	
  all	
  necessary	
  occupancy	
  and	
  other	
  material	
  permits.	
  	
  

If	
  the	
  Trust	
  has	
  pre-‐leased	
  space	
  at	
  or	
  prior	
  to	
  the	
  start	
  of	
  the	
  development,	
  and	
  the	
  lease	
  requires	
  tenant	
  improvements	
  that	
  
enhance	
  the	
  value	
  of	
  the	
  property,	
  practical	
  completion	
  is	
  considered	
  to	
  occur	
  when	
  such	
  improvements	
  are	
  completed.	
  	
  

Initial	
  direct	
  leasing	
  costs	
  incurred	
  in	
  negotiating	
  and	
  arranging	
  tenant	
  leases	
  are	
  added	
  to	
  the	
  carrying	
  amount	
  of	
  investment	
  
properties.	
   Lease	
   incentives,	
   which	
   include	
   costs	
   incurred	
   to	
   make	
   leasehold	
   improvements	
   to	
   tenants’	
   space	
   and	
   cash	
  
allowances	
  provided	
  to	
  tenants,	
  are	
  added	
  to	
  the	
  carrying	
  amount	
  of	
  investment	
  properties	
  and	
  are	
  amortized	
  on	
  a	
  straight-‐line	
  
basis	
   over	
   the	
   term	
   of	
   the	
   lease	
   as	
   a	
   reduction	
   of	
   investment	
   properties	
   revenue.	
   Internal	
   leasing	
   costs	
   are	
   expensed	
   in	
   the	
  
period	
  that	
  they	
  are	
  incurred.	
  

Segment	
  reporting	
  
A	
  reportable	
  operating	
  segment	
  is	
  a	
  distinguishable	
  component	
  of	
  the	
  Trust	
  that	
  is	
  engaged	
  either	
  in	
  providing	
  related	
  products	
  
or	
   services	
   (business	
   segment)	
   or	
   in	
   providing	
   products	
   or	
   services	
   within	
   a	
   particular	
   economic	
   environment	
   (geographical	
  
segment),	
  which	
  is	
  subject	
  to	
  risks	
  and	
  rewards	
  that	
  are	
  different	
  from	
  those	
  of	
  other	
  reportable	
  segments.	
  The	
  Trust’s	
  primary	
  
format	
  for	
  segment	
  reporting	
  is	
  based	
  on	
  business	
  segments.	
  The	
  business	
  segments,	
  ofﬁce	
  properties,	
  are	
  based	
  on	
  the	
  Trust’s	
  
management	
   and	
   internal	
   reporting	
   structure.	
   Operating	
   segments	
   are	
   reported	
   in	
   a	
   manner	
   consistent	
   with	
   the	
   internal	
  
reporting	
  provided	
  to	
  the	
  chief	
  operating	
  decision-‐maker,	
  determined	
  to	
  be	
  the	
  Chief	
  Executive	
  Officer	
  (“CEO”)	
  of	
  the	
  Trust.	
  The	
  
operating	
   segments	
   derive	
   their	
   revenue	
   primarily	
   from	
   rental	
   income	
   from	
   lessees.	
   All	
   of	
   the	
   Trust’s	
   business	
   activities	
   and	
  
operating	
  segments	
  are	
  reported	
  within	
  the	
  ofﬁce	
  property	
  segments.	
  	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  87	
  

	
  
Other	
  non-‐current	
  assets	
  	
  
Other	
   non-‐current	
   assets	
   include	
   property	
   and	
   equipment,	
   deposits,	
   restricted	
   cash,	
   straight-‐line	
   rent	
   receivables,	
   external	
  
management	
   contracts	
   and	
   goodwill.	
   Property	
   and	
   equipment	
   are	
   stated	
   at	
   cost	
   less	
   accumulated	
   depreciation	
   and	
  
accumulated	
   impairment	
   losses.	
   Depreciation	
   of	
   property	
   and	
   equipment	
   is	
   calculated	
   using	
   the	
   straight-‐line	
   method	
   to	
  
allocate	
   their	
   cost,	
   net	
   of	
   their	
   residual	
   values,	
   over	
   their	
   expected	
   useful	
   lives	
   of	
   four	
   to	
   ten	
   years.	
   The	
   residual	
   values	
   and	
  
useful	
  lives	
  of	
  all	
  assets	
  are	
  reviewed	
  and	
  adjusted,	
  if	
  appropriate,	
  at	
  least	
  at	
  each	
  ﬁnancial	
  year-‐end.	
  Cost	
  includes	
  expenditures	
  
that	
  are	
  directly	
  attributable	
  to	
  the	
  acquisition	
  and	
  expenditures	
  for	
  replacing	
  part	
  of	
  the	
  property	
  and	
  equipment	
  when	
  that	
  
cost	
  is	
  incurred,	
  if	
  the	
  recognition	
  criteria	
  are	
  met.	
  Subsequent	
  costs	
  are	
  included	
  in	
  the	
  asset’s	
  carrying	
  amount	
  or	
  recognized	
  
as	
  a	
  separate	
  asset,	
  as	
  appropriate,	
  only	
  when	
  it	
  is	
  probable	
  that	
  future	
  economic	
  beneﬁts	
  associated	
  with	
  the	
  item	
  will	
  ﬂow	
  to	
  
the	
  Trust	
  and	
  the	
  cost	
  of	
  the	
  item	
  can	
  be	
  measured	
  reliably.	
  All	
  other	
  repairs	
  and	
  maintenance	
  are	
  charged	
  to	
  comprehensive	
  
income	
  during	
  the	
  ﬁnancial	
  period	
  in	
  which	
  they	
  are	
  incurred.	
  	
  

Other	
   non-‐current	
  assets	
   are	
   derecognized	
   on	
   disposal	
   or	
   when	
   no	
   future	
   economic	
   beneﬁts	
   are	
   expected	
   from	
   their	
   use	
   or	
  
disposal.	
  Any	
  gain	
  or	
  loss	
  arising	
  on	
  derecognition	
  of	
  an	
  asset	
  (calculated	
  as	
  the	
  difference	
  between	
  the	
  net	
  disposal	
  proceeds	
  
and	
  the	
  carrying	
  amount	
  of	
  the	
  asset)	
  is	
  included	
  in	
  the	
  consolidated	
  statements	
  of	
  comprehensive	
  income	
  in	
  the	
  year	
  the	
  asset	
  
is	
  derecognized.	
  

Revenue	
  recognition	
  	
  
The	
  Trust	
  accounts	
  for	
  tenant	
  leases	
  as	
  operating	
  leases	
  given	
  that	
  it	
  has	
  retained	
  substantially	
  all	
  of	
  the	
  risks	
  and	
  beneﬁts	
  of	
  
ownership	
   of	
   its	
   investment	
   properties.	
   Revenues	
   from	
   investment	
   properties	
   include	
   base	
   rents,	
   recoveries	
   of	
   operating	
  
expenses	
   including	
   property	
   taxes,	
   percentage	
   participation	
   rents,	
   lease	
   termination	
   fees,	
   parking	
   income	
   and	
   incidental	
  
income.	
  Revenue	
  recognition	
  under	
  a	
  lease	
  commences	
  when	
  the	
  tenant	
  has	
  a	
  right	
  to	
  use	
  the	
  leased	
  asset.	
  The	
  total	
  amount	
  
of	
   contractual	
   rent	
   to	
   be	
   received	
   from	
   operating	
   leases	
   is	
   recognized	
   on	
   a	
   straight-‐line	
   basis	
   over	
   the	
   term	
   of	
   the	
   lease;	
   a	
  
straight-‐line	
   rent	
   receivable,	
   which	
   is	
   included	
   in	
   other	
   non-‐current	
   assets,	
   is	
   recorded	
   for	
   the	
   difference	
   between	
   the	
   rental	
  
revenue	
  recognized	
  and	
  the	
  contractual	
  amount	
  received.	
  Recoveries	
  from	
  tenants	
  are	
  recognized	
  as	
  revenues	
  in	
  the	
  period	
  in	
  
which	
  the	
  corresponding	
  costs	
  are	
  incurred	
  and	
  collectability	
  reasonably	
  assured.	
  Percentage	
  participation	
  rents	
  are	
  recognized	
  
on	
  an	
  accrual	
  basis	
  once	
  tenant	
  sales	
  revenues	
  exceed	
  contractual	
  thresholds.	
  Other	
  revenues	
  are	
  recorded	
  as	
  earned.	
  	
  

Business	
  combinations	
  	
  
The	
  purchase	
  method	
  of	
  accounting	
  is	
  used	
  for	
  acquisitions	
  meeting	
  the	
  deﬁnition	
  of	
  a	
  business.	
  The	
  consideration	
  transferred	
  
in	
   a	
   business	
   combination	
   is	
   measured	
   at	
   fair	
   value,	
   which	
   is	
   calculated	
   as	
   the	
   sum	
   of	
   the	
   acquisition	
   date	
   fair	
   values	
   of	
   the	
  
assets	
   transferred	
   by	
   the	
   acquirer,	
   the	
   liabilities	
   incurred	
   by	
   the	
   acquirer	
   to	
   former	
   owners	
   of	
   the	
   acquiree,	
   and	
   the	
   equity	
  
interests	
  issued	
  by	
  the	
  acquirer.	
  

Identiﬁable	
  assets	
  acquired	
  and	
  liabilities	
  and	
  contingent	
  liabilities	
  assumed	
  in	
  a	
  business	
  combination	
  are	
  measured	
  initially	
  at	
  
their	
  acquisition	
  date	
  fair	
  values	
  irrespective	
  of	
  the	
  extent	
  of	
  any	
  minority	
  interest.	
  The	
  excess	
  of	
  the	
  cost	
  of	
  acquisition	
  over	
  the	
  
fair	
  value	
  of	
  the	
  Trust’s	
  share	
  of	
  the	
  identiﬁable	
  net	
  assets	
  acquired	
  is	
  recorded	
  as	
  goodwill.	
  If	
  the	
  cost	
  of	
  acquisition	
  is	
  less	
  than	
  
the	
  fair	
  value	
  of	
  the	
  Trust’s	
  share	
  of	
  the	
  net	
  assets	
  acquired,	
  the	
  difference	
  is	
  recognized	
  directly	
  in	
  the	
  proﬁt	
  or	
  loss	
  for	
  the	
  year	
  
as	
   an	
   acquisition	
   gain.	
   Any	
   transaction	
   costs	
   incurred	
   with	
   respect	
   to	
   the	
   business	
   combination	
   are	
   expensed	
   in	
   the	
   period	
  
incurred.	
  	
  

Goodwill	
  
Goodwill	
  arises	
  on	
  the	
  acquisition	
  of	
  businesses	
  and	
  represents	
  the	
  excess	
  of	
  the	
  consideration	
  transferred	
  over	
  and	
  above	
  the	
  
Trust’s	
   interest	
   in	
   the	
   fair	
   value	
   of	
   the	
   net	
   identifiable	
   assets,	
   liabilities	
   and	
   contingent	
   liabilities	
   of	
   the	
   acquiree	
   and	
   the	
   fair	
  
value	
  of	
  the	
  non-‐controlling	
  interest	
  in	
  the	
  acquiree.	
  

For	
  the	
  purpose	
  of	
  impairment	
  testing,	
  goodwill	
  acquired	
  in	
  a	
  business	
  combination	
  is	
  allocated	
  to	
  each	
  of	
  the	
  cash-‐generating	
  
units	
  or	
  groups	
  of	
  cash-‐generating	
  units	
  that	
  are	
  expected	
  to	
  benefit	
  from	
  the	
  synergies	
  of	
  the	
  combination.	
  Each	
  unit	
  or	
  group	
  
of	
  units	
  to	
  which	
  the	
  goodwill	
  is	
  allocated	
  represents	
  the	
  lowest	
  level	
  within	
  the	
  entity	
  at	
  which	
  the	
  goodwill	
  is	
  monitored	
  for	
  
internal	
  management	
  purposes.	
  Goodwill	
  is	
  monitored	
  by	
  the	
  Trust	
  at	
  the	
  geographical	
  segment	
  level.	
  

Goodwill	
   impairment	
   reviews	
   are	
   undertaken	
   annually	
   or	
   more	
   frequently	
   if	
   events	
   or	
   changes	
   in	
   circumstances	
   indicate	
   a	
  
potential	
  impairment.	
  The	
  carrying	
  value	
  of	
  goodwill	
  is	
  compared	
  to	
  the	
  recoverable	
  amount,	
  which	
  is	
  the	
  higher	
  of	
  value-‐in-‐use	
  
and	
  the	
  fair	
  value	
  less	
  costs	
  to	
  sell.	
  Any	
  impairment	
  is	
  recognized	
  immediately	
  as	
  an	
  expense	
  and	
  is	
  not	
  subsequently	
  reversed.	
  

Dream	
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External	
  property	
  management	
  contracts	
  
External	
  property	
  management	
  contracts	
  assumed	
  in	
  a	
  business	
  combination	
  are	
  recorded	
  on	
  the	
  consolidated	
  balance	
  sheets	
  
and	
  arise	
  when	
  the	
  Trust	
  acquires	
  less	
  than	
  100%	
  of	
  an	
  investment	
  property,	
  but	
  manages	
  the	
  investment	
  property	
  and	
  earns	
  a	
  
property	
  management	
  fee	
  from	
  the	
  co-‐owner.	
  External	
  property	
  management	
  contracts	
  are	
  in	
  place	
  as	
  long	
  as	
  the	
  property	
  is	
  
co-‐owned	
  by	
  the	
  Trust	
  and	
  are	
  amortized	
  on	
  a	
  straight-‐line	
  basis	
  into	
  comprehensive	
  income	
  over	
  ten	
  years.	
  

Distributions	
  	
  
Distributions	
  to	
  unitholders	
  are	
  recognized	
  as	
  a	
  liability	
  in	
  the	
  period	
  in	
  which	
  the	
  distributions	
  are	
  approved	
  by	
  the	
  Board	
  of	
  
Trustees	
  and	
  are	
  recorded	
  as	
  a	
  reduction	
  of	
  retained	
  earnings.	
  	
  

Income	
  taxes	
  	
  
Dream	
  Office	
  REIT	
  is	
  taxed	
  as	
  a	
  mutual	
  fund	
  trust	
  for	
  Canadian	
  income	
  tax	
  purposes.	
  The	
  Trust	
  expects	
  to	
  distribute	
  all	
  of	
  its	
  
taxable	
   income	
   to	
   its	
   unitholders,	
   which	
   enables	
   it	
   to	
   deduct	
   such	
   distributions	
   for	
   income	
   tax	
   purposes.	
   As	
   the	
   income	
   tax	
  
obligations	
  relating	
  to	
  the	
  distributions	
  are	
  those	
  of	
  the	
  individual	
  unitholder,	
  no	
  provision	
  for	
  income	
  taxes	
  is	
  required	
  on	
  such	
  
amounts.	
  The	
  Trust	
  expects	
  to	
  continue	
  to	
  distribute	
  its	
  taxable	
  income	
  and	
  to	
  qualify	
  as	
  a	
  real	
  estate	
  investment	
  trust	
  (“REIT”)	
  
for	
  the	
  foreseeable	
  future.	
  

For	
  U.S.	
  subsidiaries,	
  income	
  taxes	
  are	
  accounted	
  for	
  using	
  the	
  asset	
  and	
  liability	
  method.	
  Under	
  this	
  method,	
  deferred	
  income	
  
taxes	
  are	
  recognized	
  for	
  the	
  expected	
  future	
  tax	
  consequences	
  of	
  temporary	
  differences	
  between	
  the	
  carrying	
  value	
  of	
  balance	
  
sheet	
  items	
  and	
  their	
  corresponding	
  tax	
  values.	
  Deferred	
  income	
  taxes	
  are	
  computed	
  using	
  substantively	
  enacted	
  income	
  tax	
  
rates	
  or	
  laws	
  for	
  the	
  years	
  in	
  which	
  the	
  temporary	
  differences	
  are	
  expected	
  to	
  reverse	
  or	
  settle.	
  

Unit-‐based	
  compensation	
  plan	
  	
  
As	
  described	
  in	
  Note	
  15,	
  the	
  Trust	
  has	
  a	
  Deferred	
  Unit	
  Incentive	
  Plan	
  (“DUIP”)	
  that	
  provides	
  for	
  the	
  granting	
  of	
  deferred	
  trust	
  
units	
   and	
   income	
   deferred	
   trust	
   units	
   to	
   trustees,	
   ofﬁcers,	
   employees	
   and	
   afﬁliates	
   and	
   their	
   service	
   providers	
   (including	
   the	
  
asset	
   manager).	
   Unvested	
   deferred	
   trust	
   units	
   are	
   recorded	
   as	
   a	
   liability,	
   and	
   compensation	
   expense	
   is	
   recognized	
   over	
   the	
  
vesting	
  period	
  at	
  amortized	
  cost	
  based	
  on	
  the	
  fair	
  value	
  of	
  the	
  units.	
  Once	
  vested,	
  the	
  liability	
  is	
  remeasured	
  at	
  each	
  reporting	
  
date	
   at	
   amortized	
   cost,	
   based	
   on	
   the	
   fair	
   value	
   of	
   the	
   corresponding	
   REIT	
   A	
   Units,	
   with	
   changes	
   in	
   fair	
   value	
   recognized	
   in	
  
comprehensive	
  income	
  as	
  a	
  fair	
  value	
  adjustment	
  to	
  financial	
  instruments.	
  Deferred	
  trust	
  units	
  and	
  income	
  deferred	
  units	
  are	
  
only	
  settled	
  in	
  REIT	
  A	
  Units.	
  

Cash	
  and	
  cash	
  equivalents	
  	
  
Cash	
   and	
   cash	
   equivalents	
   include	
   all	
   short-‐term	
   investments	
   with	
   an	
   original	
   maturity	
   of	
   three	
   months	
   or	
   less,	
   and	
   exclude	
  
cash	
  subject	
  to	
  restrictions	
  that	
  prevent	
  its	
  use	
  for	
  current	
  purposes.	
  Excluded	
  from	
  cash	
  and	
  cash	
  equivalents	
  are	
  amounts	
  held	
  
for	
   repayment	
   of	
   tenant	
   security	
   deposits,	
   as	
   required	
   by	
   various	
   lending	
   agreements.	
   Deposits	
   are	
   included	
   in	
   other	
  
non-‐current	
  assets.	
  	
  

Dream	
  Office	
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Financial	
  instruments	
  
Designation	
  of	
  financial	
  instruments	
  
The	
  following	
  summarizes	
  the	
  Trust’s	
  classification	
  and	
  measurement	
  of	
  financial	
  assets	
  and	
  financial	
  liabilities:	
  

Financial	
  assets	
  
Promissory	
  notes	
  receivable	
  
Amounts	
  receivable	
  
Restricted	
  cash	
  and	
  deposits	
  
Cash	
  and	
  cash	
  equivalents	
  

Financial	
  liabilities	
  
Mortgages	
  
Term	
  debt	
  
Debentures	
  
Subsidiary	
  redeemable	
  units	
  
Deposits	
  
Deferred	
  Unit	
  Incentive	
  Plan	
  
Amounts	
  payable	
  and	
  accrued	
  liabilities	
  
Distributions	
  payable	
  
Convertible	
  debentures	
  –	
  host	
  instrument	
  
Convertible	
  debentures	
  –	
  conversion	
  feature	
  
Interest	
  rate	
  swaps	
  

Classification	
  

Measurement	
  

Loans	
  and	
  receivables	
  
Loans	
  and	
  receivables	
  
Loans	
  and	
  receivables	
  
Loans	
  and	
  receivables	
  

Other	
  liabilities	
  	
  
Other	
  liabilities	
  	
  
Other	
  liabilities	
  	
  
Other	
  liabilities	
  	
  
Other	
  liabilities	
  	
  
Other	
  liabilities	
  	
  
Other	
  liabilities	
  	
  
Other	
  liabilities	
  	
  
Other	
  liabilities	
  	
  
Fair	
  value	
  through	
  profit	
  or	
  loss	
  	
  
Cash	
  flow	
  hedge	
  	
  

Amortized	
  cost	
  
Amortized	
  cost	
  
Amortized	
  cost	
  
Amortized	
  cost	
  

Amortized	
  cost	
  
Amortized	
  cost	
  
Amortized	
  cost	
  
Amortized	
  cost	
  
Amortized	
  cost	
  
Amortized	
  cost	
  
Amortized	
  cost	
  
Amortized	
  cost	
  
Amortized	
  cost	
  
Fair	
  value	
  
Fair	
  value	
  

Financial	
  assets	
  	
  
The	
   Trust	
   classifies	
   its	
   non-‐derivative	
   financial	
   assets	
   with	
   fixed	
   or	
   determinable	
   payments	
   that	
   are	
   not	
   quoted	
   in	
   an	
   active	
  
market	
  as	
  loans	
  and	
  receivables.	
  All	
  ﬁnancial	
  assets	
  are	
  initially	
  measured	
  at	
  fair	
  value,	
  less	
  any	
  related	
  transaction	
  costs,	
  and	
  
are	
  subsequently	
  measured	
  at	
  amortized	
  cost.	
  	
  

Amounts	
   receivable	
   are	
   initially	
   measured	
   at	
   fair	
   value	
   and	
   are	
   subsequently	
   measured	
   at	
   amortized	
   cost	
   less	
   provision	
   for	
  
impairment.	
   A	
   provision	
   for	
   impairment	
   is	
   established	
   when	
   there	
   is	
   objective	
   evidence	
   that	
   collection	
   will	
   not	
   be	
   possible	
  
under	
   the	
   original	
   terms	
   of	
   the	
   contract.	
   Indicators	
   of	
   impairment	
   include	
   payment	
   delinquency	
   and	
   signiﬁcant	
   ﬁnancial	
  
difﬁculty	
  of	
  the	
  tenant.	
  The	
  carrying	
  amount	
  of	
  the	
  financial	
  asset	
  is	
  reduced	
  through	
  an	
  allowance	
  account,	
  and	
  the	
  amount	
  of	
  
the	
   loss	
   is	
   recognized	
   in	
   the	
   consolidated	
   statements	
   of	
   comprehensive	
   income	
   within	
   investment	
   properties	
   operating	
  
expenses.	
   Bad	
   debt	
   write-‐offs	
   occur	
   when	
   the	
   Trust	
   determines	
   collection	
   is	
   not	
   possible.	
   Any	
   subsequent	
   recoveries	
   of	
  
amounts	
  previously	
  written	
  off	
  are	
  credited	
  against	
  investment	
  properties	
  operating	
  expenses	
  in	
  the	
  consolidated	
  statements	
  
of	
  comprehensive	
  income.	
  Trade	
  receivables	
  that	
  are	
  less	
  than	
  three	
  months	
  past	
  due	
  are	
  not	
  considered	
  impaired	
  unless	
  there	
  
is	
   evidence	
   collection	
   is	
   not	
   possible.	
   If	
   in	
   a	
   subsequent	
   period	
   when	
   the	
   amount	
   of	
   the	
   impairment	
   loss	
   decreases	
   and	
   the	
  
decrease	
   can	
   be	
   related	
   objectively	
   to	
   an	
   event	
   occurring	
   after	
   the	
   impairment	
   was	
   recognized,	
   the	
   previously	
   recognized	
  
impairment	
   loss	
   is	
   reversed	
   to	
   the	
   extent	
   that	
   the	
   carrying	
   amount	
   of	
   the	
   asset	
   does	
   not	
   exceed	
   its	
   amortized	
   cost	
   at	
   the	
  
reversal	
  date.	
  Any	
  subsequent	
  reversal	
  of	
  an	
  impairment	
  loss	
  is	
  recognized	
  in	
  proﬁt	
  or	
  loss.	
  	
  

Financial	
  assets	
  are	
  derecognized	
  only	
  when	
  the	
  contractual	
  rights	
  to	
  the	
  cash	
  ﬂows	
  from	
  the	
  ﬁnancial	
  asset	
  expire	
  or	
  the	
  Trust	
  
transfers	
  substantially	
  all	
  risks	
  and	
  rewards	
  of	
  ownership.	
  	
  

Financial	
  liabilities	
  	
  
The	
   Trust	
   classiﬁes	
   its	
   ﬁnancial	
   liabilities	
   on	
   initial	
   recognition	
   as	
   either	
   fair	
   value	
   through	
   proﬁt	
   or	
   loss	
   or	
   other	
   liabilities	
  
measured	
   at	
   amortized	
   cost.	
   Financial	
   liabilities	
   are	
   initially	
   recognized	
   at	
   fair	
   value	
   less	
   related	
   transaction	
   costs.	
   Financial	
  
liabilities	
   classiﬁed	
   as	
   other	
   liabilities	
   are	
   measured	
   at	
   amortized	
   cost	
   using	
   the	
   effective	
   interest	
   rate	
   method.	
   Under	
   the	
  
effective	
  interest	
  rate	
  method,	
  any	
  transaction	
  fees,	
  costs,	
  discounts	
  and	
  premiums	
  directly	
  related	
  to	
  the	
  ﬁnancial	
  liabilities	
  are	
  
recognized	
  in	
  comprehensive	
  income	
  over	
  the	
  expected	
  life	
  of	
  the	
  debt.	
  The	
  Trust’s	
  ﬁnancial	
  liabilities	
  that	
  are	
  classiﬁed	
  as	
  fair	
  
value	
  through	
  proﬁt	
  or	
  loss	
  are	
  initially	
  recognized	
  at	
  fair	
  value	
  and	
  are	
  subsequently	
  remeasured	
  at	
  fair	
  value	
  each	
  reporting	
  
period,	
  with	
  changes	
  in	
  the	
  fair	
  value	
  recognized	
  in	
  comprehensive	
  income.	
  	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  90	
  

   
 
 
   
 
 
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
Mortgages,	
  term	
  debt	
  and	
  debentures	
  are	
  initially	
  recognized	
  at	
  fair	
  value	
  less	
  related	
  transaction	
  costs,	
  or	
  at	
  fair	
  value	
  when	
  
assumed	
   in	
   a	
   business	
   or	
   asset	
   acquisition.	
   Subsequent	
   to	
   initial	
   recognition,	
   mortgages	
   and	
   term	
   debt	
   are	
   recognized	
   at	
  
amortized	
  cost.	
  Borrowing	
  costs	
  that	
  are	
  directly	
  attributable	
  to	
  investment	
  properties	
  under	
  development	
  are	
  capitalized.	
  

On	
   issuance,	
   convertible	
   debentures	
   are	
   separated	
   into	
   two	
   ﬁnancial	
   liability	
   components:	
   the	
   host	
   instrument	
   and	
   the	
  
conversion	
  feature.	
  This	
  presentation	
  is	
  required	
  because	
  the	
  conversion	
  feature	
  permits	
  the	
  holder	
  to	
  convert	
  the	
  debenture	
  
into	
   REIT	
   Units	
   that,	
   except	
   for	
   the	
   available	
   exemption	
   under	
   International	
   Accounting	
   Standard	
   (“IAS”)	
   32,	
   “Financial	
  
Instruments:	
  Presentation”	
  (“IAS	
  32”),	
  would	
  normally	
  be	
  presented	
  as	
  a	
  financial	
  liability	
  because	
  of	
  the	
  redemption	
  feature	
  
attached	
   to	
   the	
   REIT	
   A	
   Units.	
   Both	
   components	
   are	
   measured	
   based	
   on	
   their	
   respective	
   estimated	
   fair	
   values	
   at	
   the	
   date	
   of	
  
issuance.	
  The	
  fair	
  value	
  of	
  the	
  host	
  instrument	
  is	
  net	
  of	
  any	
  related	
  transaction	
  costs.	
  The	
  fair	
  value	
  of	
  the	
  host	
  instrument	
  is	
  
estimated	
  based	
  on	
  the	
  present	
  value	
  of	
  future	
  interest	
  and	
  principal	
  payments	
  due	
  under	
  the	
  terms	
  of	
  the	
  debenture	
  using	
  a	
  
discount	
  rate	
  for	
  similar	
  debt	
  instruments	
  without	
  a	
  conversion	
  feature.	
  Subsequent	
  to	
  initial	
  recognition,	
  the	
  host	
  instrument	
  is	
  
accounted	
  for	
  at	
  amortized	
  cost.	
  The	
  conversion	
  feature	
  is	
  accounted	
  for	
  at	
  fair	
  value	
  with	
  changes	
  in	
  fair	
  value	
  recognized	
  in	
  
comprehensive	
  income	
  each	
  period.	
  When	
  the	
  holder	
  of	
  a	
  convertible	
  debenture	
  converts	
  its	
  interest	
  into	
  REIT	
  A	
  Units,	
  the	
  host	
  
instrument	
   and	
   conversion	
   feature	
   are	
   reclassiﬁed	
   to	
   unitholders’	
   equity	
   in	
   proportion	
   to	
   the	
   units	
   converted	
   over	
   the	
   total	
  
equivalent	
  units	
  outstanding.	
  	
  

Deferred	
   trust	
   units	
   and	
   the	
   subsidiary	
   redeemable	
   units	
   are	
   measured	
   at	
   amortized	
   cost	
   because	
   they	
   are	
   settled	
   in	
   REIT	
   A	
  
Units	
   and	
   REIT	
   B	
   Units,	
   which	
   in	
   accordance	
   with	
   IAS	
   32	
   are	
   considered	
   liabilities.	
   Consequently,	
   the	
   deferred	
   units	
   and	
  
subsidiary	
  redeemable	
  units	
  are	
  remeasured	
  each	
  reporting	
  period	
  based	
  on	
  the	
  fair	
  value	
  of	
  REIT	
  Units,	
  with	
  changes	
  in	
  the	
  
liabilities	
   recorded	
   in	
   comprehensive	
   income.	
   Distributions	
   paid	
   on	
   subsidiary	
   redeemable	
   units	
   are	
   recorded	
   as	
   interest	
  
expense	
   in	
   comprehensive	
   income.	
   A	
   ﬁnancial	
   liability	
   is	
   derecognized	
   when	
   the	
   obligation	
   under	
   the	
   liability	
   is	
   discharged,	
  
cancelled	
  or	
  expired.	
  	
  

Derivative	
  ﬁnancial	
  instruments	
  and	
  hedging	
  activities	
  	
  
Derivative	
   financial	
   instruments	
   are	
   initially	
   recognized	
   at	
   fair	
   value	
   on	
   the	
   date	
   a	
   derivative	
   contract	
   is	
   entered	
   into	
   and	
  
subsequently	
  remeasured	
  at	
  fair	
  value.	
  The	
  method	
  of	
  recognizing	
  the	
  resulting	
  gain	
  or	
  loss	
  depends	
  on	
  whether	
  the	
  derivative	
  
financial	
   instrument	
   is	
   designated	
   as	
   a	
   hedging	
   instrument	
   and,	
   if	
   so,	
   the	
   nature	
   of	
   the	
   item	
   being	
   hedged.	
   The	
   Trust	
   has	
  
designated	
  its	
  interest	
  rate	
  swaps	
  as	
  a	
  hedge	
  of	
  the	
  interest	
  under	
  the	
  term	
  loan	
  facility.	
  	
  

At	
  the	
  inception	
  of	
  the	
  transaction,	
  the	
  Trust	
  documents	
  the	
  relationship	
  between	
  hedging	
  instruments	
  and	
  hedged	
  items,	
  as	
  
well	
   as	
   its	
   risk	
   management	
   objectives	
   and	
   strategy	
   for	
   undertaking	
   various	
   hedging	
   transactions.	
   The	
   Trust	
   also	
   documents,	
  
both	
  at	
  hedge	
  inception	
  and	
  on	
  an	
  ongoing	
  basis,	
  its	
  assessment	
  of	
  whether	
  the	
  derivatives	
  used	
  in	
  hedging	
  transactions	
  are	
  
highly	
  effective	
  in	
  offsetting	
  changes	
  in	
  cash	
  ﬂows	
  of	
  hedged	
  items.	
  

The	
  effective	
  portion	
  of	
  changes	
  in	
  the	
  fair	
  value	
  of	
  derivatives	
  that	
  are	
  designated	
  and	
  qualify	
  as	
  cash	
  ﬂow	
  hedges	
  is	
  recognized	
  
in	
   other	
   comprehensive	
   income.	
   The	
   gain	
   or	
   loss	
   relating	
   to	
   the	
   ineffective	
   portion	
   is	
   recognized	
   immediately	
   in	
   the	
  
consolidated	
  statements	
  of	
  comprehensive	
  income.	
  	
  

Amounts	
  accumulated	
  in	
  equity	
  are	
  reclassiﬁed	
  to	
  other	
  comprehensive	
  income	
  or	
  loss	
  in	
  the	
  periods	
  when	
  the	
  hedged	
  item	
  
affects	
  proﬁt	
  or	
  loss.	
  	
  

When	
   a	
   hedging	
   instrument	
   expires	
   or	
   is	
   sold,	
   or	
   when	
   a	
   hedge	
   no	
   longer	
   meets	
   the	
   criteria	
   for	
   hedge	
   accounting,	
   any	
  
cumulative	
   gains	
   or	
   losses	
   existing	
   in	
   equity	
   at	
   that	
   time	
   are	
   recognized	
   in	
   the	
   consolidated	
   statements	
   of	
   comprehensive	
  
income	
  immediately.	
  

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  Office	
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Interest	
  on	
  debt	
  	
  
Interest	
   on	
   debt	
   includes	
   coupon	
   interest,	
   amortization	
   of	
   premiums	
   allocated	
   to	
   the	
   conversion	
   features	
   of	
   the	
   convertible	
  
debentures,	
  and	
  amortization	
  of	
  ancillary	
  costs	
  incurred	
  in	
  connection	
  with	
  the	
  arrangement	
  of	
  borrowings.	
  Finance	
  costs	
  are	
  
amortized	
  to	
  interest	
  expense	
  unless	
  they	
  relate	
  to	
  a	
  qualifying	
  asset	
  in	
  which	
  case	
  they	
  are	
  capitalized.	
  	
  

Equity	
  	
  
The	
  Trust	
  presents	
  REIT	
  Units	
  as	
  equity,	
  notwithstanding	
  the	
  fact	
  that	
  the	
  Trust’s	
  REIT	
  Units	
  meet	
  the	
  definition	
  of	
  a	
  financial	
  
liability.	
  Under	
  IAS	
  32,	
  the	
  REIT	
  Units	
  are	
  considered	
  a	
  puttable	
  ﬁnancial	
  instrument	
  because	
  of	
  the	
  holder’s	
  option	
  to	
  redeem	
  
REIT	
  Units,	
  generally	
  at	
  any	
  time,	
  subject	
  to	
  certain	
  restrictions,	
  at	
  a	
  redemption	
  price	
  per	
  unit	
  equal	
  to	
  the	
  lesser	
  of	
  90%	
  of	
  a	
  
20-‐day	
   weighted	
   average	
   closing	
   price	
   prior	
   to	
   the	
   redemption	
   date	
   or	
   100%	
   of	
   the	
   closing	
   market	
   price	
   on	
   the	
   redemption	
  
date.	
  The	
  total	
  amount	
  payable	
  by	
  Dream	
  Office	
  REIT	
  in	
  any	
  calendar	
  month	
  will	
  not	
  exceed	
  $50	
  unless	
  waived	
  by	
  Dream	
  Office	
  
REIT’s	
  Board	
  of	
  Trustees	
  at	
  their	
  sole	
  discretion.	
  The	
  Trust	
  has	
  determined	
  the	
  REIT	
  Units	
  can	
  be	
  presented	
  as	
  equity	
  and	
  not	
  
ﬁnancial	
  liabilities	
  because	
  the	
  REIT	
  Units	
  have	
  all	
  of	
  the	
  following	
  features,	
  as	
  deﬁned	
  in	
  IAS	
  32	
  (hereinafter	
  referred	
  to	
  as	
  the	
  
“puttable	
  exemption”):	
  	
  

•  REIT	
  Units	
  entitle	
  the	
  holder	
  to	
  a	
  pro	
  rata	
  share	
  of	
  the	
  Trust’s	
  net	
  assets	
  in	
  the	
  event	
  of	
  its	
  liquidation.	
  Net	
  assets	
  are	
  those	
  

assets	
  that	
  remain	
  after	
  deducting	
  all	
  other	
  claims	
  on	
  the	
  assets.	
  	
  

•  REIT	
   Units	
   are	
   the	
   class	
   of	
   instruments	
   that	
   are	
   subordinate	
   to	
   all	
   other	
   classes	
   of	
   instruments	
   because	
   they	
   have	
   no	
  
priority	
   over	
   other	
   claims	
   to	
   the	
   assets	
   of	
   the	
   Trust	
   on	
   liquidation,	
   and	
   do	
   not	
   need	
   to	
   be	
   converted	
   into	
   another	
  
instrument	
  before	
  they	
  are	
  in	
  the	
  class	
  of	
  instruments	
  that	
  is	
  subordinate	
  to	
  all	
  other	
  classes	
  of	
  instruments.	
  	
  

•  All	
  instruments	
  in	
  the	
  class	
  of	
  instruments	
  that	
  is	
  subordinate	
  to	
  all	
  other	
  classes	
  of	
  instruments	
  have	
  identical	
  features.	
  	
  

•  Apart	
  from	
  the	
  contractual	
  obligation	
  for	
  the	
  Trust	
  to	
  redeem	
  the	
  REIT	
  Units	
  for	
  cash	
  or	
  another	
  ﬁnancial	
  asset,	
  the	
  REIT	
  
Units	
  do	
  not	
  include	
  any	
  contractual	
  obligation	
  to	
  deliver	
  cash	
  or	
  another	
  ﬁnancial	
  asset	
  to	
  another	
  entity,	
  or	
  to	
  exchange	
  
ﬁnancial	
  assets	
  or	
  ﬁnancial	
  liabilities	
  with	
  another	
  entity	
  under	
  conditions	
  that	
  are	
  potentially	
  unfavourable	
  to	
  the	
  Trust,	
  
and	
  it	
  is	
  not	
  a	
  contract	
  that	
  will	
  or	
  may	
  be	
  settled	
  in	
  the	
  Trust’s	
  own	
  instruments.	
  	
  

• 

The	
  total	
  expected	
  cash	
  ﬂows	
  attributable	
  to	
  the	
  REIT	
  Units	
  over	
  their	
  lives	
  are	
  based	
  substantially	
  on	
  the	
  proﬁt	
  or	
  loss,	
  and	
  
the	
  change	
  in	
  the	
  recognized	
  net	
  assets	
  and	
  unrecognized	
  net	
  assets	
  of	
  the	
  Trust	
  over	
  the	
  life	
  of	
  the	
  REIT	
  Units.	
  

•  REIT	
  Units	
  are	
  initially	
  recognized	
  at	
  the	
  fair	
  value	
  of	
  the	
  consideration	
  received	
  by	
  the	
  Trust.	
  Any	
  transaction	
  costs	
  arising	
  

on	
  the	
  issuance	
  of	
  REIT	
  Units	
  are	
  recognized	
  directly	
  in	
  unitholders’	
  equity	
  as	
  a	
  reduction	
  of	
  the	
  proceeds	
  received.	
  

Provisions	
  
Provisions	
  for	
  legal	
  claims	
  are	
  recognized	
  when	
  the	
  Trust	
  has	
  a	
  present	
  legal	
  or	
  constructive	
  obligation	
  as	
  a	
  result	
  of	
  past	
  events;	
  
it	
   is	
   probable	
   an	
   outflow	
   of	
   resources	
   will	
   be	
   required	
   to	
   settle	
   the	
   obligation;	
   and	
   the	
   amount	
   has	
   been	
   reliably	
   estimated.	
  
Provisions	
  are	
  not	
  recognized	
  for	
  future	
  operating	
  losses.	
  

Where	
   there	
   are	
   a	
   number	
   of	
   similar	
   obligations,	
   the	
   likelihood	
   an	
   outflow	
   will	
   be	
   required	
   in	
   settlement	
   is	
   determined	
   by	
  
considering	
  the	
  class	
  of	
  obligations	
  as	
  a	
  whole.	
  A	
  provision	
  is	
  recognized	
  even	
  if	
  the	
  likelihood	
  of	
  an	
  outflow	
  with	
  respect	
  to	
  any	
  
one	
  item	
  included	
  in	
  the	
  same	
  class	
  of	
  obligations	
  may	
  be	
  small.	
  

Provisions	
  are	
  measured	
  at	
  the	
  present	
  value	
  of	
  the	
  expenditures	
  expected	
  to	
  be	
  required	
  to	
  settle	
  the	
  obligation	
  using	
  a	
  rate	
  
that	
  reflects	
  current	
  market	
  assessments	
  of	
  the	
  time	
  value	
  of	
  money	
  and	
  the	
  risks	
  specific	
  to	
  the	
  obligation.	
  The	
  increase	
  in	
  the	
  
provision	
  due	
  to	
  passage	
  of	
  time	
  is	
  recognized	
  as	
  interest	
  expense.	
  

Assets	
  held	
  for	
  sale	
  	
  
Assets	
  and	
  liabilities	
  (or	
  disposal	
  groups)	
  are	
  classified	
  as	
  held	
  for	
  sale	
  when	
  their	
  carrying	
  amount	
  is	
  to	
  be	
  recovered	
  principally	
  
through	
  a	
  sale	
  transaction	
  and	
  a	
  sale	
  is	
  considered	
  highly	
  probable.	
  Investment	
  properties	
  continue	
  to	
  be	
  measured	
  at	
  fair	
  value	
  
and	
  the	
  remainder	
  of	
  the	
  disposal	
  group	
  is	
  stated	
  at	
  the	
  lower	
  of	
  the	
  carrying	
  amount	
  and	
  fair	
  value	
  less	
  costs	
  to	
  sell.	
  

Foreign	
  currencies	
  
The	
  consolidated	
  financial	
  statements	
  are	
  presented	
  in	
  Canadian	
  dollars,	
  which	
  is	
  the	
  functional	
  currency	
  of	
  the	
  Trust	
  and	
  the	
  
presentation	
  currency	
  for	
  the	
  consolidated	
  financial	
  statements.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  92	
  

Assets	
  and	
  liabilities	
  related	
  to	
  properties	
  held	
  in	
  a	
  foreign	
  entity	
  with	
  a	
  functional	
  currency	
  other	
  than	
  the	
  Canadian	
  dollar	
  are	
  
translated	
  at	
  the	
  rate	
  of	
  exchange	
  at	
  the	
  consolidated	
  balance	
  sheet	
  dates.	
  Revenues	
  and	
  expenses	
  are	
  translated	
  at	
  average	
  
rates	
   for	
   the	
   period,	
   unless	
   exchange	
   rates	
   fluctuate	
   significantly	
   during	
   the	
   period	
   in	
   which	
   case	
   the	
   exchange	
   rates	
   at	
   the	
  
dates	
   of	
   the	
   transactions	
   are	
   used.	
   The	
   resulting	
   foreign	
   currency	
   translation	
   adjustments	
   are	
   recognized	
   in	
   other	
  
comprehensive	
  income.	
  

Note	
  4	
  	
  
CRITICAL	
  ACCOUNTING	
  JUDGMENTS,	
  ESTIMATES	
  AND	
  ASSUMPTIONS	
  IN	
  APPLYING	
  ACCOUNTING	
  POLICIES	
  	
  
Preparing	
   the	
   consolidated	
   ﬁnancial	
   statements	
   requires	
   management	
   to	
   make	
   judgments,	
   estimates	
   and	
   assumptions	
   that	
  
affect	
   the	
   amounts	
   reported.	
   Management	
   bases	
   its	
   judgments	
   and	
   estimates	
   on	
   historical	
   experience	
   and	
   other	
   factors	
   it	
  
believes	
  to	
  be	
  reasonable	
  under	
  the	
  circumstances,	
  but	
  which	
  are	
  inherently	
  uncertain	
  and	
  unpredictable,	
  the	
  result	
  of	
  which	
  
forms	
  the	
  basis	
  of	
  the	
  carrying	
  amounts	
  of	
  assets	
  and	
  liabilities.	
  However,	
  uncertainty	
  about	
  these	
  assumptions	
  and	
  estimates	
  
could	
   result	
   in	
   outcomes	
   that	
   could	
   require	
   a	
   material	
   adjustment	
   to	
   the	
   carrying	
   amount	
   of	
   the	
   affected	
   asset	
   or	
   liability	
   in	
  	
  
the	
  future.	
  	
  

Critical	
  accounting	
  judgments	
  	
  
The	
   following	
   are	
   the	
   critical	
   accounting	
   judgments	
   used	
   in	
   applying	
   the	
   Trust’s	
   accounting	
   policies	
   that	
   have	
   the	
   most	
  
signiﬁcant	
  effect	
  on	
  the	
  amounts	
  in	
  the	
  consolidated	
  ﬁnancial	
  statements:	
  	
  

Investment	
  properties	
  	
  
Critical	
  judgments	
  are	
  made	
  in	
  respect	
  of	
  the	
  fair	
  values	
  of	
  investment	
  properties	
  and	
  the	
  investment	
  properties	
  held	
  in	
  equity	
  
accounted	
   investments.	
   The	
   fair	
   values	
   of	
   these	
   investments	
   are	
   reviewed	
   regularly	
   by	
   management	
   with	
   reference	
   to	
  
independent	
   property	
   valuations	
   and	
   market	
   conditions	
   existing	
   at	
   the	
   reporting	
   date,	
   using	
   generally	
   accepted	
   market	
  
practices.	
  The	
  independent	
  valuators	
  are	
  experienced,	
  nationally	
  recognized	
  and	
  qualiﬁed	
  in	
  the	
  professional	
  valuation	
  of	
  ofﬁce	
  
buildings	
  in	
  their	
  respective	
  geographic	
  areas.	
  Judgment	
  is	
  also	
  applied	
  in	
  determining	
  the	
  extent	
  and	
  frequency	
  of	
  independent	
  
appraisals.	
  At	
  each	
  annual	
  reporting	
  period,	
  a	
  select	
  number	
  of	
  properties,	
  determined	
  on	
  a	
  rotational	
  basis,	
  will	
  be	
  valued	
  by	
  
qualiﬁed	
   valuation	
   professionals.	
   For	
   properties	
   not	
   subject	
   to	
   independent	
   appraisals,	
   internal	
   appraisals	
   are	
   prepared	
   by	
  
management	
  during	
  each	
  reporting	
  period.	
  	
  

The	
  Trust	
  makes	
  judgments	
  with	
  respect	
  to	
  whether	
  lease	
  incentives	
  provided	
  in	
  connection	
  with	
  a	
  lease	
  enhance	
  the	
  value	
  of	
  
the	
   leased	
   space,	
   which	
   determines	
   whether	
   or	
   not	
   such	
   amounts	
   are	
   treated	
   as	
   tenant	
   improvements	
   and	
   added	
   to	
  
investment	
   properties.	
   Lease	
   incentives,	
   such	
   as	
   cash,	
   rent-‐free	
   periods	
   and	
   lessee-‐	
   or	
   lessor-‐owned	
   improvements,	
   may	
   be	
  
provided	
  to	
  lessees	
  to	
  enter	
  into	
  an	
  operating	
  lease.	
  Lease	
  incentives	
  that	
  do	
  not	
  provide	
  beneﬁts	
  beyond	
  the	
  initial	
  lease	
  term	
  
are	
  included	
  in	
  the	
  carrying	
  amount	
  of	
  investment	
  properties	
  and	
  are	
  amortized	
  as	
  a	
  reduction	
  of	
  rental	
  revenue	
  on	
  a	
  straight-‐
line	
  basis	
  over	
  the	
  term	
  of	
  the	
  lease.	
  	
  

Judgment	
  is	
  also	
  applied	
  in	
  determining	
  whether	
  certain	
  costs	
  are	
  additions	
  to	
  the	
  carrying	
  amount	
  of	
  the	
  investment	
  property	
  
and,	
   for	
   properties	
   under	
   development,	
   identifying	
   the	
   point	
   at	
   which	
   practical	
   completion	
   of	
   the	
   property	
   occurs	
   and	
  
identifying	
  the	
  directly	
  attributable	
  borrowing	
  costs	
  to	
  be	
  included	
  in	
  the	
  carrying	
  amount	
  of	
  the	
  development	
  property.	
  	
  

Business	
  combinations	
  	
  
Accounting	
  for	
  business	
  combinations	
  under	
  IFRS	
  3,	
  “Business	
  Combinations”	
  (“IFRS	
  3”),	
  only	
  applies	
  if	
  it	
  is	
  considered	
  that	
  a	
  
business	
   has	
   been	
   acquired.	
   Under	
   IFRS	
   3,	
   a	
   business	
   is	
   deﬁned	
   as	
   an	
   integrated	
   set	
   of	
   activities	
   and	
   assets	
   conducted	
   and	
  
managed	
   for	
   the	
   purpose	
   of	
   providing	
   a	
   return	
   to	
   investors	
   or	
   lower	
   costs	
   or	
   other	
   economic	
   beneﬁts	
   directly	
   and	
  
proportionately	
  to	
  the	
  Trust.	
  A	
  business	
  generally	
  consists	
  of	
  inputs,	
  processes	
  applied	
  to	
  those	
  inputs,	
  and	
  resulting	
  outputs	
  
that	
   are,	
   or	
   will	
   be,	
   used	
   to	
   generate	
   revenues.	
   In	
   the	
   absence	
   of	
   such	
   criteria,	
   a	
   group	
   of	
   assets	
   is	
   deemed	
   to	
   have	
   been	
  
acquired.	
   If	
   goodwill	
   is	
   present	
   in	
   a	
   transferred	
   set	
   of	
   activities	
   and	
   assets,	
   the	
   transferred	
   set	
   is	
   presumed	
   to	
   be	
   a	
   business.	
  
Judgment	
   is	
   used	
   by	
   management	
   in	
   determining	
   whether	
   the	
   acquisition	
   of	
   an	
   individual	
   property	
   qualiﬁes	
   as	
   a	
   business	
  
combination	
  in	
  accordance	
  with	
  IFRS	
  3	
  or	
  as	
  an	
  asset	
  acquisition.	
  	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  93	
  

 
	
  
When	
   determining	
   whether	
   the	
   acquisition	
   of	
   an	
   investment	
   property	
   or	
   a	
   portfolio	
   of	
   investment	
   properties	
   is	
   a	
   business	
  
combination	
  or	
  an	
  asset	
  acquisition,	
  the	
  Trust	
  applies	
  judgment	
  when	
  considering	
  the	
  following:	
  	
  

•  whether	
  the	
  investment	
  property	
  or	
  properties	
  are	
  capable	
  of	
  producing	
  outputs	
  
•  whether	
  the	
  market	
  participant	
  could	
  produce	
  outputs	
  if	
  missing	
  elements	
  exist	
  

In	
  particular,	
  the	
  Trust	
  considers	
  the	
  following:	
  

•  whether	
  employees	
  were	
  assumed	
  in	
  the	
  acquisition	
  
•  whether	
  an	
  operating	
  platform	
  has	
  been	
  acquired	
  

Currently,	
   when	
   the	
   Trust	
   acquires	
   properties	
   or	
   a	
   portfolio	
   of	
   properties	
   and	
   not	
   legal	
   entities,	
   does	
   not	
   take	
   on	
   or	
   assume	
  
employees,	
  or	
  does	
  not	
  acquire	
  an	
  operating	
  platform,	
  it	
  classifies	
  the	
  acquisition	
  as	
  an	
  asset	
  acquisition.	
  

Impairment	
  	
  
The	
  Trust	
  assesses	
  the	
  possibility	
  and	
  amount	
  of	
  any	
  impairment	
  loss	
  or	
  write-‐down	
  as	
  it	
  relates	
  to	
  the	
  Investment	
  in	
  Dream	
  
Industrial	
  REIT,	
  amounts	
  receivable,	
  property	
  and	
  equipment,	
  external	
  management	
  contracts,	
  and	
  goodwill.	
  	
  

IAS	
   39,	
   “Financial	
   instruments:	
   Recognition	
   and	
   measurement”,	
   requires	
   management	
   to	
   use	
   judgment	
   in	
   determining	
   if	
   the	
  
Trust’s	
  financial	
  assets	
  are	
  impaired.	
  In	
  making	
  this	
  judgment,	
  the	
  Trust	
  evaluates,	
  among	
  other	
  factors,	
  the	
  duration	
  and	
  extent	
  
to	
  which	
  the	
  fair	
  value	
  of	
  the	
  investment	
  is	
  less	
  than	
  its	
  carrying	
  amount;	
  and	
  the	
  financial	
  health	
  of	
  and	
  short-‐term	
  business	
  
outlook	
  for	
  the	
  investee,	
  including	
  factors	
  such	
  as	
  industry	
  and	
  sector	
  performance,	
  changes	
  in	
  technology,	
  and	
  operational	
  and	
  
financing	
  cash	
  flow.	
  

IAS	
   36,	
   “Impairment	
   of	
   Assets”	
   (“IAS	
   36”),	
   requires	
   management	
   to	
   use	
   judgment	
   in	
   determining	
   the	
   recoverable	
   amount	
   of	
  
assets	
   and	
   equity	
   accounted	
   investments	
   that	
   are	
   tested	
   for	
   impairment,	
   including	
   goodwill	
   and	
   the	
   investment	
   in	
   Dream	
  
Industrial	
   REIT.	
   Judgment	
   is	
   involved	
   in	
   estimating	
   the	
   fair	
   value	
   less	
   cost	
   to	
   sell	
   or	
   value-‐in-‐use	
   of	
   the	
   cash-‐generating	
   units	
  
(“CGUs”)	
   to	
   which	
   goodwill	
   has	
   been	
   allocated,	
   including	
   estimates	
   of	
   growth	
   rates,	
   discount	
   rates	
   and	
   terminal	
   rates.	
  
Judgment	
   is	
   also	
   involved	
   in	
   estimating	
   the	
   value-‐in-‐use	
   of	
   the	
   investment	
   in	
   Dream	
   Industrial	
   REIT,	
   including	
   estimates	
   of	
  
future	
  cash	
  flows,	
  discount	
  rates	
  and	
  terminal	
  rates.	
  The	
  values	
  assigned	
  to	
  these	
  key	
  assumptions	
  reflect	
  past	
  experience	
  and	
  
are	
  consistent	
  with	
  external	
  sources	
  of	
  information.	
  

The	
  Trust’s	
  goodwill	
  balance	
  is	
  allocated	
  to	
  the	
  office	
  properties	
  group	
  of	
  CGUs	
  by	
  geographical	
  segment	
  (herein	
  referred	
  to	
  as	
  
the	
  goodwill	
  CGU).	
  The	
  recoverable	
  amount	
  of	
  the	
  Trust’s	
  goodwill	
  CGU	
  is	
  determined	
  based	
  on	
  the	
  value-‐in-‐use	
  approach.	
  For	
  
the	
  purpose	
  of	
  this	
  impairment	
  test,	
  the	
  Trust	
  uses	
  cash	
  flow	
  projections	
  forecasted	
  out	
  for	
  a	
  ten-‐year	
  period,	
  consistent	
  with	
  
the	
   internal	
   financial	
   budgets	
   approved	
   by	
   management	
   on	
   a	
   property-‐by-‐property	
   basis.	
   The	
   key	
   assumptions	
   used	
   in	
  
determining	
  the	
  value-‐in-‐use	
  of	
  the	
  goodwill	
  CGU	
  are	
  the	
  estimated	
  growth	
  rate,	
  discount	
  rate	
  and	
  terminal	
  rate.	
  In	
  arriving	
  at	
  
the	
   growth	
   rate,	
   the	
   Trust	
   considers	
   past	
   experience	
   and	
   inflation,	
   as	
   well	
   as	
   industry	
   trends.	
   The	
   Trust	
   utilizes	
   weighted	
  
average	
   cost	
   of	
   capital	
   (“WACC”)	
   to	
   determine	
   the	
   discount	
   rate	
   and	
   terminal	
   rate.	
   The	
   WACC	
   reflects	
   specific	
   risks	
   that	
  	
  
would	
  be	
  attributable	
  to	
  the	
  Trust.	
  As	
  the	
  Trust	
  is	
  not	
  subject	
  to	
  taxation,	
  no	
  adjustment	
  is	
  required	
  to	
  adjust	
  the	
  WACC	
  on	
  a	
  
pre-‐tax	
  basis.	
  

Estimates	
  and	
  assumptions	
  	
  
The	
   Trust	
   makes	
   estimates	
   and	
   assumptions	
   that	
   affect	
   the	
   carrying	
   amounts	
   of	
   assets	
   and	
   liabilities,	
   the	
   disclosure	
   of	
  
contingent	
   assets	
   and	
   liabilities,	
   and	
   the	
   reported	
   amount	
   of	
   earnings	
   for	
   the	
   period.	
   Actual	
   results	
   could	
   differ	
   from	
   these	
  
estimates.	
  The	
  estimates	
  and	
  assumptions	
  that	
  are	
  critical	
  in	
  determining	
  the	
  amounts	
  reported	
  in	
  the	
  consolidated	
  ﬁnancial	
  
statements	
  relate	
  to	
  the	
  following:	
  	
  

Valuation	
  of	
  investment	
  properties	
  
Critical	
   assumptions	
   relating	
   to	
   the	
   estimates	
   of	
   fair	
   values	
   of	
   investment	
   properties	
   include	
   the	
   receipt	
   of	
   contractual	
   rents,	
  
expected	
   future	
   market	
   rents,	
   renewal	
   rates,	
   maintenance	
   requirements,	
   discount	
   rates	
   that	
   reﬂect	
   current	
   market	
  
uncertainties,	
   capitalization	
   rates,	
   and	
   current	
   and	
   recent	
   property	
   investment	
   prices.	
   If	
   there	
   is	
   any	
   change	
   in	
   these	
  
assumptions	
   or	
   regional,	
   national	
   or	
   international	
   economic	
   conditions,	
   the	
   fair	
   value	
   of	
   investment	
   properties	
   may	
  	
  
change	
  materially.	
  

Dream	
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  |	
  	
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Valuation	
  of	
  ﬁnancial	
  instruments	
  	
  
The	
   Trust	
   makes	
   estimates	
   and	
   assumptions	
   relating	
   to	
   the	
   fair	
   value	
   measurement	
   of	
   the	
   subsidiary	
   redeemable	
   units,	
   the	
  
deferred	
   trust	
   units,	
   the	
   convertible	
   debenture	
   conversion	
   feature,	
   interest	
   rate	
   swaps	
   and	
   the	
   fair	
   value	
   disclosure	
   of	
   the	
  
convertible	
   debentures,	
   mortgages	
   and	
   term	
   debt.	
   The	
   critical	
   assumptions	
   underlying	
   the	
   fair	
   value	
   measurements	
   and	
  
disclosures	
  include	
  the	
  market	
  price	
  of	
  REIT	
  Units,	
  market	
  interest	
  rates	
  for	
  mortgages,	
  term	
  debt	
  and	
  unsecured	
  debentures,	
  
and	
  assessment	
  of	
  the	
  effectiveness	
  of	
  hedging	
  relationships.	
  

For	
   certain	
   ﬁnancial	
   instruments,	
   including	
   cash	
   and	
   cash	
   equivalents,	
   promissory	
   notes	
   receivable,	
   amounts	
   receivable,	
  
amounts	
  payable	
  and	
  accrued	
  liabilities,	
  deposits	
  and	
  distributions	
  payable,	
  the	
  carrying	
  amounts	
  approximate	
  fair	
  values	
  due	
  
to	
   their	
   immediate	
   or	
   short-‐term	
   maturity.	
   The	
   fair	
   values	
   of	
   mortgages,	
   term	
   debt	
   and	
   interest	
   rate	
   swaps	
   are	
   determined	
  
based	
  on	
  discounted	
  cash	
  ﬂows	
  using	
  discount	
  rates	
  that	
  reﬂect	
  current	
  market	
  conditions	
  for	
  instruments	
  with	
  similar	
  terms	
  
and	
  risks.	
  The	
  fair	
  value	
  of	
  convertible	
  debentures	
  is	
  determined	
  by	
  reference	
  to	
  quoted	
  market	
  prices	
  from	
  an	
  active	
  market.	
  

Note	
  5	
  
CHANGES	
  IN	
  ACCOUNTING	
  POLICIES	
  AND	
  DISCLOSURES	
  
The	
  Trust	
  has	
  adopted	
  the	
  following	
  new	
  and	
  revised	
  standards,	
  along	
  with	
  any	
  consequential	
  amendments,	
  effective	
  January	
  1,	
  
2014.	
  	
  These	
  changes	
  were	
  made	
  in	
  accordance	
  with	
  the	
  applicable	
  transitional	
  provisions.	
  

Consolidated	
  financial	
  statements	
  
Amendments	
  to	
  IFRS	
  10,	
  “Consolidated	
  Financial	
  Statements”,	
  IFRS	
  12,	
  “Disclosure	
  of	
  Interests	
  in	
  Other	
  Entities”	
  (“IFRS	
  12”)	
  and	
  
IAS	
   27,	
   “Separate	
   financial	
   statements	
   –	
   Investment	
   entities”	
   (“IAS	
   27”):	
   The	
   amendments	
   define	
   an	
   investment	
   entity	
   and	
  
introduce	
  an	
  exception	
  to	
  consolidating	
  particular	
  subsidiaries	
  for	
  investment	
  entities.	
  These	
  investments	
  require	
  an	
  investment	
  
entity	
  to	
  measure	
  those	
  subsidiaries	
  at	
  fair	
  value	
  through	
  profit	
  or	
  loss,	
  in	
  accordance	
  with	
  IFRS	
  9,	
  “Financial	
  Instruments”,	
  in	
  its	
  
consolidated	
  and	
  separate	
  financial	
  statements.	
  The	
  amendments	
  also	
  introduce	
  new	
  disclosure	
  requirements	
  for	
  investment	
  
entities	
   in	
   IFRS	
   12	
   and	
   IAS	
   27.	
   The	
   Trust	
   is	
   not	
   considered	
   to	
   be	
   an	
   investment	
   entity	
   and	
   thus,	
   the	
   Trust	
   adopted	
   these	
  
amendments	
  without	
  impact	
  to	
  the	
  consolidated	
  financial	
  statements	
  or	
  note	
  disclosures	
  effective	
  January	
  1,	
  2014.	
  	
  

Segment	
  reporting	
  
A	
  reportable	
  operating	
  segment	
  is	
  a	
  distinguishable	
  component	
  of	
  the	
  Trust	
  that	
  is	
  engaged	
  either	
  in	
  providing	
  related	
  rental	
  
space	
   or	
   services	
   (business	
   segment)	
   or	
   in	
   providing	
   rental	
   space	
   or	
   services	
   within	
   a	
   particular	
   economic	
   environment	
  
(geographical	
  segment),	
  which	
  is	
  subject	
  to	
  risks	
  and	
  rewards	
  that	
  are	
  different	
  from	
  those	
  of	
  other	
  reportable	
  segments.	
  The	
  
Trust’s	
   reportable	
   operating	
   segments	
   include	
   Western	
   Canada,	
   Calgary	
   downtown,	
   Calgary	
   suburban,	
   Toronto	
   downtown,	
  
Toronto	
  suburban,	
  and	
  Eastern	
  Canada,	
  which	
  are	
  based	
  on	
  internal	
  reporting	
  structure	
  to	
  management.	
  Operating	
  segments	
  
are	
  reported	
  in	
  a	
  manner	
  consistent	
  with	
  the	
  internal	
  reporting	
  provided	
  to	
  the	
  chief	
  operating	
  decision-‐maker,	
  determined	
  to	
  
be	
  the	
  Chief	
  Executive	
  Officer	
  (“CEO”)	
  of	
  the	
  Trust.	
  

Prior	
   to	
   January	
   1,	
   2014,	
   the	
   Trust	
   analyzed	
   its	
   operations	
   as	
   a	
   single	
   office	
   portfolio.	
   Beginning	
   January	
   1,	
   2014,	
   the	
   CEO	
  
analyzed	
  the	
  portfolio	
  based	
  on	
  the	
  aforementioned	
  geographical	
  segments.	
  The	
  comparative	
  amounts	
  have	
  been	
  reclassified	
  
to	
  conform	
  to	
  the	
  current	
  year’s	
  presentation.	
  

Accounting	
  for	
  levies	
  imposed	
  by	
  governments	
  
IFRIC	
   21,	
   “Levies”	
   (“IFRIC	
   21”),	
   provides	
   guidance	
   on	
   accounting	
   for	
   levies	
   in	
   accordance	
   with	
   IAS	
   37,	
   “Provisions,	
   Contingent	
  
Liabilities	
  and	
  Contingent	
  Assets”.	
  The	
  interpretation	
  defines	
  a	
  levy	
  as	
  an	
  outflow	
  from	
  an	
  entity	
  imposed	
  by	
  a	
  government	
  in	
  
accordance	
  with	
  legislation	
  and	
  confirms	
  that	
  an	
  entity	
  recognizes	
  a	
  liability	
  for	
  a	
  levy	
  only	
  when	
  the	
  triggering	
  event	
  specified	
  
in	
  the	
  legislation	
  occurs.	
  The	
  Trust	
  adopted	
  this	
  new	
  interpretation	
  effective	
  January	
  1,	
  2014	
  and	
  it	
  was	
  applied	
  retrospectively.	
  
This	
  new	
  interpretation	
  had	
  no	
  material	
  impact	
  on	
  the	
  amounts	
  recognized	
  in	
  the	
  Trust’s	
  consolidated	
  financial	
  statements	
  or	
  
note	
  disclosures	
  for	
  the	
  year	
  ended	
  December	
  31,	
  2014.	
  

Dream	
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  Report	
  	
  |	
  	
  95	
  

 
	
  
Accounting	
  for	
  internal	
  leasing	
  costs	
  
Prior	
   to	
   January	
   1,	
   2014,	
   the	
   Trust	
   capitalized	
   costs	
   of	
   certain	
   internal	
   leasing	
   costs	
   within	
   initial	
   direct	
   leasing	
   costs	
   to	
  
investment	
  properties.	
  These	
  costs	
  would	
  not	
  have	
  been	
  incurred	
  if	
  no	
  leasing	
  activity	
  had	
  taken	
  place	
  and	
  are	
  reasonably	
  and	
  
directly	
   attributable	
   to	
   the	
   leasing	
   activity.	
   On	
   April	
   2,	
   2014,	
   IFRIC	
   issued	
   an	
   agenda	
   decision	
   indicating	
   that	
   certain	
   internal	
  
leasing	
   costs	
   such	
   as	
   salary	
   costs	
   of	
   permanent	
   staff	
   involved	
   in	
   negotiating	
   and	
   arranging	
   new	
   leases	
   do	
   not	
   qualify	
   as	
  
incremental	
   costs	
   in	
   accordance	
   with	
   IAS	
   17,	
   “Leases”.	
   As	
   a	
   result,	
   the	
   Trust	
   has	
   adopted	
   an	
   accounting	
   policy	
   effective	
  	
  
January	
   1,	
   2014	
   of	
   recognizing	
   certain	
   internal	
   leasing	
   costs	
   involved	
   in	
   negotiating	
   and	
   arranging	
   new	
   leases	
   in	
   the	
  
consolidated	
   statements	
   of	
   comprehensive	
   income	
   as	
   incurred.	
   This	
   accounting	
   policy	
   has	
   been	
   applied	
   retrospectively.	
   The	
  
impact	
  for	
  the	
  years	
  ended	
  December	
  31,	
  2014	
  and	
  December	
  31,	
  2013	
  is	
  an	
  increase	
  to	
  internal	
  leasing	
  costs	
  expense	
  included	
  
as	
   part	
   of	
   net	
   gains	
   (losses)	
   on	
   transactions	
   and	
   other	
   activities	
   of	
   $6,118	
   and	
   $6,468,	
   respectively,	
   and	
   a	
   corresponding	
  
increase	
  in	
  fair	
  value	
  adjustments	
  to	
  investment	
  properties	
  of	
  $6,118	
  and	
  $6,468,	
  respectively.	
  This	
  change	
  did	
  not	
  impact	
  the	
  
consolidated	
   balance	
   sheets.	
   External	
   direct	
   leasing	
   costs	
   continue	
   to	
   be	
   capitalized	
   to	
   initial	
   direct	
   leasing	
   costs	
   within	
  
investment	
  properties.	
  	
  

Note	
  6	
  	
  
FUTURE	
  ACCOUNTING	
  POLICY	
  CHANGES	
  	
  
Revenue	
  recognition	
  
IFRS	
  15,	
  “Revenue	
  from	
  Contracts	
  with	
  Customers”	
  (“IFRS	
  15”),	
  provides	
  a	
  comprehensive	
  five-‐step	
  revenue	
  recognition	
  model	
  
for	
  all	
  contracts	
  with	
  customers.	
  The	
  IFRS	
  15	
  revenue	
  recognition	
  model	
  requires	
  management	
  to	
  exercise	
  significant	
  judgment	
  
and	
   make	
   estimates	
   that	
   affect	
   revenue	
   recognition.	
   IFRS	
   15	
   is	
   effective	
   for	
   annual	
   periods	
   beginning	
   on	
   or	
   after	
   January	
   1,	
  
2017,	
   with	
   earlier	
   application	
   permitted.	
   The	
   Trust	
   is	
   currently	
   evaluating	
   the	
   impact	
   of	
   adopting	
   this	
   standard	
   on	
   the	
  
consolidated	
  financial	
  statements.	
  

Financial	
  instruments	
  	
  
The	
   final	
   version	
   of	
   IFRS	
   9,	
   “Financial	
   Instruments”	
   (“IFRS	
   9”),	
   was	
   issued	
   by	
   the	
   IASB	
   in	
   July	
   2014	
   and	
   will	
   replace	
   IAS	
   39,	
  
“Financial	
  Instruments:	
  Recognition	
  and	
  Measurement”.	
  IFRS	
  9	
  introduces	
  a	
  model	
  for	
  classification	
  and	
  measurement,	
  a	
  single,	
  
forward-‐looking	
   “expected	
   loss”	
   impairment	
   model,	
   and	
   a	
   substantially	
   reformed	
   approach	
   to	
   hedge	
   accounting.	
   The	
   new	
  
single,	
  principle-‐based	
  approach	
  for	
  determining	
  the	
  classification	
  of	
  financial	
  assets	
  is	
  driven	
  by	
  cash	
  flow	
  characteristics	
  and	
  
the	
   business	
   model	
   in	
   which	
   an	
   asset	
   is	
   held.	
   The	
   new	
   model	
   also	
   results	
   in	
   a	
   single	
   impairment	
   model	
   being	
   applied	
   to	
   all	
  
financial	
  instruments,	
  which	
  will	
  require	
  more	
  timely	
  recognition	
  of	
  expected	
  credit	
  losses.	
  It	
  also	
  includes	
  changes	
  in	
  respect	
  of	
  
own	
   credit	
   risk	
   in	
   measuring	
   liabilities	
   elected	
   to	
   be	
   measured	
   at	
   fair	
   value,	
   so	
   that	
   gains	
   caused	
   by	
   the	
   deterioration	
   of	
   an	
  
entity’s	
   own	
   credit	
   risk	
   on	
   such	
   liabilities	
   are	
   no	
   longer	
   recognized	
   in	
   profit	
   or	
   loss.	
   IFRS	
   9	
   is	
   effective	
   for	
   annual	
   periods	
  
beginning	
  on	
   or	
  after	
  January	
  1,	
  2018;	
  however,	
  it	
  is	
  available	
  for	
   early	
  adoption.	
  In	
  addition,	
  the	
  own	
   credit	
  changes	
   can	
  be	
  
early	
  adopted	
  in	
  isolation	
  without	
  otherwise	
  changing	
  the	
  accounting	
  for	
  financial	
  instruments.	
  The	
  Trust	
  is	
  currently	
  evaluating	
  
the	
  impact	
  of	
  adopting	
  this	
  standard	
  on	
  the	
  consolidated	
  financial	
  statements.	
  

Presentation	
  of	
  financial	
  statements	
  
IAS	
   1,	
   “Presentation	
   of	
   Financial	
   Statements”	
   (“IAS	
   1”),	
   was	
   amended	
   by	
   the	
   IASB	
   to	
   clarify	
   guidance	
   on	
   materiality	
   and	
  
aggregation,	
   the	
   presentation	
   of	
   subtotals,	
   the	
   structure	
   of	
   financial	
   statements	
   and	
   disclosure	
   of	
   accounting	
   policies.	
   The	
  
amendment	
  gives	
  guidance	
  that	
  information	
  within	
  the	
  consolidated	
  balance	
  sheets	
  and	
  statements	
  of	
  comprehensive	
  income	
  
should	
   not	
   be	
   aggregated	
   or	
   disaggregated	
   in	
   a	
   manner	
   that	
   obscures	
   useful	
   information,	
   and	
   that	
   disaggregation	
   may	
   be	
  
required	
  in	
  the	
  statement	
  of	
  comprehensive	
  income	
  in	
  the	
  form	
  of	
  additional	
  subtotals	
  as	
  they	
  are	
  relevant	
  to	
  understanding	
  
the	
   entity’s	
   financial	
   position	
   or	
   performance.	
   The	
   amendments	
   to	
   IAS	
   1	
   are	
   effective	
   for	
   periods	
   beginning	
   on	
   or	
   after	
  	
  
January	
  1,	
  2016.	
  The	
  Trust	
  is	
  currently	
  evaluating	
  the	
  impact	
  of	
  adopting	
  this	
  standard	
  on	
  the	
  consolidated	
  financial	
  statements.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  96	
  

	
  
	
  
Equity	
  accounting	
  for	
  investments	
  in	
  associates	
  and	
  joint	
  ventures	
  
IAS	
  28,	
  “Investments	
  in	
  Associates	
  and	
  Joint	
  Ventures”	
  (“IAS	
  28”),	
  was	
  amended	
  by	
  the	
  IASB	
  to	
  allow	
  an	
  entity	
  which	
  is	
  not	
  an	
  
investment	
  entity,	
  but	
  has	
  interest	
  in	
  an	
  associate	
  or	
  joint	
  venture	
  which	
  is	
  an	
  investment	
  entity,	
  a	
  policy	
  choice	
  when	
  applying	
  
the	
  equity	
  method	
  of	
  accounting.	
  The	
  entity	
  may	
  choose	
  to	
  retain	
  the	
  fair	
  value	
  measurement	
  applied	
  by	
  the	
  investment	
  entity	
  
associate	
   or	
   joint	
   venture,	
   or	
   to	
   unwind	
   the	
   fair	
   value	
   measurement	
   and	
   instead	
   perform	
   a	
   consolidation	
   at	
   the	
   level	
   of	
   the	
  
investment	
   entity	
   associate	
   or	
   joint	
   venture.	
  The	
   amendments	
   to	
   IAS	
   28	
   are	
   effective	
   for	
   periods	
   beginning	
   on	
   or	
   after	
  	
  
January	
  1,	
  2016.	
  The	
  Trust	
  is	
  currently	
  evaluating	
  the	
  impact	
  of	
  adopting	
  this	
  standard	
  on	
  the	
  consolidated	
  financial	
  statements.	
  

Note	
  7	
  	
  
PROPERTY	
  ACQUISITIONS	
  	
  
For	
   the	
   year	
   ended	
   December	
   31,	
   2014,	
   there	
   were	
   no	
   acquisitions	
   completed.	
   For	
   the	
   year	
   ended	
   December	
   31,	
   2013,	
   the	
  
following	
  acquisitions	
  were	
  completed:	
  

Property	
  
Broadmoor	
  Plaza,	
  Edmonton	
  
887	
  Great	
  Northern	
  Way,	
  Vancouver	
  

(Discovery	
  Parks)	
  

340–350	
  3rd	
  Avenue	
  North,	
  Saskatoon	
  	
  

(T&T	
  Towers)	
  and	
  14505–14555	
  Bannister	
  Road,	
  

	
   Calgary	
  (Parke	
  at	
  Fish	
  Creek)	
  
20	
  Toronto	
  Street	
  and	
  137	
  Yonge	
  Street,	
  

Toronto	
  

212	
  King	
  Street	
  West,	
  Toronto	
  
IBM	
  Corporate	
  Park,	
  Calgary	
  
4561	
  Parliament	
  Avenue,	
  Regina	
  

(Harbour	
  Landing	
  Business	
  Park)	
  

83	
  Yonge	
  Street,	
  Toronto	
  
Total	
  

(1)	
  Includes	
  transaction	
  costs.	
  

Interest	
  

acquired	
  

Property	
  type	
  
office	
  	
  

(%)	
  
100.0	
  	
   $	
  

Purchase	
  	
  
price(1)	
  	
  
	
  84,892	
  

	
  $	
  

Fair	
  value	
  of	
  	
  

mortgage	
  	
  	
  

assumed	
  
	
  -‐	
  

Date	
  acquired	
  	
  
March	
  15,	
  2013	
  

Year	
  ended	
  December	
  31,	
  2013 

office	
  	
  

100.0	
  	
  

	
  68,068	
  

	
  31,405	
  

April	
  8,	
  2013	
  

office	
  	
  

100.0	
  	
  

	
  62,610	
  

	
  145,983	
  
	
  38,730	
  
	
  124,377	
  

office	
  	
  
office	
  	
  
office	
  	
  

office	
  	
  
office	
  	
  

100.0	
  	
  
100.0	
  	
  
66.7	
  	
  

100.0	
  	
  
100.0	
  	
  

	
  	
   $	
  

	
  -‐	
  

	
  -‐	
  
	
  -‐	
  
	
  -‐	
  

April	
  12,	
  2013	
  

April	
  30,	
  2013	
  
May	
  24,	
  2013	
  
August	
  13,	
  2013	
  

	
  15,517	
  
	
  8,481	
  
548,658	
  

	
  $	
  

	
  -‐	
  
	
  -‐	
  
31,405	
  

	
   September	
  16,	
  2013	
  
December	
  2,	
  2013	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  97	
  

	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
 
 
 
 
 
 
 
 
 
 
 
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
 
 
 
 
 
 
 
 
 
 
 
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
   
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
 	
  
 	
  
	
  
	
  
	
  	
  
	
  	
  
 
Note	
  8	
  
INVESTMENT	
  PROPERTIES	
  

Balance	
  at	
  beginning	
  of	
  year	
  
Additions:	
  

Property	
  acquisitions	
  
Transfer	
  of	
  interest	
  from	
  investment	
  in	
  joint	
  ventures(1)	
  
Building	
  improvements	
  
Lease	
  incentives	
  and	
  initial	
  direct	
  leasing	
  costs	
  

Total	
  additions	
  to	
  investment	
  properties	
  
Dispositions:	
  

Investment	
  properties	
  disposed	
  of	
  during	
  the	
  year	
  

Total	
  dispositions	
  of	
  investment	
  properties	
  
Gains	
  and	
  losses	
  included	
  in	
  net	
  income:	
  

Fair	
  value	
  adjustments	
  to	
  investment	
  properties	
  
Amortization	
  of	
  lease	
  incentives	
  

Total	
  gains	
  (losses)	
  included	
  in	
  net	
  income	
  
Gains	
  and	
  losses	
  included	
  in	
  other	
  comprehensive	
  income:	
  

Foreign	
  currency	
  translation	
  gain	
  and	
  other	
  

Note	
  

	
  $	
  

7	
  

26	
  

Year	
  ended	
  December	
  31,	
  
2013	
  
	
  5,477,560	
  

2014	
  
	
  6,241,685	
  

	
  $	
  

	
  -‐	
  

	
  -‐	
  
	
  29,979	
  
	
  47,414	
  
	
  77,393	
  

	
  (53,947)	
  
	
  (53,947)	
  

	
  (124,303)	
  
	
  (9,893)	
  
	
  (134,196)	
  

	
  548,658	
  

	
  61,823	
  
	
  31,023	
  
	
  37,442	
  
	
  678,946	
  

	
  -‐	
  
	
  -‐	
  

	
  85,745	
  
	
  (6,471)	
  
	
  79,274	
  

	
  8,135	
  
	
  8,135	
  
	
  6,139,070	
  

	
  5,905	
  
	
  5,905	
  
	
  6,241,685	
  

Total	
  gains	
  included	
  in	
  other	
  comprehensive	
  income	
  
Balance	
  at	
  end	
  of	
  year	
  
Change	
  in	
  unrealized	
  gains	
  (losses)	
  included	
  in	
  net	
  income	
  for	
  the	
  year	
  
	
  Change	
  in	
  fair	
  value	
  of	
  investment	
  properties	
  
(1)	
   On	
  August	
  13,	
  2013,	
  the	
  Trust	
  acquired	
  the	
  remaining	
  66.7%	
  interest	
   in	
  IBM	
  Corporate	
  Park	
   in	
  Calgary.	
  Prior	
  to	
  August	
  13,	
  2013,	
  the	
  Trust	
  held	
   a	
  33.3%	
  

	
  (123,064)	
  

	
  85,745	
  

	
  $	
  

	
  $	
  

	
  $	
  

	
  $	
  

interest	
  in	
  the	
  property	
  through	
  a	
  partnership	
  interest	
  and	
  accounted	
  for	
  it	
  as	
  a	
  joint	
  venture.	
  

Investment	
  properties	
  have	
  been	
  reduced	
  by	
  $33,382	
  (December	
  31,	
  2013	
  –	
  $29,661)	
  related	
  to	
  straight-‐line	
  rent	
  receivables,	
  
which	
  have	
  been	
  reclassiﬁed	
  to	
  other	
  non-‐current	
  assets	
  (see	
  Note	
  11).	
  Refer	
  to	
  Note	
  31	
  for	
  disclosures	
  surrounding	
  fair	
  value	
  
measurements	
  over	
  investment	
  properties.	
  

The	
   key	
   valuation	
   metrics	
   for	
   investment	
   properties,	
   including	
   properties	
   in	
   joint	
   ventures,	
   and	
   excluding	
   assets	
   related	
   to	
  
assets	
  held	
  for	
  sale,	
  are	
  set	
  out	
  below:	
  

Capitalization	
  rate	
  (“cap	
  rate”)	
  (%)	
  
Investment	
  properties	
  
Investment	
  in	
  joint	
  ventures	
  
Total	
  portfolio	
  

December	
  31,	
  2014	
  

	
   Weighted	
  

December	
  31,	
  2013	
  

	
   Weighted	
  

Range	
  
	
   5.15–9.00	
  
	
   5.15–6.00	
  
	
   5.15–9.00	
  

average	
  
6.32	
  
5.29	
  
6.17	
  

Range	
  
	
   5.25–9.00	
  
	
   5.15–6.00	
  
	
   5.15–9.00	
  

average	
  
6.34	
  
5.29	
  
6.19	
  

Generally,	
   an	
   increase	
   in	
   stabilized	
   net	
   operating	
   income	
   (“NOI”)	
   will	
   result	
   in	
   an	
   increase	
   to	
   the	
   fair	
   value	
   of	
   an	
   investment	
  
property.	
  An	
  increase	
  in	
  the	
  capitalization	
  rate	
  (“cap	
  rate”)	
  will	
  result	
  in	
  a	
  decrease	
  to	
  the	
  fair	
  value	
  of	
  an	
  investment	
  property.	
  
The	
  cap	
  rate	
  magnifies	
  the	
  effect	
  of	
  a	
  change	
  in	
  stabilized	
  NOI,	
  with	
  a	
  lower	
  rate	
  resulting	
  in	
  a	
  greater	
  impact	
  to	
  the	
  fair	
  value	
  of	
  
an	
  investment	
  property	
  than	
  a	
  higher	
  rate.	
  	
  

If	
  the	
  weighted	
  average	
  cap	
  rate	
  were	
  to	
  increase	
  by	
  25	
  basis	
  points	
  (“bps”),	
  the	
  value	
  of	
  investment	
  properties	
  (excluding	
  joint	
  
ventures	
   and	
   assets	
   held	
   for	
   sale)	
   would	
   decrease	
   by	
   $241,762.	
   If	
   the	
   cap	
   rate	
   were	
   to	
   decrease	
   by	
   25	
   bps,	
   the	
   value	
   of	
  
investment	
  properties	
  (excluding	
  joint	
  ventures	
  and	
  assets	
  held	
  for	
  sale)	
  would	
  increase	
  by	
  $262,059.	
  

Investment	
  properties,	
  including	
  investment	
  in	
  joint	
  ventures	
  and	
  excluding	
  assets	
  held	
  for	
  sale,	
  with	
  an	
  aggregate	
  fair	
  value	
  of	
  
$2,475,687	
   for	
   the	
   year	
   ended	
   December	
   31,	
   2014	
   (for	
   the	
   year	
   ended	
   December	
   31,	
   2013	
   –	
   $2,045,384),	
   were	
   valued	
   by	
  
qualiﬁed	
  external	
  valuation	
  professionals.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  98	
  

	
  
	
  
	
  
	
  	
  
	
  
	
  
	
   	
  
	
   	
  
	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
  
	
   	
  
	
   	
  
	
  
	
  
	
  
	
  
	
   	
  
	
  
	
  
	
   	
  
	
   	
  
	
  
	
  
	
   	
  
	
   	
  
	
  
	
   	
  
	
   	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
  
	
  
	
   	
  
	
   	
  
	
  
	
   	
  
	
   	
  
	
  
	
   	
   	
  
	
  
	
   	
  
	
  
	
  
	
   	
  
	
   	
  
	
  
	
   	
  
	
   	
  
	
  
	
   	
  
	
   	
  
	
  
	
   	
   	
  
	
  
	
   	
  
	
  
	
  
	
   	
  
	
   	
  
	
  
	
   	
  
	
   	
  
	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
Investment	
  properties,	
  including	
  investment	
  in	
  joint	
  ventures	
  and	
  excluding	
  assets	
  held	
  for	
  sale,	
  with	
  a	
  fair	
  value	
  of	
  $5,768,109	
  
as	
  at	
  December	
  31,	
  2014	
  (December	
  31,	
  2013	
  –	
  $5,939,978),	
  are	
  pledged	
  as	
  security	
  for	
  the	
  associated	
  mortgages.	
  

Investment	
  properties,	
  including	
  investment	
  in	
  joint	
  ventures	
  and	
  excluding	
  assets	
  held	
  for	
  sale,	
  pledged	
  as	
  security	
  for	
  demand	
  
revolving	
  credit	
  facilities	
  and	
  term	
  loan	
  facility,	
  are	
  as	
  follows:	
  

Number	
  of	
  properties	
  	
  

Fair	
  value	
  

December	
  31,	
  	
  

December	
  31,	
  

December	
  31,	
  	
  

December	
  31,	
  

Ranking	
  	
  

2014	
  

2013	
  

2014	
  

2013	
  

Facilities	
  
Demand	
  revolving	
  credit	
  facilities:	
  

Formula-‐based	
  maximum	
  not	
  to	
  	
  

exceed	
  $171,500	
  

Formula-‐based	
  maximum	
  not	
  to	
  	
  

exceed	
  $27,690	
  

Formula-‐based	
  maximum	
  not	
  to	
  	
  

first	
  ranking	
  	
  

first	
  ranking	
  	
  

exceed	
  $35,000	
  	
  

second	
  ranking	
  	
  

Formula-‐based	
  maximum	
  not	
  to	
  	
  

exceed	
  $35,000	
  	
  

Term	
  loan	
  facility	
  
Total	
  

first	
  ranking	
  	
  
second	
  ranking	
  	
  
first	
  ranking	
  	
  

	
  9	
   	
  

	
  2	
   	
  

	
  2	
   	
  

	
  1	
   	
  
	
  1	
   	
  
	
  8	
   	
  
	
  23	
   	
  

	
  9	
   	
  

$	
  

	
  256,258	
   	
  

$	
  

	
  259,158	
  

	
  2	
   	
  

	
  2	
   	
  

	
  1	
   	
  
	
  1	
   	
  
	
  8	
   	
  
	
  23	
   	
  

	
  41,993	
   	
  

	
  42,700	
  

	
  167,688	
   	
  

	
  212,209	
  

	
  38,326	
   	
  
	
  117,345	
   	
  
	
  307,097	
   	
  
	
  928,707	
   	
  

$	
  

	
  36,400	
  
	
  114,100	
  
	
  308,050	
  
	
  972,617	
  

$	
  

Note	
  9	
  
INVESTMENT	
  IN	
  DREAM	
  INDUSTRIAL	
  REIT	
  
Dream	
   Industrial	
   REIT,	
   formerly	
   known	
   as	
   Dundee	
   Industrial	
   REIT,	
   is	
   an	
   unincorporated,	
   open-‐ended	
   real	
   estate	
   investment	
  
trust	
  listed	
  on	
  the	
  Toronto	
  Stock	
  Exchange	
  under	
  the	
  symbol	
  “DIR.UN.”.	
  	
  Dream	
  Industrial	
  REIT	
  owns	
  a	
  portfolio	
  of	
  216	
  primarily	
  
light	
  industrial	
  properties	
  comprising	
  approximately	
  17	
  million	
  square	
  feet	
  of	
  gross	
  leasable	
  area.	
  	
  

On	
  September	
  9,	
  2014,	
  the	
  Trust	
  completed	
  the	
  sale	
  of	
  four	
  investment	
  properties	
  to	
  Dream	
  Industrial	
  REIT	
  for	
  a	
  sale	
  price	
  of	
  
$33,000,	
  net	
  of	
  mark-‐to-‐market	
  adjustments	
  on	
  mortgages	
  assumed	
  by	
  Dream	
  Industrial	
  REIT.	
  The	
  sale	
  price	
  was	
  satisfied	
  by	
  
receipt	
  of	
  2,269,759	
  Class	
  B	
  limited	
  partnership	
  units	
  of	
  Dream	
  Industrial	
  LP	
  (a	
  subsidiary	
  of	
  Dream	
  Industrial	
  REIT)	
  at	
  $9.40	
  per	
  
unit,	
  which	
  are	
  exchangeable	
  for	
  units	
  of	
  Dream	
  Industrial	
  REIT,	
  offset	
  by	
  mortgages	
  assumed	
  on	
  disposition.	
  	
  	
  

As	
   part	
   of	
   other	
   transactions	
   entered	
   into	
   by	
   Dream	
   Industrial	
   REIT	
   during	
   the	
   years	
   ended	
   December	
   31,	
   2014	
   and	
  	
  
December	
  31,	
  2013,	
  Dream	
  Industrial	
  REIT	
  issued	
  additional	
  units	
  as	
  partial	
  consideration,	
  which	
  resulted	
  in	
  a	
  net	
  change	
  to	
  the	
  
Trust’s	
  ownership	
  to	
  24.2%	
  and	
  22.9%,	
  respectively.	
  

Balance	
  as	
  at	
  beginning	
  of	
  year	
  
Units	
  received	
  on	
  sale	
  of	
  properties	
  to	
  Dream	
  Industrial	
  REIT	
  
Units	
  purchased	
  through	
  Distribution	
  Reinvestment	
  Plan	
  
Distributions	
  received	
  
Share	
  of	
  net	
  income	
  from	
  investment	
  in	
  Dream	
  Industrial	
  REIT	
  
Dilution	
  gain	
  (loss)	
  
Balance	
  as	
  at	
  end	
  of	
  year	
  
Dream	
  Industrial	
  LP	
  Class	
  B	
  limited	
  partnership	
  units	
  held,	
  end	
  of	
  year	
  
Ownership	
  %,	
  end	
  of	
  year	
  

	
  $	
  

	
  $	
  

Year	
  ended	
  December	
  31,	
  

2014	
  
	
  166,317	
  
	
  21,336	
  
	
  -‐	
  
	
  (11,927)	
  
	
  16,225	
  
	
  (260)	
  
	
  191,691	
  
	
  18,551,855	
  
24.2%	
  

	
  $	
  

	
  $	
  

2013	
  
	
  160,976	
  
	
  -‐	
  
	
  939	
  
	
  (11,295)	
  
	
  13,720	
  
	
  1,977	
  
	
  166,317	
  
	
  16,282,096	
  
22.9%	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  99	
  

	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
 
 
 
 
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
At	
   December	
   31,	
   2014,	
   the	
   fair	
   value	
   of	
   the	
   Trust’s	
   interest	
   in	
   Dream	
   Industrial	
   REIT	
   was	
   $156,206	
   (December	
   31,	
   2013	
   –	
  
$144,096).	
  

External	
  market	
  conditions	
  have	
  caused	
  a	
  decline	
  in	
  the	
  unit	
  price	
  of	
  Dream	
  Industrial	
  REIT	
  since	
  the	
  second	
  quarter	
  of	
  2013,	
  
resulting	
  in	
  the	
  carrying	
  value	
  to	
  be	
  above	
  the	
  market	
  value.	
  Under	
  IAS	
  39,	
  “Financial	
  Instruments”,	
  a	
  significant	
  or	
  prolonged	
  
decline	
  in	
  the	
  fair	
  value	
  of	
  an	
  investment	
  in	
  an	
  equity	
  instrument	
  above	
  its	
  cost	
  is	
  an	
  indicator	
  of	
  impairment.	
  As	
  a	
  result,	
  the	
  
Trust	
  performed	
  an	
  impairment	
  test	
  as	
  at	
  December	
  31,	
  2014,	
  by	
  comparing	
  the	
  recoverable	
  amount	
  of	
  its	
  investment	
  in	
  Dream	
  
Industrial	
   REIT	
   using	
   the	
   value-‐in-‐use	
   approach	
   to	
   its	
   carrying	
   value.	
   Based	
   on	
   the	
   impairment	
   test	
   performed,	
   the	
   Trust	
  
concluded	
  that	
  no	
  impairment	
  existed	
  as	
  at	
  December	
  31,	
  2014.	
  	
  	
  

The	
  following	
  amounts	
  represent	
  the	
  Trust’s	
  ownership	
  interest	
  in	
  the	
  assets,	
  liabilities,	
  revenues,	
  expenses	
  and	
  cash	
  flows	
  of	
  
Dream	
  Industrial	
  REIT:	
  

At	
  100%	
  

At	
  %	
  ownership	
  interest	
  

Non-‐current	
  assets	
  
Current	
  assets	
  
Total	
  assets	
  
Non-‐current	
  liabilities	
  
Current	
  liabilities	
  
Total	
  liabilities	
  
Net	
  assets	
  	
  
Add-‐back:	
  
	
  	
  	
  	
  Subsidiary	
  redeemable	
  units	
  
Investment	
  in	
  Dream	
  Industrial	
  REIT	
  

Net	
  rental	
  income 
Other	
  revenue	
  and	
  expenses,	
  fair	
  value	
  adjustments	
  and 

other	
  items 

Net	
  income	
  before	
  the	
  undernoted	
  adjustments 
Add-‐back: 

Interest	
  on	
  subsidiary	
  redeemable	
  units 
Fair	
  value	
  adjustments	
  to	
  subsidiary	
  redeemable	
  units 

Share	
  of	
  net	
  income	
  from	
  investment	
  in	
  Dream	
  Industrial	
  REIT 
Add	
  (deduct): 
  Dilution	
  gain	
  (loss) 
Share	
  of	
  net	
  income	
  and	
  dilution	
  gain	
  (loss)	
  from	
  investment 

in	
  Dream	
  Industrial	
  REIT 

2014	
  
	
  1,723,693	
  
	
  19,017	
  
	
  1,742,710	
  
	
  947,970	
  
	
  166,089	
  
	
  1,114,059	
  
	
  628,651	
  

	
  $	
  

	
  $	
  

	
  $	
  
	
  $	
  

	
  $	
  

	
  $	
  

	
  $	
  
	
  $	
  

December	
  31,	
  	
  

2013	
  
	
  1,581,282	
  
	
  8,523	
  
	
  1,589,805	
  
	
  883,795	
  
	
  135,194	
  
	
  1,018,989	
  
	
  570,816	
  

At	
  100	
  % 
Year	
  ended	
  December	
  31,  
2013 
2014 
	
  98,927 
	
  112,764 

 $ 

	
  (44,763) 
68,001   $ 

	
  (14,946) 
83,981 

  $ 

  $ 

	
  $	
  

	
  $	
  

	
  $	
  
	
  $	
  

	
  $	
  

 $ 

 $ 

 $ 

2014	
  
	
  399,025	
  
	
  4,402	
  
	
  403,427	
  
	
  339,496	
  
	
  28,446	
  
	
  367,942	
  
	
  35,485	
  

	
  156,206	
  
	
  191,691	
  

	
  $	
  

	
  $	
  

	
  $	
  
	
  $	
  

	
  $	
  

December	
  31,	
  	
  

2013	
  
	
  367,869	
  
	
  1,982	
  
	
  369,851	
  
	
  316,179	
  
	
  31,451	
  
	
  347,630	
  
	
  22,221	
  

	
  144,096	
  
	
  166,317	
  

At	
  %	
  ownership	
  interest 

Year	
  ended	
  December	
  31, 
2013 
2014 
	
  23,809 
	
  26,104 

 $ 

	
  (11,967) 
14,137 

 $ 

	
  16,884 
40,693 

	
  11,927  
	
  (9,839)  
	
  16,225 

 $ 

	
  11,295 
	
  (38,268) 
	
  13,720 

	
  (260) 

	
  1,977 

 $ 

	
  15,965 

 $ 

	
  15,697 

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  100	
  

	
  
	
  
	
  
	
  
	
  
	
  
	
  
 
 
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
  
 
  
 
 
 
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
  
 
 
 
 
  
 
  
 
 
 
 
 
  
 
 
 
 
  
 
  
 
  
 
 
 
 
  
 
  
  
 
 
 
  
 
  
 
  
 
 
 
 
  
 
 
 
 
 
 
 
 
 
  
 
  
 
	
  
	
  
	
  
Note	
  10	
  
JOINT	
  ARRANGEMENTS	
  
The	
  Trust	
  participates	
  in	
  partnerships	
  (“joint	
  ventures”)	
  with	
  other	
  parties	
  that	
  own	
  investment	
  properties	
  and	
  accounts	
  for	
  its	
  
interests	
  using	
  the	
  equity	
  method.	
  

On	
  August	
  13,	
  2013,	
  the	
  Trust	
  acquired	
  the	
  remaining	
  two-‐thirds	
  interest	
  in	
  IBM	
  Corporate	
  Park	
  in	
  Calgary	
  for	
  approximately	
  
$124,377	
  (including	
  transaction	
  costs).	
  Prior	
  to	
  August	
  13,	
  2013,	
  the	
  Trust	
  held	
  a	
  one-‐third	
  interest	
  in	
  the	
  property	
  through	
  a	
  
partnership	
  interest	
  and	
  accounted	
  for	
  it	
  as	
  a	
  joint	
  venture.	
  	
  	
  

On	
   June	
   26,	
   2013,	
   the	
   Trust	
   acquired	
   a	
   two-‐thirds	
   interest	
   in	
   100	
   Yonge	
   Street,	
   an	
   office	
   building	
   in	
   downtown	
   Toronto,	
   for	
  
approximately	
  $56,273	
  (including	
  transaction	
  costs).	
  The	
  Trust	
  has	
  entered	
  into	
  a	
  joint	
  venture	
  with	
  H&R	
  REIT,	
  the	
  owner	
  of	
  the	
  
remaining	
  one-‐third	
  interest	
  in	
  this	
  office	
  building.	
  The	
  acquisition	
  was	
  funded	
  by	
  the	
  assumption	
  of	
  a	
  mortgage	
  of	
  $25,477	
  (at	
  
fair	
  value)	
  with	
  the	
  balance	
  funded	
  by	
  cash.	
  

The	
  investment	
  properties	
  that	
  the	
  joint	
  ventures	
  hold	
  are	
  consistent	
  in	
  terms	
  of	
  the	
  class	
  and	
  type	
  of	
  properties	
  held	
  in	
  the	
  
Trust’s	
  portfolio.	
  

Property 
Scotia	
  Plaza 
Other	
  joint	
  ventures: 
100	
  Yonge	
  Street 
Telus	
  Tower 

Property 
Scotia	
  Plaza 
Other	
  joint	
  ventures 
Total	
  net	
  assets 

Location 

  Toronto,	
  Ontario 

  Toronto,	
  Ontario 
  Calgary,	
  Alberta 

December	
  31,	
    
2014 
	
  66.7 

Ownership	
  interest	
  (%) 
December	
  31,	
   
2013 
	
  66.7 

	
  66.7 
	
  50.0 

	
  66.7 
	
  50.0 

Net	
  assets	
  at	
  %	
  ownership	
  interest 
as	
  at	
  December	
  31,	
   
2013 
	
  430,681 
	
  96,574 
	
  527,255 

2014 
	
  448,906 
	
  104,235 
	
  553,141 

  $ 

  $ 

$ 

$ 

Share	
  of	
  net	
  income	
  (loss)	
  at	
   
%	
  ownership	
  interest 
for	
  the	
  year	
  ended	
  December	
  31,	
   
2013 
Property 
	
  57,441 
Scotia	
  Plaza 
Other	
  joint	
  ventures(1) 
	
  26,941 
Share	
  of	
  net	
  income	
  from	
  investment	
  in	
  joint	
  ventures 
84,382 
(1)	
  Other	
  joint	
  ventures	
  consist	
  of	
  the	
  share	
  of	
  net	
  income	
  (loss)	
  from	
  Capital	
  Centre,	
  Plaza	
  124,	
  Riverbend	
  Atrium	
  and	
  Stockman	
  Centre,	
  which	
  were	
  reclassified	
  

2014 
	
  31,345 
	
  6,266 
	
  37,611 

  $ 

  $ 

$ 

$ 

as	
  assets	
  held	
  for	
  sale	
  as	
  at	
  December	
  31,	
  2013. 

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  101	
  

 
 
   
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
	
  
	
  
	
  
	
  
	
  
The	
  following	
  amounts	
  represent	
  100%	
  and	
  the	
  Trust’s	
  ownership	
  interest	
  in	
  the	
  assets,	
  liabilities,	
  revenues,	
  expenses	
  and	
  cash	
  
ﬂows	
  in	
  the	
  equity	
  accounted	
  investments	
  in	
  which	
  the	
  Trust	
  participates,	
  excluding	
  the	
  interest	
  in	
  Dream	
  Industrial	
  REIT,	
  which	
  
is	
  disclosed	
  separately	
  in	
  Note	
  9.	
  

Scotia	
  Plaza	
  

At	
  100%	
  

Scotia	
  Plaza	
  

At	
  66.7%	
  

December	
  31,	
   	
  

December	
  31,	
  

Non-‐current	
  assets	
  
Current	
  assets	
  
Total	
  assets	
  
Non-‐current	
  liabilities	
  
Current	
  liabilities	
  
Total	
  liabilities	
  
Net	
  assets	
  

2014	
  
	
  1,316,805	
  
	
  14,150	
  
	
  1,330,955	
  
	
  599,255	
  
	
  58,341	
  
	
  657,596	
  
	
  673,359	
  

	
  $	
  

	
  $	
  

	
  $	
  
	
  $	
  

2013	
  
	
  1,308,542	
  
	
  5,306	
  
	
  1,313,848	
  
	
  612,603	
  
	
  55,221	
  
	
  667,824	
  
	
  646,024	
  

	
  $	
  

	
  $	
  

	
  $	
  
	
  $	
  

Net	
  rental	
  income	
  
Other	
  income	
  and	
  expenses,	
  fair	
  value	
  adjustments,	
  net	
  
	
  	
  	
  gains	
  (losses)	
  on	
  transactions	
  and	
  other	
  activities	
  

Net	
  income	
  for	
  the	
  year	
  

	
   $	
  

	
   $	
  

Scotia	
  Plaza	
  

At	
  100%	
  

Year	
  ended	
  December	
  31,	
   
2013	
  
2014	
  
	
  70,211	
  
	
  70,404	
  

	
  $	
  

	
  (23,387)	
  
	
  47,017	
  

	
  $	
  

	
  15,950	
  
	
  86,161	
  

2014	
  
	
  877,870	
  
	
  9,433	
  
	
  887,303	
  
	
  399,503	
  
	
  38,894	
  
	
  438,397	
  
	
  448,906	
  

	
  $	
  

	
  $	
  

	
  $	
  
	
  $	
  

2013	
  
	
  872,360	
  
	
  3,537	
  
	
  875,897	
  
	
  408,402	
  
	
  36,814	
  
	
  445,216	
  
	
  430,681	
  

Scotia	
  Plaza	
  

At	
  66.7%	
  

Year	
  ended	
  December	
  31,	
  

2014	
  
	
  46,936	
  

	
  (15,591)	
  
	
  31,345	
  

	
  $	
  

	
  $	
  

2013	
  
	
  46,807	
  

	
  10,634	
  
	
  57,441	
  

	
  $	
  

	
  $	
  

	
  $	
  
	
  $	
  

	
  $	
  

	
  $	
  

Scotia	
  Plaza	
  

At	
  100%	
  

Year	
  ended	
  December	
  31,	
   
2013	
  
2014	
  

Scotia	
  Plaza	
  

At	
  66.7%	
  

Year	
  ended	
  December	
  31,	
  

2014	
  

2013	
  

Cash	
  flow	
  generated	
  from	
  (utilized	
  in):	
  

Operating	
  activities	
  
Investing	
  activities	
  
Financing	
  activities	
  

Increase	
  (decrease)	
  in	
  cash	
  and	
  cash	
  equivalents	
  

	
  $	
  

	
   $	
  

	
  43,976	
  
	
  (710)	
  
	
  (33,468)	
  
	
  9,798	
  

	
  $	
  

	
  $	
  

	
  44,502	
  
	
  (1,310)	
  
	
  (44,834)	
  
	
  (1,642)	
  

	
  $	
  

	
  $	
  

	
  29,317	
  
	
  (473)	
  
	
  (22,312)	
  
	
  6,532	
  

	
  $	
  

	
  $	
  

	
  29,668	
  
	
  (873)	
  
	
  (29,890)	
  
	
  (1,095)	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  102	
  

 
 
 
 
 
 
 
 
	
    
 
 
	
  
	
  
 
 
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
 
 
 
 
 
 
 
 
 
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
 
 
 
 
 
 
 
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
 
 
Non-‐current	
  assets 
Current	
  assets 
Total	
  assets 
Non-‐current	
  liabilities 
Current	
  liabilities 
Total	
  liabilities 
Net	
  assets 

Other	
  joint	
  ventures 
At	
  100% 

Other	
  joint	
  ventures 
At	
  proportionate	
  share 

2014 
	
  360,801 
	
  2,879 
	
  363,680 
	
  160,704 
	
  9,139 
	
  169,843 
	
  193,837 

 $ 

 $ 

 $ 
 $ 

December	
  31,   

2013 
	
  357,823 
	
  4,576 
	
  362,399 
	
  165,305 
	
  18,188 
	
  183,493 
	
  178,906 

 $ 

 $ 

 $ 
 $ 

2014 
	
  193,413 
	
  1,569 
	
  194,982 
	
  85,780 
	
  4,967 
	
  90,747 
	
  104,235 

 $ 

 $ 

 $ 
 $ 

December	
  31, 
2013 
	
  191,880 
	
  2,319 
	
  194,199 
	
  88,243 
	
  9,382 
	
  97,625 
	
  96,574 

 $ 

 $ 

 $ 
 $ 

Other	
  joint	
  ventures(1) 
At	
  100% 

Other	
  joint	
  ventures(1) 
At	
  proportionate	
  share 

Net	
  rental	
  income 
Other	
  income	
  and	
  expenses,	
  fair	
  value	
  adjustments,	
  net 
	
  12,356 
	
  	
  	
  gains	
  (losses)	
  on	
  transactions	
  and	
  other	
  activities 
Net	
  income	
  (loss)	
  for	
  the	
  year 
	
  26,941 
(1)	
  Other	
  joint	
  ventures	
  consist	
  of	
  the	
  share	
  of	
  net	
  income	
  (loss)	
  from	
  Capital	
  Centre,	
  Plaza	
  124,	
  Riverbend	
  Atrium	
  and	
  Stockman	
  Centre,	
  which	
  were	
  reclassified	
  

	
  (16,879) 
	
  9,815 

	
  (7,240) 
	
  6,266 

	
  35,812 
	
  69,553 

 $ 

 $ 

 $ 

 $ 

 $ 

 $ 

 $ 

 $ 

Year	
  ended	
  December	
  31,   
2014 
	
  26,694 

2013 
	
  33,741 

Year	
  ended	
  December	
  31, 
2014 
2013 
	
  14,585 
	
  13,506 

as	
  assets	
  held	
  for	
  sale	
  as	
  at	
  December	
  31,	
  2013. 

Cash	
  flow	
  generated	
  from	
  (utilized	
  in): 

Operating	
  activities 
Investing	
  activities 
Financing	
  activities 

  $ 

Other	
  joint	
  ventures(1) 
At	
  100% 

	
  Year	
  ended	
  December	
  31,  
2013 
2014 

Other	
  joint	
  ventures(1) 
At	
  proportionate	
  share 

	
  Year	
  ended	
  December	
  31, 
2013 
2014 

 $ 

	
  13,373 
	
  64,504 
	
  (80,419) 
	
  (2,542) 

 $ 

	
  17,887 
	
  (9,077) 
	
  (14,127) 
	
  (5,317) 

 $ 

	
  8,279 
	
  14,442 
	
  (22,996) 
	
  (275) 

	
  9,193 
	
  (4,268) 
	
  (6,962) 
	
  (2,037) 

Decrease	
  in	
  cash	
  and	
  cash	
  equivalents 
  $ 
(1)	
  Other	
  joint	
  ventures	
  consist	
  of	
  the	
  share	
  of	
  cash	
  flows	
  generated	
  from	
  Capital	
  Centre,	
  Plaza	
  124,	
  Riverbend	
  Atrium	
  and	
  Stockman	
  Centre,	
  which	
  were	
  

 $ 

 $ 

 $ 

reclassified	
  as	
  assets	
  held	
  for	
  sale	
  as	
  at	
  December	
  31,	
  2013. 

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  103	
  

 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
  
  
  
  
 
  
 
  
 
  
 
  
  
  
  
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
   
 
   
 
  
 
  
 
 
 
  
  
  
 
 
  
  
  
	
  
	
  
	
  
Co-‐owned	
  investment	
  properties	
  	
  
The	
  Trust’s	
  interests	
  in	
  co-‐owned	
  investment	
  properties	
  are	
  accounted	
  for	
  based	
  on	
  the	
  Trust’s	
  share	
  of	
  interest	
  in	
  the	
  assets,	
  
liabilities,	
  revenues	
  and	
  expenses	
  of	
  the	
  properties.	
  	
  

Property	
  

10199	
  -‐	
  101st	
  Street	
  North	
  West	
  
St.	
  Albert	
  Trail	
  Centre	
  
2810	
  Matheson	
  Boulevard	
  East	
  
50	
  &	
  90	
  Burnhamthorpe	
  Road	
  (Sussex	
  Centre)	
  
300,	
  302	
  &	
  304	
  The	
  East	
  Mall	
  (Valhalla	
  Executive	
  Centre)	
  
680	
  Broadway	
  Street	
  (Tillsonburg	
  Gateway	
  Centre)	
  
185–195	
  The	
  West	
  Mall	
  
460	
  Two	
  Nations	
  Crossing	
  
350–450	
  Lansdowne	
  Street	
  
275	
  Dundas	
  Street	
  West	
  (London	
  City	
  Centre)	
  
80	
  Whitehall	
  Drive	
  
6501–6523	
  Mississauga	
  Road	
  
6531–6559	
  Mississauga	
  Road	
  
2010	
  Winston	
  Park	
  Drive	
  
219	
  Laurier	
  Avenue	
  West	
  
55	
  Norfolk	
  Street	
  South	
  
10	
  Lower	
  Spadina	
  Avenue	
  
49	
  Ontario	
  Street	
  
401	
  &	
  405	
  The	
  West	
  Mall	
  (Commerce	
  West)	
  
2261	
  Keating	
  Cross	
  Road	
  
117	
  Kearney	
  Lake	
  Road	
  
Centre	
  70	
  

Location	
  

	
   Edmonton,	
  Alberta	
  
	
   Edmonton,	
  Alberta	
  
	
   Mississauga,	
  Ontario	
  
	
   Mississauga,	
  Ontario	
  
	
   Mississauga,	
  Ontario	
  
	
   Tillsonburg,	
  Ontario	
  
	
   Toronto,	
  Ontario	
  
	
   Fredericton,	
  New	
  Brunswick	
  
	
   Kamloops,	
  British	
  Columbia	
  
	
   London,	
  Ontario	
  
	
   Markham,	
  Ontario	
  
	
   Mississauga,	
  Ontario	
  
	
   Mississauga,	
  Ontario	
  
	
   Oakville,	
  Ontario	
  
	
   Ottawa,	
  Ontario	
  
	
   Simcoe,	
  Ontario	
  
	
   Toronto,	
  Ontario	
  
	
   Toronto,	
  Ontario	
  
	
   Toronto,	
  Ontario	
  
	
   Victoria,	
  British	
  Columbia	
  
	
   Halifax,	
  Nova	
  Scotia	
  
	
   Calgary,	
  Alberta	
  

Ownership	
  interest	
  (%)	
  

December	
  31,	
  	
  

December	
  31,	
  

2014	
  
	
  50.0	
  
	
  -‐	
  
	
  49.9	
   	
  
	
  49.9	
   	
  
	
  49.9	
   	
  
	
  49.9	
   	
  
	
  49.9	
   	
  
	
  40.0	
   	
  
	
  40.0	
   	
  
	
  40.0	
   	
  
	
  40.0	
   	
  
	
  40.0	
   	
  
	
  40.0	
   	
  
	
  40.0	
   	
  
	
  40.0	
   	
  
	
  40.0	
   	
  
	
  40.0	
   	
  
	
  40.0	
   	
  
	
  40.0	
   	
  
	
  40.0	
   	
  
	
  35.0	
   	
  
	
  15.0	
  

2013	
  
	
  50.0	
  
	
  50.0	
  
	
  49.9	
  
	
  49.9	
  
	
  49.9	
  
	
  49.9	
  
	
  49.9	
  
	
  40.0	
  
	
  40.0	
  
	
  40.0	
  
	
  40.0	
  
	
  40.0	
  
	
  40.0	
  
	
  40.0	
  
	
  40.0	
  
	
  40.0	
  
	
  40.0	
  
	
  40.0	
  
	
  40.0	
  
	
  40.0	
  
	
  35.0	
  
	
  15.0	
  

The	
   following	
   amounts	
   represent	
   the	
   Trust’s	
   ownership	
   interest	
   in	
   the	
   assets,	
   liabilities,	
   revenues	
   and	
   expenses	
   of	
   the	
  	
  
co-‐owned	
  properties	
  in	
  which	
  the	
  Trust	
  participates.	
  

Non-‐current	
  assets	
  
Current	
  assets	
  
Total	
  assets	
  
Non-‐current	
  liabilities	
  
Current	
  liabilities	
  
Total	
  liabilities	
  
Net	
  assets	
  

Net	
  rental	
  income	
  
Other	
  income	
  and	
  expenses,	
  fair	
  value	
  adjustments,	
  net	
  gains	
  (losses)	
  

on	
  transactions	
  and	
  other	
  activities	
  

Share	
  of	
  net	
  income	
  from	
  investment	
  in	
  co-‐owned	
  properties	
  	
  

December	
  31,	
  	
  

December	
  31,	
  

2014	
  
	
  445,314	
  
	
  8,315	
  
	
  453,629	
  
	
  160,553	
  
	
  68,445	
  
	
  228,998	
  
	
  224,631	
  

	
  $	
  

	
  $	
  
	
  $	
  

	
  $	
  
	
  $	
  

2013	
  
	
  452,624	
  
	
  9,955	
  
	
  462,579	
  
	
  214,787	
  
	
  26,162	
  
	
  240,949	
  
	
  221,630	
  

Year	
  ended	
  December	
  31,	
  

2014	
  
	
  24,753	
  

	
  (12,652)	
  
	
  12,101	
  

	
  $	
  

	
  $	
  

2013	
  
	
  27,226	
  

	
  (18,823)	
  
	
  8,403	
  

	
  $	
  

	
  $	
  
	
  $	
  

	
  $	
  
	
  $	
  

	
  $	
  

	
  $	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  104	
  

	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
 
 
	
  
	
  	
  
	
  
 
 
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
Note	
  11	
  
OTHER	
  NON-‐CURRENT	
  ASSETS	
  

Property	
  and	
  equipment,	
  net	
  of	
  accumulated	
  depreciation	
  of	
  $4,813	
  (December	
  31,	
  2013	
  –	
  $3,135)	
  
Deposits	
  
Restricted	
  cash	
  
Straight-‐line	
  rent	
  receivable	
  
External	
  management	
  contracts,	
  net	
  of	
  accumulated	
  amortization	
  of	
  $3,749	
  

(December	
  31,	
  2013	
  –	
  $2,457)	
  

Goodwill	
  
Total	
  

December	
  31,	
  	
  

December	
  31,	
  	
  

	
  $	
  

2014	
  
	
  6,398	
  
	
  2,125	
  
	
  3,559	
  
	
  33,382	
  

2013	
  
	
  6,709	
  
	
  2,919	
  
	
  2,617	
  
	
  29,661	
  

	
  9,253	
  
	
  52,086	
  
	
  106,803	
  

	
  $	
  

	
  10,545	
  
	
  52,371	
  
	
  104,822	
  

	
  $	
  

	
  $	
  

Deposits	
   largely	
   represent	
   amounts	
   provided	
   by	
   the	
   Trust	
   in	
   connection	
   with	
   utility	
   deposits.	
   Restricted	
   cash	
   primarily	
  
represents	
  tenant	
  rent	
  deposits	
  and	
  cash	
  held	
  as	
  security	
  for	
  certain	
  mortgages.	
  

The	
  Trust	
  leases	
  various	
  vehicles	
  and	
  machinery	
  under	
  non-‐cancellable	
  ﬁnance	
  lease	
  agreements.	
  The	
  remaining	
  term	
  of	
  these	
  
leases	
  is	
  for	
  two	
  years.	
  

External	
  management	
  contracts	
  and	
  goodwill	
  

As	
  at	
  	
  January	
  1,	
  2013	
  
Amortization	
  of	
  external	
  management	
  contracts	
  	
  

As	
  at	
  December	
  31,	
  2013	
  
Amortization	
  of	
  external	
  management	
  contracts	
  	
  
Derecognition	
  of	
  goodwill	
  due	
  to	
  investment	
  properties	
  disposed	
  of	
  during	
  the	
  year	
  
As	
  at	
  December	
  31,	
  2014	
  

External	
   
management	
  

contracts	
  
	
  11,883	
  
	
  (1,338)	
  
	
  10,545	
  
	
  (1,292)	
  
	
  -‐	
  
	
  9,253	
  

	
  $	
  

	
  $	
  

	
  $	
  

	
  $	
  

Goodwill	
  
	
  52,371	
  
	
  -‐	
  
	
  52,371	
  
	
  -‐	
  
	
  (285)	
  
	
  52,086	
  

The	
  Trust	
  performed	
  its	
  annual	
  goodwill	
  impairment	
  test	
  as	
  at	
  December	
  31,	
  2014	
  in	
  accordance	
  with	
  the	
  methodology	
  set	
  out	
  
in	
  IAS	
  36,	
  by	
  comparing	
  the	
  recoverable	
  amount	
  of	
  the	
  goodwill	
  CGU	
  using	
  the	
  value-‐in-‐use	
  approach	
  to	
  its	
  carrying	
  amount.	
  
The	
  carrying	
  amount	
  of	
  goodwill	
  associated	
  with	
  each	
  geographical	
  segment	
  was:	
  	
  

Western	
  Canada	
  
Calgary	
  downtown	
  
Calgary	
  suburban	
  
Toronto	
  downtown	
  
Toronto	
  suburban	
  
Eastern	
  Canada	
  
Total	
  goodwill	
  

	
  $	
  

$	
  

	
  10,155	
  
	
  8,360	
  
	
  1,331	
  
	
  17,460	
  
	
  6,980	
  
	
  7,800	
  

	
  52,086	
  

For	
  the	
  purpose	
  of	
  this	
  impairment	
  test,	
  management	
  has	
  used	
  its	
  projected	
  financial	
  forecasts	
  for	
  a	
  period	
  of	
  ten	
  years.	
  The	
  
key	
  assumptions	
  used	
  included	
  estimated	
  growth	
  rate	
  and	
  discount	
  and	
  terminal	
  rates.	
  The	
  discount	
  and	
  terminal	
  rates	
  used	
  in	
  
this	
  impairment	
  test	
  ranged	
  from	
  4.92%	
  to	
  6.31%	
  depending	
  on	
  the	
  geographical	
  region.	
  

The	
  Trust	
  performed	
  a	
  sensitivity	
  analysis	
  on	
  each	
  of	
  the	
  key	
  assumptions,	
  assuming	
  a	
  100	
  bps	
  unfavourable	
  change	
  for	
  each	
  of	
  
the	
   individual	
   assumptions	
   while	
   holding	
   other	
   assumptions	
   constant,	
   and	
   determined	
   that	
   there	
   will	
   be	
   no	
   material	
  
impairment.	
   Based	
   on	
   the	
   impairment	
   test	
   performed,	
   the	
   Trust	
   concluded	
   that	
   no	
   goodwill	
   impairment	
   existed	
   as	
   at	
  	
  
December	
  31,	
  2014.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  105	
  

	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  
 
 
 
 
 
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
 	
  
Note	
  12	
  
AMOUNTS	
  RECEIVABLE	
  
Amounts	
  receivable	
  are	
  net	
  of	
  credit	
  adjustments	
  aggregating	
  $5,992	
  (December	
  31,	
  2013	
  –	
  $11,450).	
  

Trade	
  receivables	
  
Less:	
  Provision	
  for	
  impairment	
  of	
  trade	
  receivables	
  
Trade	
  receivables,	
  net	
  
Other	
  amounts	
  receivable	
  
Total	
  

December	
  31,	
  	
  

December	
  31,	
  	
  

Note	
  

25	
  

	
   $	
  

	
   $	
  

2014	
  
	
  8,296	
  
	
  (2,419)	
  
	
  5,877	
  
	
  10,688	
  
	
  16,565	
  

	
   $	
  

	
   $	
  

2013	
  
	
  9,671	
  
	
  (2,113)	
  
	
  7,558	
  
	
  20,918	
  
	
  28,476	
  

The	
  movement	
  in	
  the	
  provision	
  for	
  impairment	
  of	
  trade	
  receivables	
  during	
  the	
  year	
  ended	
  December	
  31	
  was	
  as	
  follows:	
  

Balance	
  at	
  beginning	
  of	
  year	
  
Provision	
  for	
  impairment	
  of	
  trade	
  receivables	
  
Reversal	
  of	
  provision	
  for	
  previously	
  impaired	
  trade	
  receivables	
  
Receivables	
  written	
  off	
  during	
  the	
  period	
  as	
  uncollectible	
  
Balance	
  at	
  end	
  of	
  year	
  

Year	
  ended	
  December	
  31,	
  

2014	
  
	
  2,113	
  
	
  1,812	
  
	
  (589)	
  
	
  (917)	
  
	
  2,419	
  

	
   $	
  

	
   $	
  

2013	
  
	
  1,993	
  
	
  1,044	
  
	
  (231)	
  
	
  (693)	
  
	
  2,113	
  

	
   $	
  

	
   $	
  

The	
  carrying	
  value	
  of	
  amounts	
  receivable	
  approximates	
  fair	
  value	
  due	
  to	
  their	
  current	
  nature.	
  As	
  at	
  December	
  31,	
  2014,	
  trade	
  
receivables	
  of	
  approximately	
  $2,642	
  (December	
  31,	
  2013	
  –	
  $3,205)	
  were	
  past	
  due	
  but	
  not	
  considered	
  impaired	
  as	
  the	
  Trust	
  has	
  
ongoing	
  relationships	
  with	
  these	
  tenants	
  and	
  the	
  aging	
  of	
  these	
  trade	
  receivables	
  is	
  not	
  indicative	
  of	
  expected	
  default.	
  

The	
  Trust	
  leases	
  office	
  properties	
  to	
  tenants	
  under	
  operating	
  leases.	
  Minimum	
  rental	
  commitments,	
  including	
  joint	
  operations,	
  
on	
  non-‐cancellable	
  tenant	
  operating	
  leases	
  over	
  their	
  remaining	
  terms	
  are	
  as	
  follows:	
  

No	
  more	
  than	
  1	
  year	
  
1–5	
  years	
  
5+	
  years	
  

December	
  31,	
  2014	
  
	
  332,653	
  
	
   $	
  
	
  855,490	
  
	
  322,237	
  
	
  1,510,380	
  

	
   $	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  106	
  

	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
 
 
 
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
Note	
  13	
  
DEBT	
  

Mortgages(1)(2)	
  
Term	
  debt	
  
Demand	
  revolving	
  credit	
  facilities(2)	
  
Term	
  loan	
  facility(2)	
  
Convertible	
  debentures	
  
Debentures	
  
Total	
  
Less:	
  Current	
  portion	
  
Non-‐current	
  debt	
  
(1)	
  Net	
  of	
  financing	
  costs	
  of	
  $7,943	
  (December	
  31,	
  2013	
  –	
  $8,079).	
  
(2)	
  Secured	
  by	
  charges	
  on	
  specific	
  investment	
  properties	
  (refer	
  to	
  Note	
  8).	
  

Demand	
  revolving	
  credit	
  facilities	
  

December	
  31,	
  	
  

December	
  31,	
  	
  

2014	
  
	
  2,380,708	
  
	
  533	
  
	
  -‐	
  
	
  182,260	
  
	
  51,160	
  
	
  482,700	
  
	
  3,097,361	
  
	
  365,855	
  
	
  2,731,506	
  

	
  $	
  

	
  $	
  

2013	
  
	
  2,477,183	
  
	
  825	
  
	
  103,946	
  
	
  181,530	
  
	
  51,885	
  
	
  333,647	
  
	
  3,149,016	
  
	
  264,535	
  
	
  2,884,481	
  

	
  $	
  

	
  $	
  

Secured	
  	
  
investment	
  properties	
    
Second-‐	
   	
  

First-‐	
  

Face	
  

December	
  31,	
  2014	
  

December	
  31,	
  2013	
  

ranking	
  

ranking	
  

interest	
  

Amount	
  

Maturity	
  date	
   mortgages	
   mortgages	
   	
  

rate	
  

available	
  

Amount	
  

drawn	
  

Amount	
  

available	
  

Amount	
  

drawn	
  

Formula-‐based	
  maximum	
  	
  
	
   not	
  to	
  exceed	
  $171,500	
  
Formula-‐based	
  maximum	
  	
  
	
   not	
  to	
  exceed	
  $27,690	
  
Formula-‐based	
  maximum	
  	
  

	
   not	
  to	
  exceed	
  $35,000	
  
Formula-‐based	
  maximum	
  

	
   March	
  5,	
  2016	
  

	
   April	
  30,	
  2015	
  

April	
  30,	
  2015	
  

	
   not	
  to	
  exceed	
  $35,000	
  

April	
  30,	
  2015	
  

9	
  

2	
  

	
  -‐	
  

1	
  
12	
  

	
  -‐	
  

	
  -‐	
  

3.75%(1)	
   $	
   	
  171,500	
   $	
  

	
  -‐	
  

	
  $	
  

	
  67,500	
  

$	
  

	
  104,000	
  

3.85%(2)	
  	
  

	
  27,247(3)	
  	
  

2	
   	
  

3.75%(1)	
  	
  

	
  34,850(4)	
  	
  

1	
   	
  

3.75%(1)	
  	
  

	
  3	
  

	
   3.76%	
  

	
  17,943(5)	
  	
  
$	
   	
  251,540	
   $	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  
	
  -‐	
  

	
  26,156(3)	
  	
  

	
  32,819(4)	
  	
  

	
  -‐	
  

	
  -‐	
  

	
  34,700(5)	
  	
  
	
  161,175	
   $	
  

	
  -‐	
  
	
  104,000	
  

	
  $	
  

(1)  In	
   the	
   form	
   of	
   rolling	
   one-‐month	
   bankersʼ	
   acceptances	
   (“BAs”)	
   bearing	
   interest	
   at	
   the	
   BA	
   rate	
   plus	
   1.75%	
   or	
   at	
   the	
   bankʼs	
   prime	
   rate	
   (3.0%	
   as	
   at	
  	
  

December	
  31,	
  2014)	
  plus	
  0.75%.	
  

(2)  This	
  facility	
  matured	
  on	
  April	
  30,	
  2014	
  and	
  was	
  extended	
  to	
  April	
  30,	
  2015	
  in	
  the	
  form	
  of	
  rolling	
  one-‐month	
  BAs	
  bearing	
  interest	
  at	
  BA	
  rate	
  plus	
  1.85%	
  or	
  at	
  

the	
  bankʼs	
  prime	
  rate	
  plus	
  0.85%.	
  

(3)  Formula-‐based	
  amount	
  available	
  under	
  this	
  facility	
  was	
  $27,690	
  less	
  $443	
  in	
  the	
  form	
  of	
  a	
  letter	
  of	
  credit	
  (“LOC”)	
  as	
  at	
  December	
  31,	
  2014	
  and	
  $27,690	
  less	
  

$1,534	
  (LOC)	
  as	
  at	
  December	
  31,	
  2013.	
  

(4)  Formula-‐based	
  amount	
  available	
  under	
  this	
  facility	
  was	
  $35,000	
  less	
  $150	
  in	
  the	
  form	
  of	
  LOC	
  as	
  at	
  December	
  31,	
  2014	
  and	
  $35,000	
  less	
  $2,181	
  in	
  the	
  form	
  

of	
  LOC	
  as	
  at	
  December	
  31,	
  2013.	
  

(5)  Formula-‐based	
  amount	
  available	
  under	
  this	
  facility	
  was	
  $35,000	
  less	
  $17,057	
  in	
  the	
  form	
  of	
  LOC	
  as	
  at	
  December	
  31,	
  2014	
  and	
  $35,000	
  less	
  $300	
  (LOC)	
  as	
  at	
  

December	
  31,	
  2013.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  107	
  

	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
 
	
  
	
  
	
  
	
  
	
  
 
 
 
   
 
 
 
 
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
   	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
   	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
   	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
   	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
Term	
  loan	
  facility	
  
On	
  August	
  15,	
  2011,	
  the	
  Trust	
  entered	
  into	
  a	
  term	
  loan	
  facility	
  for	
  $188,000	
  in	
  the	
  form	
  of	
  rolling	
  one-‐month	
  BA	
  rates.	
  The	
  term	
  
loan	
  facility	
  bears	
  interest	
  at	
  BA	
  rates	
  plus	
  1.85%	
  payable	
  monthly.	
  The	
  term	
  loan	
  facility	
  was	
  originally	
  secured	
  by	
  ﬁrst-‐ranking	
  
collateral	
   mortgages	
   on	
   nine	
   properties.	
   On	
   August	
   15,	
   2012,	
   the	
   Trust	
   repaid	
   $4,547	
   on	
   the	
   term	
   loan	
   facility	
   as	
   one	
   of	
   the	
  
properties	
  securing	
  the	
  facility	
  was	
  sold.	
  At	
  December	
  31,	
  2013,	
  $183,453	
  was	
  outstanding	
  on	
  the	
  term	
  loan	
  facility,	
  secured	
  by	
  
first-‐ranking	
  collateral	
  mortgages	
  on	
  eight	
  properties.	
  The	
  term	
  loan	
  facility	
  expires	
  on	
  August	
  15,	
  2016.	
  

On	
   August	
   15,	
   2011,	
   the	
   Trust	
   entered	
   into	
   interest	
   rate	
   swap	
   agreements	
   to	
   modify	
   the	
   interest	
   rate	
   proﬁle	
   of	
   the	
   current	
  
variable	
   rate	
   debt	
   on	
   the	
   $188,000	
   term	
   loan	
   facility,	
   without	
   an	
   exchange	
   of	
   the	
   underlying	
   principal	
   amounts.	
   On	
  	
  
December	
  31,	
  2013,	
  the	
  notional	
  amount	
  of	
  interest	
  rate	
  swap	
  agreements	
  hedged	
  against	
  the	
  term	
  loan	
  facility	
  was	
  $183,453.	
  
The	
   Trust	
   has	
   applied	
   hedge	
   accounting	
   to	
   this	
   relationship,	
   whereby	
   the	
   change	
   in	
   fair	
   value	
   of	
   the	
   effective	
   portion	
   of	
   the	
  
hedging	
   derivative	
   is	
   recognized	
   in	
   other	
   comprehensive	
   income.	
   Settlement	
   of	
   both	
   the	
   ﬁxed	
   and	
   variable	
   portions	
   of	
   the	
  
interest	
  rate	
  swaps	
  occurs	
  on	
  a	
  monthly	
  basis.	
  

Convertible	
  debentures	
  

5.5%	
  Series	
  H	
  Debentures	
  

Carrying	
  value	
  

December	
  31,	
  	
  

December	
  31,	
  	
  

2014	
  
	
  51,160	
  

	
   $	
  

2013	
  
	
  51,885	
  

	
  $	
  

Original	
  	
  

Face	
  

December	
  31,	
  	
  

December	
  31,	
  	
  

Outstanding	
  principal	
  amount	
  

5.5%	
  Series	
  H	
  Debentures	
  

December	
  9,	
  2011	
  	
   March	
  31,	
  2017	
  	
  

$	
  

	
  51,650	
  

5.5%	
  

	
  $	
  

Date	
  issued	
  	
  

Maturity	
  date	
  	
  

principal	
  issued	
   interest	
  rate	
  

2014	
  
	
  50,628	
  

	
  $	
  

2013	
  
	
  51,128	
  

5.5%	
  Series	
  H	
  Debentures	
  
The	
   5.5%	
   Series	
   H	
   Debentures	
   are	
   convertible	
   at	
   the	
   request	
   of	
   the	
   holder,	
   subject	
   to	
   certain	
   terms	
   and	
   conditions,	
   into	
  
27.25648	
   REIT	
   A	
   Units	
   per	
   one	
   thousand	
   dollars	
   of	
   face	
   value,	
   representing	
   a	
   conversion	
   price	
   of	
   $36.69	
   per	
   unit.	
   The	
   5.5%	
  
Series	
  H	
  Debentures	
  are	
  redeemable	
  at	
  the	
  principal	
  amount	
  at	
  the	
  Trust’s	
  option,	
  subject	
  to	
  certain	
  terms	
  and	
  conditions,	
  from	
  
March	
  31,	
  2015,	
  and	
  prior	
  to	
  March	
  31,	
  2016,	
  provided	
  the	
  20-‐day	
  weighted	
  average	
  trading	
  price	
  of	
  the	
  Units	
  is	
  at	
  least	
  $45.87,	
  
and	
  at	
  their	
  principal	
  amount	
  on	
  and	
  after	
  March	
  31,	
  2016.	
  Interest	
  on	
  the	
  5.5%	
  Series	
  H	
  Debentures	
  is	
  payable	
  semi-‐annually	
  
on	
  March	
  31	
  and	
  September	
  30.	
  

For	
  the	
  year	
  ended	
  December	
  31,	
  2014,	
  $500	
  of	
  5.5%	
  Series	
  H	
  Debentures	
  were	
  converted	
  to	
  REIT	
  A	
  Units.	
  For	
  the	
  year	
  ended	
  
December	
  31,	
  2013,	
  no	
  debentures	
  were	
  converted	
  (see	
  Note	
  19).	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  108	
  

	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
Debentures	
  
The	
  principal	
  amount	
  outstanding	
  and	
  the	
  carrying	
  value	
  for	
  each	
  series	
  of	
  debentures	
  are	
  as	
  follows:	
  

Debentures	
  
Series	
  A	
  
	
   Debentures	
  
Series	
  B	
  
	
   Debentures	
  
Series	
  C	
  
	
   Debentures	
  
Series	
  K	
  
	
   Debentures	
  
Series	
  L	
  
	
   Debentures	
  

Date	
  issued	
  	
  

Maturity	
  date	
  

	
  principal	
  issued	
  

	
  interest	
  rate	
  	
  

principal	
   	
  	
  

value	
  

Original	
  	
  	
  

Face	
  	
   Outstanding	
   	
  

Carrying	
  	
  

Carrying	
  

value	
  

December	
  31,	
  2014	
  

	
   December	
  31,	
  2013	
  

June	
  13,	
  2013	
  

June	
  13,	
  2018	
  	
   $	
  

	
  175,000	
  

3.42%	
   $	
  

	
  175,000	
  

	
  $	
  

	
  173,900	
  

	
   $	
  

	
  173,582	
  

October	
  9,	
  2013	
  

January	
  9,	
  2017	
  	
  

	
  125,000	
  

2.97%(1)	
  

	
  125,000	
  

	
  124,556	
  

	
  124,335	
  

January	
  21,	
  2014	
  

January	
  21,	
  2020	
  	
  

	
  150,000	
  

4.07%	
  

	
  150,000	
  

	
  148,813	
  

	
  -‐	
  

April	
  26,	
  2011	
  

April	
  26,	
  2016	
  	
  

	
  35,000	
  

5.95%	
  

	
  25,000	
  

	
  25,312	
  

	
  25,526	
  

August	
  8,	
  2011	
  

September	
  30,	
  2016	
  	
  

	
  	
   $	
  

	
  10,000	
  
	
  495,000	
  

5.95%	
  

	
   $	
  

	
  10,000	
  
	
  485,000	
  

	
  10,119	
  
	
  482,700	
  

	
  $	
  

	
   $	
  

	
  10,204	
  
	
  333,647	
  

(1)	
  Variable	
  interest	
  rate	
  at	
  three-‐month	
  Canadian	
  Dealer	
  Offered	
  Rate	
  (“CDOR”)	
  plus	
  1.7%.	
  

Series	
  A	
  Debentures	
  
On	
   June	
   13,	
   2013,	
   the	
   Trust	
   completed	
   the	
   issuance	
   of	
   $175,000	
   aggregate	
   principal	
   amount	
   of	
   Series	
   A	
   senior	
   unsecured	
  
debentures	
   (“Series	
   A	
   Debentures”).	
   The	
   Series	
   A	
   Debentures	
   bear	
   interest	
   at	
   a	
   coupon	
   rate	
   of	
   3.424%	
   per	
   annum	
   with	
   a	
  
maturity	
  date	
  of	
  June	
  13,	
  2018.	
  Interest	
  on	
  the	
  Series	
  A	
  Debentures	
  is	
  payable	
  semi-‐annually	
  on	
  June	
  13	
  and	
  December	
  13,	
  with	
  
the	
  first	
  payment	
  commencing	
  on	
  December	
  13,	
  2013.	
  	
  Costs	
  related	
  to	
  the	
  issuance	
  of	
  the	
  Series	
  A	
  Debentures	
  totalled	
  $1,590.	
  

The	
  Trust	
  has	
  the	
  option	
  to	
  redeem	
  the	
  Series	
  A	
  Debentures	
  at	
  a	
  redemption	
  price	
  equal	
  to	
  the	
  greater	
  of	
  Canada	
  Yield	
  Price	
  
and	
   par	
   plus	
   any	
   accrued	
   and	
   unpaid	
   interest.	
   The	
   Canada	
   Yield	
   Price	
   is	
   defined	
   as	
   the	
   amount	
   that	
   would	
   return	
   a	
   yield	
   on	
  
investment	
   for	
   the	
   remaining	
   term	
   to	
   maturity	
   equal	
   to	
   the	
   Canada	
   bond	
   rate	
   with	
   equal	
   term	
   to	
   maturity	
   plus	
   a	
   spread	
  	
  
of	
  0.475%.	
  

Series	
  B	
  Debentures	
  
On	
   October	
   9,	
   2013,	
   the	
   Trust	
   completed	
   the	
   issuance	
   of	
   $125,000	
   aggregate	
   principal	
   amount	
   of	
   Series	
   B	
   floating	
   senior	
  
unsecured	
  debentures	
  (“Series	
  B	
  Debentures”).	
  The	
  Series	
  B	
  Debentures	
  bear	
  interest	
  at	
  a	
  three-‐month	
  CDOR	
   rate	
  plus	
  1.7%	
  
per	
   annum	
   with	
   a	
   maturity	
   date	
   of	
   January	
   9,	
   2017.	
   Interest	
   on	
   the	
   Series	
   B	
   Debentures	
   is	
   payable	
   quarterly	
   in	
   arrears	
   on	
  
January	
  9,	
  April	
  9,	
  July	
  9	
  and	
  October	
  9,	
  with	
  the	
  first	
  payment	
  commencing	
  on	
  January	
  9,	
  2014.	
  Costs	
  related	
  to	
  the	
  issuance	
  of	
  
the	
  Series	
  B	
  Debentures	
  totalled	
  $720.	
  

Series	
  C	
  Debentures	
  
On	
  January	
  21,	
  2014,	
  the	
  Trust	
  completed	
  the	
  issuance	
  of	
  $150,000	
   aggregate	
  principal	
  amount	
  of	
  Series	
  C	
  senior	
  unsecured	
  
debentures	
   (“Series	
   C	
   Debentures”).	
   The	
   Series	
   C	
   Debentures	
   bear	
   interest	
   at	
   a	
   rate	
   of	
   4.074%	
   with	
   a	
   maturity	
   date	
   of	
  	
  
January	
  21,	
  2020.	
  Interest	
  on	
  the	
  Series	
  C	
  Debentures	
  is	
  payable	
  semi-‐annually	
  on	
  January	
  21	
  and	
  July	
  21,	
  with	
  the	
  first	
  payment	
  
commencing	
  on	
  July	
  21,	
  2014.	
  Costs	
  related	
  to	
  the	
  issuance	
  of	
  the	
  Series	
  C	
  Debentures	
  totalled	
  $1,400.	
  	
  

The	
  Trust	
  has	
  the	
  option	
  to	
  redeem	
  the	
  Series	
  C	
  Debentures	
  at	
  a	
  redemption	
  price	
  equal	
  to	
  the	
  greater	
  of	
  Canada	
  Yield	
  Price	
  
and	
   par	
   plus	
   any	
   accrued	
   and	
   unpaid	
   interest.	
   The	
   Canada	
   Yield	
   Price	
   is	
   defined	
   as	
   the	
   amount	
   that	
   would	
   return	
   a	
   yield	
   on	
  
investment	
   for	
   the	
   remaining	
   term	
   to	
   maturity	
   equal	
   to	
   the	
   Canada	
   bond	
   rate	
   with	
   equal	
   term	
   to	
   maturity	
   plus	
   a	
   spread	
  	
  
of	
  0.525%.	
  

Series	
  K	
  and	
  Series	
  L	
  Debentures	
  
The	
  Series	
  K	
  and	
  Series	
  L	
  Debentures	
  are	
  redeemable	
  at	
  the	
  Trust’s	
  option,	
  subject	
  to	
  certain	
  terms	
  and	
  conditions.	
  Interest	
  is	
  
payable	
  monthly.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  109	
  

	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
   	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
   	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
   	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
   	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
   	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
 
	
  
 	
  
The	
  following	
  tables	
  provide	
  a	
  continuity	
  of	
  debt	
  for	
  the	
  years	
  ended	
  December	
  31,	
  2014	
  and	
  December	
  31,	
  2013:	
  

Year	
  ended	
  December	
  31,	
  2014	
  

Mortgages	
   	
  

	
   Term	
  debt	
   	
  

Demand	
   	
  	
  

revolving	
   	
  	
  
credit	
   	
   
facilities	
   	
  

Term	
   	
  	
  

loan	
   	
   Convertible	
  	
  	
  	
  

facility	
   	
   debentures	
   	
   Debentures	
   	
  

	
  $	
  

	
  $	
  

	
  $	
  

	
  $	
  

	
   $	
  

	
  103,946	
  
	
  78,347	
  
	
  -‐	
  

	
  825	
  
	
  -‐	
  
	
  (292)	
   	
  	
  
	
  -‐	
  
	
  -‐	
  

	
  2,477,183	
  
	
  231,707	
  
	
  (66,843)	
   	
  	
  
	
  (245,154)	
   	
  	
  
	
  (1,607)	
   	
  	
  

Balance	
  as	
  at	
  January	
  1,	
  2014	
  
Borrowings	
  
Principal	
  repayments	
  
Lump	
  sum	
  repayments	
  
Financing	
  costs	
  additions	
  
Debt	
  assumed	
  by	
  purchaser	
  on	
  
	
   disposal	
  of	
  investment	
  properties	
  
Conversion	
  to	
  REIT	
  A	
  Units	
  
Foreign	
  exchange	
  adjustments	
  
Other	
  adjustments(1)	
  
	
  51,160	
  
	
  $	
  
Balance	
  as	
  at	
  December	
  31,	
  2014	
  
(1)	
  Other	
  adjustments	
  include	
  fair	
  value	
  adjustments,	
  amortization	
  of	
  financing	
  costs	
  and	
  amortization	
  of	
  fair	
  value	
  adjustments.	
  

	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  730	
  
	
  182,260	
  

	
  181,530	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  

	
  51,885	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  

	
  -‐	
  
	
  4,743	
  
	
  (2,274)	
   	
  	
  

	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  533	
  

	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  54	
  
	
  -‐	
  

	
  -‐	
  
	
  (500)	
   	
  	
  
	
  -‐	
  
	
  (225)	
   	
  	
  

	
  (182,347)	
   	
  	
  

	
  2,380,708	
  

	
  (17,047)	
   	
  	
  

	
   $	
  

	
  -‐	
  

	
  $	
  

	
  $	
  

	
  $	
  

	
  $	
  

	
  $	
  

	
  $	
  

	
  333,647	
  
	
  150,000	
  
	
  -‐	
  
	
  -‐	
  

	
  (1,400)	
   	
  	
  

Total	
  
	
  3,149,016	
  
	
  460,054	
  
	
  (67,135)	
  
	
  (427,501)	
  
	
  (3,007)	
  

	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  453	
  
	
  482,700	
  

	
  $	
  

	
  (17,047)	
  
	
  (500)	
  
	
  4,743	
  
	
  (1,262)	
  
	
  3,097,361	
  

Year	
  ended	
  December	
  31,	
  2013	
  

Demand	
   	
  	
  

revolving	
   	
  	
  
credit	
   	
   
facilities	
   	
   
	
  $	
  
	
  67,557	
  
	
  645,889	
  

Term	
    	
  
loan	
   
facility	
   
	
  180,837	
    $	
  
	
  -‐	
    	
  
	
  -‐	
    	
  
	
  -‐	
    	
  
	
  -‐	
    	
  

Term	
  debt	
  
	
  248	
  
	
  943	
  
	
  (366)	
   	
  
	
  -‐	
  
	
  -‐	
  

Mortgages	
   	
   
	
  $	
  

	
  $	
  

	
   $	
  

	
  2,441,663	
  
	
  251,049	
  
	
  (65,471)	
   	
  	
  
	
  (178,702)	
   	
  	
  
	
  (1,904)	
   	
  	
  

Balance	
  as	
  at	
  January	
  1,	
  2013	
  
Borrowings	
  
Principal	
  repayments	
  
Lump	
  sum	
  repayments	
  
Financing	
  costs	
  additions	
  
Debt	
  assumed	
  on	
  acquisition	
  
	
   of	
  investment	
  properties	
  
Foreign	
  exchange	
  adjustments	
  
Other	
  adjustments(1)	
  
	
  51,885	
  
	
  $	
  
Balance	
  as	
  at	
  December	
  31,	
  2013	
  
(1)	
  Other	
  adjustments	
  include	
  fair	
  value	
  adjustments,	
  amortization	
  of	
  financing	
  costs	
  and	
  amortization	
  of	
  fair	
  value	
  adjustments.	
  

	
  -‐	
    	
  
	
  -‐	
    	
  
	
  693	
    	
  
	
  181,530	
    $	
  

	
  52,092	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  

	
  -‐	
  
	
  -‐	
  
	
  345	
  
	
  103,946	
  

	
  -‐	
   	
  	
  
(609,567)	
   	
  	
  
	
  (278)	
   	
  	
  

	
  29,839	
  
	
  3,707	
  
	
  (2,998)	
   	
  	
  

	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  825	
  

	
  -‐	
  
	
  -‐	
  
	
  (207)	
   	
  	
  

	
  2,477,183	
  

	
   $	
  

	
  $	
  

	
  $	
  

	
  36,029	
  
	
  300,000	
  
	
  -‐	
  
	
  -‐	
  

	
  (2,310)	
   	
  	
  

	
  -‐	
  
	
  -‐	
  
	
  (72)	
   	
  	
  

	
  $	
  

	
  333,647	
  

	
  $	
  

Convertible	
  	
   	
  	
  

debentures	
   	
   Debentures	
   	
  
	
  $	
  

	
  $	
  

Total	
  
	
  2,778,426	
  
	
  1,197,881	
  
	
  (65,837)	
  
	
  (788,269)	
  
	
  (4,492)	
  

	
  29,839	
  
	
  3,707	
  
	
  (2,239)	
  
	
  3,149,016	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  110	
  

	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
  
	
  	
   	
  
	
   	
  	
  
	
   	
  	
  
	
   	
  	
  
	
  
	
  	
   	
  
	
   	
  	
  
	
   	
  	
  
	
   	
  	
  
	
   	
  	
  
	
   	
  	
  
	
  
	
  
	
  	
   	
  
	
   	
  	
  
	
   	
  	
  
	
   	
  	
  
	
   	
  	
  
	
  
	
  
	
  	
   	
  
	
   	
  	
  
 
	
  	
  
	
   	
  	
  
	
  
	
  
	
  
 
	
   	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
   	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
   	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
   	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
   	
  
 
   
 
   
 
   
 
   
 
   
 
   
 
	
   	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
   	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
   	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
   	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
  
	
   	
  
	
  
	
  
	
  	
   	
  
	
   	
  	
  
	
   	
  	
  
	
   	
  	
  
	
  
	
  	
   	
  
	
   	
  	
  
	
   	
  	
  
	
   	
  	
  
	
   	
  	
  
	
   	
  	
  
	
  
	
  
	
  	
   	
  
	
   	
  	
  
	
   	
  	
  
	
   	
  	
  
	
   	
  	
  
	
  
	
  
	
  	
   	
  
	
   	
  	
  
 
	
  	
  
	
   	
  	
  
	
  
	
  
	
  
	
   	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
   	
  
	
  	
  
	
  	
  
	
  	
  
	
   	
  
	
  	
  
	
  	
  
	
  	
  
	
   	
  
	
  	
  
	
  	
  
	
   	
  
 
   
 
   
 
   
 
   
 
   
 
   
 
	
   	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
   	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
   	
  
	
  	
  
	
  	
  
	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
  
	
  
	
  
Debt	
  weighted	
  average	
  effective	
  interest	
  rates	
  and	
  maturities	
  

Fixed	
  rate	
  
Mortgages	
  
Term	
  debt	
  
Term	
  loan	
  facility(2)	
  
Convertible	
  debentures	
  
Debentures	
  
Total	
  fixed	
  rate	
  debt	
  
Variable	
  rate	
  
Mortgages	
  
Demand	
  revolving	
  credit	
  facilities	
  
Term	
  loan	
  facility(2)	
  
Series	
  B	
  Debentures	
  
Total	
  variable	
  rate	
  debt	
  
Total	
  debt	
  

Weighted	
  average	
  effective	
  	
  
interest	
  rates(1)	
  
December	
  31,	
  	
  	
  

December	
  31,	
  	
  

Maturity	
  

December	
  31,	
  	
  	
  

December	
  31,	
  	
  

Debt	
  amount	
  

2014	
  

2013	
  

dates	
  

2014	
  

2013	
  

4.43%	
  
5.47%	
  
3.83%	
  
3.80%	
  
4.04%	
  
4.34%	
  

3.65%	
  
	
  -‐	
  
3.83%	
  
3.09%	
  
3.43%	
  
4.26%	
  

4.53%	
  
5.91%	
  
3.83%	
  
3.80%	
  
3.89%	
  
4.42%	
  

3.64%	
  
2.97%	
  
-‐	
  
3.09%	
  
3.20%	
  
4.30%	
  

	
  $	
  

	
   2015–2028	
  
2016	
  
2016	
  
2017	
  
	
   2016–2020	
  

	
   2015–2018	
  
	
   2015–2016	
  
2016	
  
2017	
  

	
  $	
  

	
  2,284,364	
  
	
  533	
  
	
  128,948	
  
	
  51,160	
  
	
  358,144	
  
	
  2,823,149	
  

	
  96,344	
  
	
  -‐	
  
	
  53,312	
  
	
  124,556	
  
	
  274,212	
  
	
  3,097,361	
  

	
  $	
  

	
  $	
  

	
  2,387,593	
  
	
  825	
  
	
  181,530	
  
	
  51,885	
  
	
  209,312	
  
	
  2,831,145	
  

	
  89,590	
  
	
  103,946	
  
	
  -‐	
  
	
  124,335	
  
	
  317,871	
  
	
  3,149,016	
  

(1)	
  	
  The	
  effective	
  interest	
  rate	
  method	
  includes	
  the	
  impact	
  of	
  fair	
  value	
  adjustments	
  on	
  assumed	
  debt	
  and	
  financing	
  costs.	
  	
  
(2)	
  	
  Under	
  a	
  hedging	
  arrangement,	
  the	
  Trust	
  has	
  entered	
  into	
  two	
  interest	
  rate	
  swap	
  agreements	
  to	
  ﬁx	
  the	
  interest	
  rate	
  of	
  the	
  term	
  loan	
  facility:	
  a	
  ﬁve-‐year	
  
interest	
  rate	
  swap	
  on	
  a	
  notional	
  balance	
  of	
  $129,783,	
  ﬁxing	
  interest	
  at	
  a	
  BA	
  rate	
  of	
  1.67%	
  plus	
  a	
  spread	
  of	
  185	
  bps;	
  and	
  a	
  three-‐year	
  interest	
  rate	
  swap	
  on	
  a	
  
notional	
  balance	
  of	
  $53,670,	
  fixing	
  interest	
  at	
  a	
  BA	
  rate	
  of	
  1.28%	
  plus	
  a	
  spread	
  of	
  185	
  bps.	
  The	
  effective	
  interest	
  rate	
  on	
  the	
  term	
  loan	
  facility	
  is	
  3.83%	
  after	
  
accounting	
  for	
  ﬁnancing	
  costs.	
  On	
  August	
  15,	
  2014,	
  the	
  three-‐year	
  interest	
  rate	
  swap	
  expired	
  and	
  was	
  not	
  subsequently	
  renewed	
  and	
  effective	
  August	
  16,	
  
2014,	
  the	
  notional	
  balance	
  of	
  $53,670	
  bears	
  interest	
  at	
  one-‐month	
  BA	
  rate	
  plus	
  185	
  bps.	
  

The	
  following	
  table	
  summarizes	
  the	
  scheduled	
  principal	
  repayments	
  and	
  debt	
  maturities:	
  

Term	
  loan	
  	
  	
  

Convertible	
  	
  	
  	
  

2015	
  
2016	
  
2017	
  
2018	
  
2019	
  
2020–2028	
  

Financing	
  costs	
  
Fair	
  value	
  adjustments	
  

	
  $	
  

$	
  

Mortgages	
   	
  
	
  365,558	
  
	
  339,436	
  
	
  307,069	
   	
   	
  
	
  218,446	
  
	
  91,267	
  
	
  1,057,552	
  
	
  2,379,328	
   	
   	
  
	
  (7,943)	
  	
   	
  
	
  9,323	
  
$	
   	
  2,380,708	
  

	
  $	
  

Term	
  debt	
   	
  
	
  297	
  
	
  236	
  
	
  -‐	
   	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  533	
   	
  
	
  -‐	
  
	
  -‐	
  
	
  533	
  

	
   $	
  

facility	
   	
  
	
  -‐	
  
	
   	
  183,453	
  

	
  $	
  

	
  -‐	
  	
   	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  

	
   	
  183,453	
  	
   	
  
	
  (1,193)	
   	
  	
  

	
  -‐	
  
	
   $	
   	
  182,260	
  

	
  $	
  

debentures	
   	
   Debentures	
   	
  
	
  $	
  

	
  $	
  

	
  -‐	
  
	
  -‐	
  

	
  50,628	
  	
   	
  

	
  -‐	
  
	
  -‐	
  
	
  -‐	
  

	
  50,628	
  	
   	
  

	
  -‐	
  
	
  532	
  
	
  51,160	
  

	
  $	
  

	
  -‐	
  
	
  35,000	
  
	
  125,000	
   	
   	
  
	
  175,000	
  
	
  -‐	
  
	
  150,000	
  
	
  485,000	
   	
   	
  
	
  (2,730)	
  	
   	
  
	
  430	
  
	
  482,700	
  

	
  $	
  

Total	
  
	
  365,855	
  
	
  558,125	
  
	
  482,697	
  
	
  393,446	
  
	
  91,267	
  
	
  1,207,552	
  
	
  3,098,942	
  
	
  (11,866)	
  
	
  10,285	
  
	
  3,097,361	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  111	
  

	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
  
	
  	
  
	
   	
  	
  
	
   	
  	
  
	
   	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
 
 
Other	
  ﬁnancial	
  instruments	
  	
  
The	
  Trust	
  has	
  other	
  financial	
  instruments	
  included	
  as	
  part	
  of	
  other	
  non-‐current	
  liabilities	
  as	
  follows	
  (see	
  Note	
  16):	
  

Fair	
  value	
  of	
  interest	
  rate	
  swaps	
  –	
  liability	
  
Fair	
  value	
  of	
  interest	
  rate	
  swaps	
  –	
  asset	
  
Conversion	
  feature	
  on	
  the	
  convertible	
  debentures	
  –	
  asset	
  
Other	
  financial	
  instruments	
  –	
  net	
  liability	
  (asset)	
  

December	
  31,	
  	
  

December	
  31,	
  	
  

	
  $	
  

	
  $	
  

2014	
  
	
  592	
  
	
  -‐	
  
	
  (760)	
  
	
  (168)	
  

	
   $	
  

	
   $	
  

2013	
  
	
  365	
  
	
  (29)	
  
	
  (317)	
  
	
  19	
  

The	
  Trust’s	
  interest	
  rate	
  swap	
  agreements	
  are	
  subject	
  to	
  master	
  netting	
  agreements	
  that	
  create	
  a	
  legally	
  enforceable	
  right	
  to	
  
offset,	
  by	
  the	
  counterparty,	
  the	
  related	
  interest	
  rate	
  swap	
  financial	
  assets	
  and	
  liabilities.	
  

Interest	
  rate	
  swaps	
  
The	
  following	
  table	
  summarizes	
  the	
  details	
  of	
  the	
  interest	
  rate	
  swaps	
  that	
  are	
  outstanding	
  at	
  December	
  31,	
  2014:	
  

Transaction	
  date	
  
August	
  15,	
  2011	
  

Term	
  loan	
  facility	
  	
  

principal	
  amount	
  	
  

(notional)	
  
	
  129,783	
  

	
  $	
  

Fixed	
  	
  	
  

interest	
  rate	
  
3.52%	
  

Financial	
  	
  	
  

instrument	
  	
  

Maturity	
  date	
  	
  
August	
  15,	
  2016	
  

classification	
  	
  
Cash	
  flow	
  hedge	
  

	
  $	
  

Fair	
  value	
  
	
  592	
  

For	
   those	
   interest	
   rate	
   swaps	
   designated	
   as	
   cash	
   flow	
   hedges,	
   the	
   Trust	
   has	
   assessed	
   that	
   there	
   is	
   no	
   ineffectiveness	
   in	
   the	
  
hedges	
   of	
   its	
   interest	
   rate	
   exposure.	
   The	
   effectiveness	
   of	
   the	
   hedging	
   relationship	
   is	
   reviewed	
   on	
   a	
   quarterly	
   basis.	
   As	
   an	
  
effective	
   hedge,	
   unrealized	
   gains	
   or	
   losses	
   on	
   the	
   interest	
   rate	
   swap	
   agreements	
   are	
   recognized	
   in	
   other	
   comprehensive	
  
income.	
  The	
  associated	
  unrealized	
  gains	
  or	
  losses	
  that	
  are	
  recognized	
  in	
  other	
  comprehensive	
  income	
  will	
  be	
  reclassiﬁed	
  into	
  
net	
  income	
  in	
  the	
  same	
  period	
  or	
  periods	
  during	
  which	
  the	
  interest	
  payments	
  on	
  the	
  hedged	
  item	
  affect	
  net	
  income.	
  

On	
  August	
  15,	
  2014,	
  the	
  three-‐year	
  interest	
  rate	
  swap	
  on	
   the	
  notional	
  balance	
  of	
  $53,670	
   expired	
  and	
  was	
  not	
  subsequently	
  
renewed.	
  As	
  a	
  result,	
  the	
  associated	
  unrealized	
  loss	
  of	
  $8	
  included	
  in	
  accumulated	
  other	
  comprehensive	
  income	
  was	
  reclassiﬁed	
  
into	
  net	
  income	
  during	
  the	
  year.	
  At	
  December	
  31,	
  2014,	
  the	
  fair	
  value	
  of	
  the	
  remaining	
  interest	
  rate	
  swap	
  amounted	
  to	
  a	
  $592	
  
ﬁnancial	
  liability	
  (December	
  31,	
  2013	
  –	
  $336	
  financial	
  liability).	
  

Conversion	
  feature	
  on	
  the	
  convertible	
  debentures	
  
The	
  movement	
  in	
  the	
  conversion	
  feature	
  on	
  the	
  convertible	
  debentures	
  for	
  the	
  year	
  is	
  as	
  follows:	
  

Balance	
  at	
  beginning	
  of	
  year	
  
Reduction	
  of	
  conversion	
  feature	
  on	
  the	
  convertible	
  debentures	
  converted	
  during	
  the	
  year	
  
Remeasurement	
  of	
  conversion	
  feature	
  on	
  convertible	
  debentures	
  
Balance	
  at	
  end	
  of	
  year	
  

Note	
  	
  

22	
  	
  

$	
  

$	
  

Year	
  ended	
  December	
  31,	
  

2014	
  
	
  (317)	
  
	
  7	
  
	
  (450)	
  
	
  (760)	
  

	
   $	
  

	
   $	
  

2013	
  
	
  1,397	
  
	
  -‐	
  
	
  (1,714)	
  
	
  (317)	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  112	
  

  
 
 
 
 
 
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
Note	
  14	
  
SUBSIDIARY	
  REDEEMABLE	
  UNITS	
  
The	
  Trust	
  has	
  the	
  following	
  subsidiary	
  redeemable	
  units	
  outstanding:	
  

Balance	
  at	
  beginning	
  of	
  year	
  
Distribution	
  Reinvestment	
  Plan	
  
Subsidiary	
  redeemable	
  units	
  surrendered	
  
Remeasurement	
  of	
  carrying	
  value	
  of	
  
	
  	
  	
  	
  subsidiary	
  redeemable	
  units	
  
Balance	
  at	
  end	
  of	
  year	
  

Note	
  

22	
  	
  

Year	
  ended	
  December	
  31,	
  2014	
  

Year	
  ended	
  December	
  31,	
  2013	
  

	
   Number	
  of	
  units	
  issued	
  

Number	
  of	
  units	
  issued	
  

and	
  outstanding	
  
	
  3,538,457	
  
	
  -‐	
  
	
  (2,936,023)	
  

	
   $	
  

Amount	
  
	
  101,978	
  
	
  -‐	
  
	
  (85,350)	
  

and	
  outstanding	
  
	
  3,528,658	
  
	
  9,799	
  
	
  -‐	
  

	
   $	
  

Amount	
  
	
  132,078	
  
	
  361	
  
	
  -‐	
  

	
  -‐	
  
	
  602,434	
  

	
   $	
  

	
  (1,477)	
  
	
  15,151	
  

	
  -‐	
  
	
  3,538,457	
  

	
   $	
  

	
  (30,461)	
  
	
  101,978	
  

During	
   the	
   year	
   ended	
   December	
   31,	
   2014,	
   the	
   Trust	
   incurred	
   $4,638	
   (December	
   31,	
   2013	
   –	
   $7,897)	
   in	
   distributions	
   on	
   the	
  
subsidiary	
  redeemable	
  units,	
  which	
  is	
  included	
  as	
  interest	
  expense	
  in	
  comprehensive	
  income	
  (see	
  Note	
  21).	
  

Dream	
  Office	
  LP,	
  a	
  subsidiary	
  of	
  Dream	
  Office	
  REIT,	
  is	
  authorized	
  to	
  issue	
  an	
  unlimited	
  number	
  of	
  LP	
  Class	
  B	
  limited	
  partnership	
  
units.	
   These	
   units	
   have	
   been	
   issued	
   in	
   two	
   series:	
   subsidiary	
   redeemable	
   units	
   and	
   LP	
   Class	
   B	
   Units,	
   Series	
   2.	
   The	
   subsidiary	
  
redeemable	
   units,	
   together	
   with	
   the	
   accompanying	
   Special	
   Trust	
   Units,	
   have	
   economic	
   and	
   voting	
   rights	
   equivalent	
   in	
   all	
  
material	
   respects	
   to	
   REIT	
   A	
   Units.	
   Generally,	
   each	
   subsidiary	
   redeemable	
   unit	
   entitles	
   the	
   holder	
   to	
   a	
   distribution	
   equal	
   to	
  
distributions	
   declared	
   on	
   REIT	
   Units,	
   Series	
   B,	
   or	
   if	
   no	
   such	
   distribution	
   is	
   declared,	
   on	
   REIT	
   Units,	
   Series	
   A.	
   Subsidiary	
  
redeemable	
  units	
  may	
  be	
  surrendered	
  or	
  indirectly	
  exchanged	
  on	
  a	
  one-‐for-‐one	
  basis	
  at	
  the	
  option	
  of	
  the	
  holder,	
  generally	
  at	
  
any	
  time	
  subject	
  to	
  certain	
  restrictions,	
  for	
  REIT	
  Units,	
  Series	
  B.	
  

Holders	
  of	
  the	
  LP	
  Class	
  B	
  Units,	
  Series	
  2	
  are	
  entitled	
  to	
  vote	
  at	
  meetings	
  of	
  the	
  limited	
  partners	
  of	
  Dream	
  Office	
  LP	
  and	
  each	
  Unit	
  
entitles	
   the	
   holder	
   to	
   a	
   distribution	
   equal	
   to	
   distributions	
   on	
   the	
   subsidiary	
   redeemable	
   units.	
   As	
   at	
   December	
   31,	
   2014	
   and	
  
December	
   31,	
   2013,	
   all	
   issued	
   and	
   outstanding	
   LP	
   Class	
   B	
   Units,	
   Series	
   2	
   are	
   owned	
   indirectly	
   by	
   the	
   Trust	
   and	
   have	
   been	
  
eliminated	
  in	
  the	
  consolidated	
  balance	
  sheets.	
  

On	
  July	
  23,	
  2014,	
  one	
  of	
  the	
  holders	
  surrendered	
  2,936,023	
  subsidiary	
  redeemable	
  units	
  and	
  received	
  2,936,023	
  REIT	
  B	
  Units.	
  	
  
On	
  July	
  24,	
  2014,	
  such	
  REIT	
  B	
  Units	
  were	
  converted	
  by	
  the	
  holder	
  into	
  2,936,023	
  REIT	
  A	
  Units.	
  The	
  exchanges	
  were	
  valued	
  based	
  
on	
  the	
  carrying	
  amount	
  of	
  the	
  subsidiary	
  redeemable	
  units,	
  the	
  day	
  prior	
  to	
  the	
  exchange	
  to	
  REIT	
  B	
  Units.	
  

Special	
   Trust	
   Units	
   are	
   issued	
   in	
   connection	
   with	
   subsidiary	
   redeemable	
   units.	
   The	
   Special	
   Trust	
   Units	
   are	
   not	
   transferable	
  
separately	
  from	
  the	
  subsidiary	
  redeemable	
  units	
  to	
  which	
  they	
  relate	
  and	
  will	
  be	
  automatically	
  redeemed	
  for	
  a	
  nominal	
  amount	
  
and	
  cancelled	
  on	
  surrender	
  or	
  exchange	
  of	
  such	
  subsidiary	
  redeemable	
  units.	
  Each	
  Special	
  Trust	
  Unit	
  entitles	
  the	
  holder	
  to	
  the	
  
number	
   of	
   votes	
   at	
   any	
   meeting	
   of	
   unitholders	
   that	
   is	
   equal	
   to	
   the	
   number	
   of	
   REIT	
   B	
   Units	
   that	
   may	
   be	
   obtained	
   on	
   the	
  
surrender	
  or	
  exchange	
  of	
  the	
  subsidiary	
  redeemable	
  units	
  to	
  which	
  they	
  relate.	
  As	
  at	
  December	
  31,	
  2014,	
  602,434	
  Special	
  Trust	
  
Units	
  were	
  issued	
  and	
  outstanding	
  (December	
  31,	
  2013	
  –	
  3,538,457).	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  113	
  

 
  
 
 
 
 
 
 
 
 
 
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
   
	
   
 
 
 
 
 
 
 
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
Note	
  15	
  	
  
DEFERRED	
  UNIT	
  INCENTIVE	
  PLAN	
  	
  
The	
  Deferred	
  Unit	
  Incentive	
  Plan	
  (“DUIP”)	
  provides	
  for	
  the	
  grant	
  of	
  deferred	
  trust	
  units	
  to	
  trustees,	
  officers	
  and	
  employees	
  as	
  
well	
  as	
  affiliates	
  and	
  their	
  service	
  providers,	
  including	
  the	
  asset	
  manager.	
  Deferred	
  trust	
  units	
  are	
  granted	
  at	
  the	
  discretion	
  of	
  
the	
  trustees	
  and	
  earn	
  income	
  deferred	
  trust	
  units	
  based	
  on	
  the	
  payment	
  of	
  distributions.	
  Once	
  granted,	
  each	
  deferred	
  trust	
  unit	
  
and	
  the	
  related	
  distribution	
  of	
  income	
  deferred	
  trust	
  units	
  vest	
  evenly	
  over	
  a	
  three-‐	
  or	
  five-‐year	
  period	
  on	
  the	
  anniversary	
  date	
  
of	
  the	
  grant.	
  Subject	
  to	
  an	
  election	
  option	
  available	
  for	
  certain	
  participants	
  to	
  postpone	
  receipt	
  of	
  REIT	
  A	
  Units,	
  such	
  units	
  will	
  
be	
   issued	
   immediately	
   on	
   vesting.	
   As	
   at	
   December	
   31,	
   2014,	
   up	
   to	
   a	
   maximum	
   of	
   1.75	
   million	
   (December	
   31,	
   2013	
   –	
  	
  
1.75	
  million)	
  deferred	
  trust	
  units	
  are	
  issuable	
  under	
  the	
  DUIP.	
  

The	
  movement	
  in	
  the	
  DUIP	
  balance	
  was	
  as	
  follows:	
  

As	
  at	
  January	
  1,	
  2013	
  
Compensation	
  expense	
  
REIT	
  A	
  Units	
  issued	
  for	
  vested	
  deferred	
  trust	
  units	
  
Remeasurements	
  of	
  carrying	
  value	
  of	
  deferred	
  trust	
  units	
  
As	
  at	
  December	
  31,	
  2013	
  
Compensation	
  expense	
  
REIT	
  A	
  Units	
  issued	
  for	
  vested	
  deferred	
  trust	
  units	
  
Remeasurements	
  of	
  carrying	
  value	
  of	
  deferred	
  trust	
  units	
  
As	
  at	
  December	
  31,	
  2014	
  

Note	
   

22	
  	
  

22	
  	
  

$	
  

$	
  

	
  18,754	
  
	
  4,087	
  
	
  (1,641)	
  
	
  (2,665)	
  
	
  18,535	
  
	
  3,707	
  
	
  (4,338)	
  
	
  (822)	
  
	
  17,082	
  

During	
  the	
  year	
  ended	
  December	
  31,	
  2014,	
  $3,707	
  of	
  compensation	
  expense	
  was	
  recorded	
  (December	
  31,	
  2013	
  –	
  $4,087)	
  and	
  
included	
  in	
  general	
  and	
  administrative	
  expenses.	
  For	
  the	
  same	
  period,	
  a	
  fair	
  value	
  gain	
  of	
  $822	
  (December	
  31,	
  2013	
  –	
  fair	
  value	
  
gain	
  of	
  $2,665)	
  was	
  recognized,	
  representing	
  the	
  remeasurement	
  of	
  the	
  DUIP	
  liability	
  during	
  the	
  period.	
  

Outstanding	
  and	
  payable	
  as	
  at	
  January	
  1,	
  2013	
  
Granted	
  	
  
Income	
  deferred	
  units	
  
REIT	
  A	
  Units	
  issued	
  
Fractional	
  Units	
  paid	
  in	
  cash	
  
Cancelled	
  	
  
Outstanding	
  and	
  payable	
  as	
  at	
  December	
  31,	
  2013	
  
Granted	
  	
  
Income	
  deferred	
  units	
  
REIT	
  A	
  Units	
  issued	
  
Fractional	
  Units	
  paid	
  in	
  cash	
  
Cancelled	
  	
  
Outstanding	
  and	
  payable	
  as	
  at	
  December	
  31,	
  2014	
  
Vested	
  but	
  not	
  issued	
  as	
  at	
  December	
  31,	
  2014	
  

Total	
  units	
  
	
  619,825	
  
	
  143,159	
  
	
  49,878	
  
	
  (44,970)	
  
	
  (26)	
  
	
  (1,828)	
  
	
  766,038	
  
	
  122,386	
  
	
  62,726	
  
	
  (157,608)	
  
	
  (66)	
  
	
  (2,177)	
  
	
  791,299	
  
	
  378,931	
  

On	
  May	
  8,	
  2014,	
  33,086	
  deferred	
  trust	
  units	
  were	
  granted	
  to	
  trustees	
  who	
  elected	
  to	
  receive	
  their	
  2014	
  annual	
  retainer	
  in	
  the	
  
form	
  of	
  deferred	
  trust	
  units	
  rather	
  than	
  cash.	
  The	
  grant	
  date	
  value	
  of	
  these	
  deferred	
  trust	
  units	
  was	
  $28.96	
  per	
  unit	
  granted.	
  

On	
   February	
   27,	
   2014,	
   89,300	
   deferred	
   trust	
   units	
   were	
   granted	
   to	
   trustees,	
   officers	
   and	
   employees	
   as	
   well	
   as	
   affiliates	
   and	
  
their	
   service	
   providers,	
   including	
   the	
   asset	
   manager.	
   Of	
   the	
   units	
   granted,	
   31,500	
   relate	
   to	
   key	
   management	
   personnel.	
   The	
  
grant	
  date	
  value	
  of	
  these	
  deferred	
  trust	
  units	
  was	
  $29.36	
  per	
  unit	
  granted.	
  

On	
  May	
  8,	
  2013,	
  11,859	
  deferred	
  trust	
  units	
  were	
  granted	
  to	
  trustees	
  who	
  elected	
  to	
  receive	
  their	
  2013	
  annual	
  retainer	
  in	
  the	
  
form	
  of	
  deferred	
  trust	
  units	
  rather	
  than	
  cash.	
  The	
  grant	
  date	
  value	
  of	
  these	
  deferred	
  trust	
  units	
  was	
  $36.68	
  per	
  unit	
  granted.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  114	
  

 
	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
   
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
On	
  February	
  20,	
  2013,	
  131,300	
  deferred	
  trust	
  units	
  were	
  granted	
  to	
  trustees,	
  officers	
  and	
  employees	
  as	
  well	
  as	
  affiliates	
  and	
  
their	
   service	
   providers,	
   including	
   the	
   asset	
   manager.	
   Of	
   the	
   units	
   granted,	
   32,000	
   relate	
   to	
   key	
   management	
   personnel.	
   The	
  
grant	
  date	
  value	
  of	
  these	
  deferred	
  trust	
  units	
  was	
  $37.54	
  per	
  unit	
  granted.	
  	
  

Note	
  16	
  
OTHER	
  NON-‐CURRENT	
  LIABILITIES	
  

Tenant	
  security	
  deposits	
  
Other	
  financial	
  instruments	
  –	
  liabilities	
  (assets),	
  net	
  
Total	
  

Note	
  17	
  	
  
AMOUNTS	
  PAYABLE	
  AND	
  ACCRUED	
  LIABILITIES	
  

Trade	
  payables	
  
Accrued	
  liabilities	
  and	
  other	
  payables	
  
Accrued	
  interest	
  
Rent	
  received	
  in	
  advance	
  
Distributions	
  payable	
  	
  
Total	
  

Note	
  

13	
  

Note	
  
25	
  
25	
  

	
  $	
  

	
  $	
  

	
  $	
  

	
  $	
  

December	
  31,	
  	
  

December	
  31,	
  	
  

2014	
  
	
  19,103	
  
	
  (168)	
  
	
  18,935	
  

	
   $	
  

	
   $	
  

2013	
  
	
  18,848	
  
	
  19	
  
	
  18,867	
  

December	
  31,	
  	
  

December	
  31,	
  	
  

2014	
  
	
  3,013	
  
	
  49,972	
  
	
  12,654	
  
	
  11,490	
  
	
  20,393	
  
	
  97,522	
  

	
   $	
  

	
   $	
  

2013	
  
	
  10,215	
  
	
  51,684	
  
	
  11,565	
  
	
  15,285	
  
	
  19,493	
  
	
  108,242	
  

Note	
  18	
  	
  
DISTRIBUTIONS	
  	
  
Dream	
  Office	
  REIT’s	
  Declaration	
  of	
  Trust	
  endeavours	
  to	
  maintain	
  monthly	
  distribution	
  payments	
  to	
  unitholders	
  payable	
  on	
  or	
  
about	
   the	
   15th	
   day	
   of	
   the	
   following	
   month.	
   The	
   Trust	
   determines	
   the	
   distribution	
   rate	
   by,	
   among	
   other	
   considerations,	
   its	
  
assessment	
   of	
   cash	
   flow	
   as	
   determined	
   using	
   adjusted	
   cash	
   flows	
   from	
   operating	
   activities,	
   which	
   includes	
   cash	
   flows	
   from	
  
operating	
   activities	
   of	
   our	
   investments	
   in	
   joint	
   ventures	
   that	
   are	
   equity	
   accounted	
   and	
   excludes	
   the	
   fluctuations	
   in	
   non-‐cash	
  
working	
  capital,	
  transaction	
  costs	
  on	
  business	
  combinations	
  and	
  investment	
  in	
  lease	
  incentives	
  and	
  initial	
  direct	
  leasing	
  costs.	
  
Adjusted	
  cash	
  flows	
  from	
  operating	
  activities	
  is	
  not	
  a	
  measure	
  deﬁned	
  by	
  IFRS	
  and	
  therefore	
  may	
  not	
  be	
  comparable	
  to	
  similar	
  
measures	
   presented	
   by	
   other	
   real	
   estate	
   investment	
   trusts.	
   The	
   distribution	
   rate	
   is	
   determined	
   by	
   the	
   trustees,	
   at	
   their	
   sole	
  
discretion,	
   based	
   on	
   what	
   they	
   consider	
   appropriate	
   given	
   the	
   circumstances	
   of	
   the	
   Trust.	
   Distributions	
   may	
   be	
   adjusted	
   for	
  
amounts	
  paid	
  in	
  prior	
  periods	
  if	
  the	
  actual	
  adjusted	
  cash	
  flows	
  from	
  operating	
  activities	
  for	
  those	
  prior	
  periods	
  is	
  greater	
  or	
  less	
  
than	
   the	
   estimates	
   used	
   for	
   those	
   prior	
   periods.	
   In	
   addition,	
   the	
   trustees	
   may	
   declare	
   distributions	
   out	
   of	
   the	
   income,	
   net	
  
realized	
  capital	
  gains,	
  net	
  recapture	
  income	
  and	
  capital	
  of	
  the	
  Trust,	
  to	
  the	
  extent	
  such	
  amounts	
  have	
  not	
  already	
  been	
  paid,	
  
allocated	
  or	
  distributed.	
  	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  115	
  

	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
The	
  following	
  table	
  summarizes	
  distribution	
  payments	
  for	
  the	
  year	
  ended	
  December	
  31:	
  

Paid	
  in	
  cash	
  
Paid	
  by	
  way	
  of	
  reinvestment	
  in	
  REIT	
  A	
  Units	
  
Less:	
  Payable	
  at	
  December	
  31,	
  2013	
  (December	
  31,	
  2012)	
  
Plus:	
  Payable	
  at	
  December	
  31,	
  2014	
  (December	
  31,	
  2013)	
  
Total	
  

2014	
  
	
  175,912	
  
	
  63,248	
  
	
  (19,493)	
  
	
  20,393	
  
	
  240,060	
  

	
  $	
  

	
  $	
  

	
  $	
  

	
  $	
  

Total	
  

2013	
  
	
  180,444	
  
	
  47,899	
  
	
  (18,056)	
  
	
  19,493	
  
	
  229,780	
  

On	
  December	
  17,	
  2014,	
  the	
  Trust	
  announced	
  a	
  cash	
  distribution	
  of	
  $0.18666	
  per	
  REIT	
  A	
  Unit	
  for	
  the	
  month	
  of	
  December	
  2014.	
  
The	
  amount	
  payable	
  at	
  December	
  31,	
  2014	
  was	
  satisfied	
  on	
  January	
  15,	
  2015	
  by	
  $14,256	
  in	
  cash	
  and	
  $5,891	
  in	
  connection	
  with	
  
the	
  issuance	
  of	
  228,186	
  REIT	
  A	
  Units.	
  

On	
  January	
  20,	
  2015,	
  the	
  Trust	
  announced	
  a	
  cash	
  distribution	
  of	
  $0.18666	
  per	
  REIT	
  A	
  Unit	
  for	
  the	
  month	
  of	
  January	
  2015.	
  The	
  
January	
  2015	
  distribution	
  was	
  satisfied	
  on	
  February	
  15,	
  2015	
  by	
  $13,494	
  in	
  cash	
  and	
  $6,597	
  in	
  connection	
  with	
  the	
  issuance	
  of	
  
252,044	
  REIT	
  A	
  Units.	
  

On	
  February	
  18,	
  2015,	
  the	
  Trust	
  announced	
  a	
  cash	
  distribution	
  of	
  $0.18666	
  per	
  REIT	
  A	
  Unit	
  for	
  the	
  month	
  of	
  February	
  2015.	
  The	
  
February	
  2015	
  distribution	
  will	
  be	
  payable	
  on	
  March	
  16,	
  2015	
  to	
  unitholders	
  on	
  record	
  at	
  February	
  27,	
  2015.	
  

During	
   2014,	
   the	
   Trust	
   declared	
   monthly	
   distributions	
   of	
   $0.18666	
   per	
   unit,	
   or	
   $2.24	
   per	
   unit	
   for	
   the	
   year	
   ended	
  	
  
December	
  31,	
  2014.	
  	
  	
  

During	
   2013,	
   the	
   Trust	
   declared	
   monthly	
   distributions	
   of	
   $0.183	
   per	
   unit	
   up	
   to	
   March	
   31,	
   2013	
   and	
   $0.18666	
   per	
   unit	
  
thereafter,	
  or	
  $2.229	
  per	
  unit	
  for	
  the	
  year	
  ended	
  December	
  31,	
  2013.	
  	
  	
  

Note	
  19	
  	
  
EQUITY	
  

REIT	
  A	
  Units	
  
Retained	
  earnings	
  
Accumulated	
  other	
  comprehensive	
  income	
  	
  
Total	
  

December	
  31,	
  2014	
  	
  

December	
  31,	
  2013	
  

Number	
  of	
  	
  

REIT	
  A	
  Units	
  	
  
	
  107,936,575	
   	
   $	
  

	
  -‐	
   	
  
	
  -‐	
   	
  

	
  107,936,575	
  	
   $	
  

Amount	
  
	
  3,171,794	
   	
  
	
  601,495	
   	
  
	
  4,228	
   	
  
	
  3,777,517	
   	
  

Number	
  of	
  

REIT	
  A	
  Units	
  	
  
	
  103,420,221	
   	
   $	
  

	
  -‐	
   	
  
	
  -‐	
   	
  

	
  103,420,221	
   	
   $	
  

Amount	
  
	
  3,039,189	
  
	
  682,265	
  
	
  1,684	
  
	
  3,723,138	
  

Dream	
  Office	
  REIT	
  Units	
  	
  
Dream	
  Office	
  REIT	
  is	
  authorized	
  to	
  issue	
  an	
  unlimited	
  number	
  of	
  REIT	
  Units	
  and	
  an	
  unlimited	
  number	
  of	
  Special	
  Trust	
  Units.	
  The	
  
REIT	
  Units	
  are	
  divided	
  into	
  and	
  issuable	
  in	
  two	
  series:	
  REIT	
  Units,	
  Series	
  A	
  and	
  REIT	
  Units,	
  Series	
  B.	
  The	
  Special	
  Trust	
  Units	
  may	
  
only	
  be	
  issued	
  to	
  holders	
  of	
  subsidiary	
  redeemable	
  units.	
  

REIT	
  Units,	
  Series	
  A	
  and	
  REIT	
  Units,	
  Series	
  B	
  represent	
  an	
  undivided	
  beneﬁcial	
  interest	
  in	
  Dream	
  Office	
  REIT	
  and	
  in	
  distributions	
  
made	
  by	
  Dream	
  Office	
  REIT.	
  No	
  REIT	
  Unit,	
  Series	
  A	
  or	
  REIT	
  Unit,	
  Series	
  B	
  has	
  preference	
  or	
  priority	
  over	
  any	
  other.	
  Each	
  REIT	
  
Unit,	
  Series	
  A	
  and	
  REIT	
  Unit,	
  Series	
  B	
  entitles	
  the	
  holder	
  to	
  one	
  vote	
  at	
  all	
  meetings	
  of	
  unitholders.	
  

Public	
  offering	
  of	
  REIT	
  A	
  Units	
  	
  
On	
  May	
  1,	
  2013,	
  the	
  Trust	
  completed	
  a	
  public	
  offering	
  of	
  6,353,750	
  REIT	
  A	
  Units,	
  including	
  an	
  over-‐allotment	
  option,	
  at	
  a	
  price	
  
of	
  $36.20	
  per	
  unit,	
  for	
  gross	
  proceeds	
  of	
  $230,006.	
  Costs	
  related	
  to	
  the	
  offering	
  totalled	
  $9,700	
  and	
  were	
  charged	
  directly	
  to	
  
unitholders’	
  equity.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  116	
  

	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
Distribution	
  Reinvestment	
  and	
  Unit	
  Purchase	
  Plan	
  	
  
The	
  Distribution	
  Reinvestment	
  and	
  Unit	
  Purchase	
  Plan	
  (“DRIP”)	
  allows	
  holders	
  of	
  REIT	
  A	
  Units	
  or	
  subsidiary	
  redeemable	
  units,	
  
other	
  than	
  unitholders	
  who	
  are	
  resident	
  of	
  or	
  present	
  in	
  the	
  U.S.,	
  to	
  elect	
  to	
  have	
  all	
  cash	
  distributions	
  from	
  Dream	
  Office	
  REIT	
  
reinvested	
  in	
  additional	
  units.	
  Unitholders	
  who	
  participate	
  in	
  the	
  DRIP	
  receive	
  an	
  additional	
  distribution	
  of	
  units	
  equal	
  to	
  4%	
  of	
  
each	
  cash	
  distribution	
  that	
  was	
  reinvested.	
  The	
  price	
  per	
  unit	
  is	
  calculated	
  by	
  reference	
  to	
  a	
  ﬁve-‐day	
  weighted	
  average	
  closing	
  
price	
  of	
  the	
  REIT	
  A	
  Units	
  on	
  the	
  Toronto	
  Stock	
  Exchange	
  (“TSX”)	
  preceding	
  the	
  relevant	
  distribution	
  date,	
  which	
  typically	
  is	
  on	
  or	
  
about	
  the	
  15th	
  day	
  of	
  the	
  month	
  following	
  the	
  declaration.	
  

For	
  the	
  year	
  ended	
  December	
  31,	
  2014,	
  2,236,530	
  REIT	
  A	
  Units	
  were	
  issued	
  under	
  the	
  DRIP	
  for	
  $63,248	
  (December	
  31,	
  2013	
  –	
  
1,509,148	
  REIT	
  A	
  Units	
  for	
  $47,899).	
  

The	
   Unit	
   Purchase	
   Plan	
   feature	
   of	
   the	
   DRIP	
   facilitates	
   the	
   purchase	
   of	
   additional	
   REIT	
   A	
   Units	
   by	
   existing	
   unitholders.	
  
Participation	
   in	
   the	
   Unit	
   Purchase	
   Plan	
   is	
   optional	
   and	
   subject	
   to	
   certain	
   limitations	
   on	
   the	
   maximum	
   number	
   of	
   additional	
  	
  
REIT	
   A	
   Units	
   that	
   may	
   be	
   acquired.	
   The	
   price	
   per	
   unit	
   is	
   calculated	
   in	
   the	
   same	
   manner	
   as	
   the	
   DRIP.	
   No	
   commission,	
   service	
  
charges	
  or	
  brokerage	
  fees	
  are	
  payable	
  by	
  participants	
  in	
  connection	
  with	
  either	
  the	
  reinvestment	
  or	
  purchase	
  features	
  of	
  the	
  
DRIP.	
   For	
   the	
   year	
   ended	
   December	
   31,	
   2014,	
   4,765	
   REIT	
   A	
   Units	
   were	
   issued	
   under	
   the	
   Unit	
   Purchase	
   Plan	
   for	
   $135	
  	
  
(December	
  31,	
  2013	
  –	
  12,212	
  REIT	
  A	
  Units	
  for	
  $429).	
  

Debenture	
  conversions	
  	
  
For	
  the	
  year	
  ended	
  December	
  31,	
  2014,	
  $500	
  of	
  5.5%	
  Series	
  H	
  Debentures	
  were	
  converted	
  for	
  13,628	
  REIT	
  A	
  Units.	
  For	
  the	
  year	
  
ended	
  December	
  31,	
  2013,	
  no	
  debentures	
  were	
  converted.	
  	
  

Exchange	
  of	
  REIT	
  B	
  Units	
  for	
  REIT	
  A	
  Units	
  
On	
  July	
  24,	
  2014,	
  2,936,023	
  REIT	
  B	
  Units	
  were	
  exchanged	
  for	
  2,936,023	
  REIT	
  A	
  Units	
  totalling	
  $85,350.	
  The	
  exchange	
  was	
  valued	
  
based	
  on	
  the	
  carrying	
  amount	
  of	
  the	
  subsidiary	
  redeemable	
  units,	
  the	
  day	
  prior	
  to	
  the	
  exchange	
  to	
  REIT	
  B	
  Units.	
  

Normal	
  course	
  issuer	
  bid	
  
The	
  Trust	
  renewed	
  its	
  normal	
  course	
  issuer	
  bid,	
  which	
  commenced	
  on	
  June	
  20,	
  2014	
  and	
  will	
  remain	
  in	
  effect	
  until	
  the	
  earlier	
  of	
  
June	
  19,	
  2015	
   or	
  the	
  date	
  on	
   which	
  the	
  Trust	
  has	
  purchased	
   the	
  maximum	
  number	
  of	
  REIT	
   A	
  Units	
  permitted	
  under	
  the	
  bid.	
  	
  
Under	
  the	
  bid,	
  the	
  Trust	
  has	
  the	
  ability	
  to	
  purchase	
  for	
  cancellation	
  up	
  to	
  a	
  maximum	
  of	
  10,298,296	
  REIT	
  A	
  Units	
  (representing	
  
10%	
  of	
  the	
  Trust’s	
  public	
  float	
  of	
  102,982,963	
  REIT	
  A	
  Units	
  at	
  the	
  time	
  of	
  entering	
  the	
  bid	
  through	
  the	
  facilities	
  of	
  the	
  TSX).	
  For	
  
the	
  year	
  ended	
  December	
  31,	
  2014,	
  832,200	
  REIT	
  A	
  Units	
  had	
  been	
  purchased	
  and	
  subsequently	
  cancelled	
  under	
  the	
  bid	
  for	
  a	
  
total	
  cost	
  of	
  $20,924	
  (December	
  31,	
  2013	
  –	
  2,134,800	
  REIT	
  A	
  Units	
  cancelled	
  for	
  $60,665).	
  

Subsequent	
   to	
   year-‐end,	
   the	
   Trust	
   purchased	
   an	
   additional	
   835,000	
   REIT	
   A	
   Units	
   under	
   the	
   normal	
   course	
   issuer	
   bid	
   for	
  
cancellation	
  for	
  a	
  total	
  cost	
  of	
  $22,348.	
  

Short	
  form	
  base	
  shelf	
  prospectus	
  
On	
  November	
  26,	
  2012,	
  the	
  Trust	
  issued	
  a	
  short	
  form	
  base	
  shelf	
  prospectus,	
  which	
  is	
  valid	
  for	
  a	
  25-‐month	
  period,	
  during	
  which	
  
time	
  the	
  Trust	
  may	
  offer	
  and	
  issue,	
  from	
  time	
  to	
  time,	
  units	
  and	
  debt	
  securities	
  convertible	
  into	
  or	
  exchangeable	
  for	
  units	
  of	
  the	
  
Trust,	
  or	
  any	
  combination	
  thereof,	
  with	
  an	
  aggregate	
  offering	
  price	
  of	
  up	
  to	
  $2,000,000.	
  The	
  short	
  form	
  base	
  shelf	
  prospectus	
  
expired	
  on	
  December	
  26,	
  2014,	
  and	
  has	
  not	
  yet	
  been	
  renewed.	
  	
  	
  

For	
   the	
   year	
   ended	
   December	
   31,	
   2014,	
   the	
   Trust	
   completed	
   the	
   issuance	
   of	
   $150,000	
   aggregate	
   principal	
   amount	
   of	
   senior	
  
unsecured	
  debentures	
  (December	
  31,	
  2013	
  –	
  $300,000)	
  under	
  the	
  short	
  form	
  base	
  shelf	
  prospectus.	
  	
  	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  117	
  

	
  
	
  
Note	
  20	
  	
  
ASSETS	
  HELD	
  FOR	
  SALE	
  AND	
  DISPOSITIONS	
  
Assets	
  held	
  for	
  sale	
  	
  
As	
   at	
   December	
   31,	
   2014,	
   the	
   Trust	
   held	
   an	
   investment	
   in	
   a	
   joint	
   venture	
   totalling	
   $2,968	
   (December	
   31,	
   2013	
   –	
   $15,921)	
  	
  
as	
   assets	
   held	
   for	
   sale.	
   The	
   Trust’s	
   share	
   of	
   the	
   joint	
   venture’s	
   assets	
   and	
   liabilities	
   were	
   $2,990	
   and	
   $22,	
   respectively	
  
(December	
  31,	
  2013	
  –	
  $21,619	
  and	
  $5,698,	
  respectively).	
  At	
  December	
  31,	
  2014,	
  management	
  had	
  committed	
  to	
  a	
  plan	
  of	
  sale	
  
of	
  the	
  underlying	
  properties,	
  and	
  therefore	
  the	
  investment	
  in	
  the	
  joint	
  ventures	
  has	
  been	
  reclassified	
  as	
  assets	
  held	
  for	
  sale.	
  

During	
   the	
   year,	
   the	
   Trust	
   disposed	
   of	
   its	
   investment	
   in	
   certain	
   joint	
   ventures	
   totalling	
   $12,597.	
   The	
   Trust’s	
   share	
   of	
   the	
  
disposed	
  joint	
  venture	
  assets	
  and	
  liabilities	
  were	
  $18,179	
  and	
  $5,582,	
  respectively.	
  As	
  a	
  result	
  of	
  the	
  sale,	
  the	
  Trust	
  recognized	
  a	
  
net	
  loss	
  of	
  $738.	
  

Dispositions	
  
For	
  the	
  year	
  ended	
  December	
  31,	
  2014,	
  the	
  following	
  dispositions	
  were	
  completed:	
  

Property	
  
9705	
  Horton	
  Road,	
  Calgary	
  
26229	
  Township	
  Road	
  531,	
  Edmonton(4)	
   	
  
11404	
  Winterburn	
  Road	
  NW,	
  Edmonton(4)	
  
16134	
  -‐	
  114th	
  Avenue	
  NW,	
  Edmonton(4)	
   	
  
16104	
  -‐	
  114th	
  Avenue	
  NW,	
  Edmonton(4)	
   	
  
St.	
  Albert	
  Trail	
  Centre,	
  Edmonton	
  
Total	
  	
  
(1)	
  Gross	
  proceeds	
  before	
  transaction	
  costs.	
  

Property	
  	
  

type	
  
office	
  
flex	
  
flex	
  
flex	
  
flex	
  
office	
  

Disposed	
  

GLA	
  
(sq.	
  ft.)	
   
	
  55,363	
  
	
  89,165	
  
	
  81,917	
  
	
  48,353	
  
	
  28,759	
  
	
  48,402	
  
	
  351,959	
  

Gross	
  
(1)

proceeds

	
   	
   Mortgages	
  	
  

discharged	
  

Loss	
  	
  
(2)

	
   on	
  sale

	
  $	
  

	
  $	
  

	
  9,150	
  
	
  12,084	
  
	
  10,489	
  
	
  3,938	
  
	
  6,281	
  
	
  12,075	
  
	
  54,017	
  

	
  $	
  

	
  $	
  

	
  5,919(3)	
  	
   $	
  
	
  5,529(3)	
  	
  
	
  5,599(3)	
  	
  
	
  2,651	
  
	
  2,030	
  
	
  6,389	
  
	
  28,117	
  

	
  $	
  

	
  (173)	
  	
  
	
  (68)	
  	
  
	
  (24)	
  	
  
	
  (44)	
  	
  
	
  (5)	
  	
  
	
  (424)	
  	
  
	
  (738)	
  	
  

Date	
  disposed	
  
June	
  12,	
  2014	
  
September	
  9,	
  2014	
  
September	
  9,	
  2014	
  
September	
  9,	
  2014	
  
September	
  9,	
  2014	
  
September	
  15,	
  2014	
  

(2)	
  Loss	
  on	
  sale	
  includes	
  the	
  write-‐off	
  of	
  financing	
  costs	
  and	
  fair	
  value	
  adjustments	
  associated	
  with	
  the	
  debt	
  discharged,	
  transaction	
  costs	
  and	
  the	
  write-‐off	
  of	
  

	
  	
  	
  	
  	
  	
  goodwill	
  associated	
  with	
  the	
  cash-‐generating	
  unit.	
  

(3)	
  Mortgages	
  assumed	
  by	
  purchasers	
  on	
  disposal	
  of	
  investment	
  properties.	
  

(4)	
  These	
  investment	
  properties	
  were	
  sold	
  to	
  Dream	
  Industrial	
  REIT	
  (refer	
  to	
  Note	
  9	
  and	
  Note	
  25).	
  	
  

For	
  the	
  year	
  ended	
  December	
  31,	
  2013,	
  the	
  following	
  dispositions	
  were	
  completed:	
  

Property	
  
625	
  University	
  Park	
  Drive,	
  Regina	
  
2640,	
  2510–2550	
  Quance	
  Street,	
  Regina	
  
Total	
  	
  
(1)	
  Gross	
  proceeds	
  before	
  transaction	
  costs.	
  

Property	
  	
  

Disposed	
  

GLA	
  

type	
  
office	
  
office	
  

(sq.	
  ft.)	
   
	
  17,145	
  
	
  69,554	
  
    	
  86,699	
  

	
  $	
  

	
  $	
  

Gross	
  
proceeds(1)	
   
	
  5,182	
  
	
  16,300	
  
	
  21,482	
  

	
  $	
  

	
  $	
  

	
   Mortgages	
  	
  

discharged	
  
	
  -‐	
  
	
  8,767	
  
	
  8,767	
  

	
  $	
  

	
  $	
  

Loss	
  	
  
on	
  sale(2)	
  	
  
	
  (68)	
  	
  
	
  (215)	
  	
  
	
  (283)	
  	
  

Date	
  disposed	
  
January	
  31,	
  2013	
  
January	
  31,	
  2013	
  

(2)	
  Loss	
  on	
  sale	
  includes	
  the	
  write-‐off	
  of	
  financing	
  costs	
  and	
  fair	
  value	
  adjustments	
  associated	
  with	
  the	
  debt	
  discharged,	
  transaction	
  costs	
  and	
  the	
  write-‐off	
  of	
  

	
  	
  	
  	
  	
  goodwill	
  associated	
  with	
  the	
  cash-‐generating	
  unit.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  118	
  

	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
   
 
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
   	
  
	
  
	
   	
  
	
  
	
  
	
  
 
 
   
 
 
 
   
 
   
 
   
 
 
 
	
  
	
  
	
   	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
 
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
 
	
  
 
	
  
	
  
	
  
Note	
  21	
  
INTEREST	
  	
  
Interest	
  on	
  debt	
  	
  
Interest	
  on	
  debt	
  incurred	
  and	
  charged	
  to	
  comprehensive	
  income	
  is	
  recorded	
  as	
  follows:	
  

Interest	
  expense	
  incurred,	
  at	
  contractual	
  and	
  hedged	
  rate	
  of	
  debt	
  
Amortization	
  of	
  financing	
  costs	
  
Amortization	
  of	
  fair	
  value	
  adjustments	
  on	
  assumed	
  debt	
  
Interest	
  expense	
  
Add	
  (deduct):	
  
	
   Amortization	
  of	
  financing	
  costs	
  
	
   Amortization	
  of	
  fair	
  value	
  adjustments	
  on	
  assumed	
  debt	
  
	
   Change	
  in	
  accrued	
  interest	
  
Cash	
  interest	
  paid	
  

Year	
  ended	
  December	
  31,	
  

2014	
  
	
  136,528	
   	
   $	
  
	
  3,178	
   	
  
	
  (4,754)	
  	
  
	
  134,952	
   	
  

	
  (3,178)	
  	
  
	
  4,754	
   	
  
	
  (1,736)	
  	
  
	
  134,792	
   	
   $	
  

2013	
  
	
  133,768	
  
	
  3,034	
  
	
  (6,633)	
  
	
  130,169	
  

	
  (3,034)	
  
	
  6,633	
  
	
  (580)	
  
	
  133,188	
  

$	
  

$	
  

Certain	
  debts	
  assumed	
  in	
  connection	
  with	
  acquisitions	
  have	
  been	
  adjusted	
  to	
  fair	
  value	
  using	
  the	
  estimated	
  market	
  interest	
  rate	
  
at	
   the	
   time	
   of	
   the	
   acquisition	
   (“fair	
   value	
   adjustments”).	
   Fair	
   value	
   adjustments	
   are	
   amortized	
   to	
   interest	
   expense	
   over	
   the	
  
expected	
  life	
  of	
  the	
  debt	
  using	
  the	
  effective	
  interest	
  rate	
  method.	
  Non-‐cash	
  adjustments	
  to	
  interest	
  expense	
  are	
  recorded	
  as	
  a	
  
change	
  in	
  non-‐cash	
  working	
  capital	
  in	
  the	
  consolidated	
  statements	
  of	
  cash	
  flows.	
  

Interest	
  on	
  subsidiary	
  redeemable	
  units	
  
Interest	
  payments	
  charged	
  to	
  comprehensive	
  income	
  are	
  recorded	
  as	
  follows:	
  

Paid	
  in	
  cash	
  
Paid	
  by	
  way	
  of	
  reinvestment	
  in	
  subsidiary	
  redeemable	
  units	
  
Less:	
  Interest	
  payable	
  at	
  December	
  31,	
  2013	
  (December	
  31,	
  2012)	
  
Plus:	
  Interest	
  payable	
  at	
  December	
  31,	
  2014	
  (December	
  31,	
  2013)	
  
Total	
  

Note	
  22	
  
FAIR	
  VALUE	
  ADJUSTMENTS	
  TO	
  FINANCIAL	
  INSTRUMENTS	
  

Remeasurement	
  of	
  conversion	
  feature	
  on	
  convertible	
  debentures 
Remeasurement	
  of	
  carrying	
  value	
  of	
  subsidiary	
  redeemable	
  units 
Remeasurement	
  of	
  carrying	
  value	
  of	
  deferred	
  trust	
  units	
  

Year	
  ended	
  December	
  31,	
  

2014	
  
	
  5,186	
   	
   $	
  
	
  -‐	
   	
  
	
  (660)	
  	
  
	
  112	
   	
  
	
  4,638	
   	
   $	
  

2013	
  
	
  7,524	
  
	
  361	
  
	
  (648)	
  
	
  660	
  
	
  7,897	
  

$	
  

$	
  

Note	
  
13	
  
14	
  
15	
  

	
   $	
  

	
   $	
  

Year	
  ended	
  December	
  31,	
  

2014	
  
	
  450	
  
	
  1,477	
  
	
  822	
  
	
  2,749	
  

	
  $	
  

	
  $	
  

2013	
  
	
  1,714	
  
	
  30,461	
  
	
  2,665	
  
	
  34,840	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  119	
  

	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
 
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
Note	
  23	
  
INCOME	
  TAXES	
  
The	
  Trust	
  is	
  subject	
  to	
  taxation	
  in	
  the	
  U.S.	
  on	
  the	
  taxable	
  income	
  earned	
  by	
  its	
  investment	
  properties	
  located	
  in	
  the	
  U.S.	
  at	
  a	
  
rate	
  of	
  approximately	
  38.46%	
  (December	
   31,	
  2013	
   –	
  38.46%).	
  A	
  deferred	
   tax	
  asset	
  arises	
  from	
  the	
  loss	
  carry-‐forwards	
  of	
  the	
  
U.S.	
  subsidiaries.	
  A	
  deferred	
  tax	
  liability	
  arises	
  from	
  the	
  temporary	
  differences	
  between	
  the	
  carrying	
  value	
  and	
  the	
  tax	
  basis	
  of	
  
the	
  net	
  assets	
  of	
  the	
  U.S.	
  subsidiaries.	
  The	
  tax	
  effects	
  of	
  temporary	
  differences	
  arise	
  from	
  investment	
  properties.	
  The	
  loss	
  carry-‐
forwards	
  and	
  the	
  tax	
  effects	
  of	
  temporary	
  differences	
  that	
  give	
  rise	
  to	
  the	
  recognition	
  of	
  deferred	
  tax	
  assets	
  and	
  liabilities	
  are	
  
presented	
  below:	
  

Deferred	
  tax	
  assets	
  
Deferred	
  financing	
  costs	
  
Financial	
  instruments	
  
Loss	
  carry-‐forwards	
  

Deferred	
  tax	
  liabilities	
  
Investment	
  properties	
  
Deferred	
  tax	
  liabilities,	
  net	
  

December	
  31,	
  

December	
  31,	
  	
  

2014	
  

2013	
  

$	
  

$	
  

	
   $	
  

	
  327	
  
	
  1,350	
  
	
  915	
  
	
  2,592	
  

	
  -‐	
  
	
  -‐	
  
	
  1,484	
  
	
  1,484	
  

	
  (8,775)	
  
	
  (6,183)	
  

	
   $	
  

	
  (6,651)	
  
	
  (5,167)	
  

A	
  reconciliation	
  between	
  the	
  expected	
  income	
  taxes	
  based	
  upon	
  the	
  2014	
  and	
  2013	
  statutory	
  rates	
  and	
  the	
  income	
  tax	
  expense	
  	
  
recognized	
  during	
  the	
  years	
  ended	
  December	
  31,	
  2014	
  and	
  December	
  31,	
  2013	
  are	
  as	
  follows:	
  

Income	
  taxes	
  computed	
  at	
  the	
  statutory	
  rate	
  of	
  nil	
  that	
  is	
  applicable	
  to	
  the	
  Trust	
  
Deferred	
  income	
  tax	
  expense	
  on	
  U.S.	
  properties	
  

December	
  31,	
  	
  

December	
  31,	
  	
  

	
   $	
  

	
   $	
  

2014	
  
	
  -‐	
  
	
  638	
  
	
  638	
  

	
   $	
  

	
   $	
  

2013	
  
	
  -‐	
  
	
  344	
  
	
  344	
  

As	
   part	
   of	
   the	
   deferred	
   tax	
   balance,	
   $378	
   is	
   a	
   result	
   of	
   foreign	
   exchange	
   differences	
   for	
   the	
   U.S.	
   properties.	
   This	
   amount	
   is	
  
included	
  as	
  part	
  of	
  other	
  comprehensive	
  income	
  under	
  unrealized	
  foreign	
  currency	
  translation	
  gain.	
  

Note	
  24	
  
SEGMENTED	
  INFORMATION	
  	
  
For	
  the	
  year	
  ended	
  December	
  31,	
  2014,	
  the	
  Trust’s	
  reportable	
  operating	
  segments	
  of	
  its	
  investment	
  properties	
  and	
  results	
  of	
  
operations	
  were	
  segmented	
  into	
  geographic	
  segments,	
  namely	
  Western	
  Canada,	
  Calgary	
  downtown,	
  Calgary	
  suburban,	
  Toronto	
  
downtown,	
  Toronto	
  suburban	
  and	
  Eastern	
  Canada.	
  Corporate	
  amounts,	
  lease	
  termination	
  fees,	
  bad	
  debt	
  expense,	
  straight-‐line	
  
rent	
  and	
  amortization	
  of	
  lease	
  incentives,	
  and	
  revenue	
  and	
  expenses	
  related	
  to	
  properties	
  held	
  for	
  redevelopment,	
  properties	
  
acquired	
   after	
   January	
   1,	
   2013	
   and	
   assets	
   held	
   for	
   sale,	
   were	
   included	
   in	
   “Other”	
   for	
   segment	
   disclosure.	
   The	
   Trust	
   did	
   not	
  
allocate	
  interest	
  expense	
  to	
  these	
  segments	
  since	
  leverage	
  is	
  viewed	
  as	
  a	
  corporate	
  function.	
  The	
  decision	
  as	
  to	
  where	
  to	
  incur	
  
the	
  debt	
  is	
  largely	
  based	
  on	
  minimizing	
  the	
  cost	
  of	
  debt	
  and	
  is	
  not	
  speciﬁcally	
  related	
  to	
  the	
  segments.	
  Similarly,	
  other	
  income,	
  
other	
  expenses,	
  fair	
  value	
  adjustments,	
  net	
  gains	
  (losses)	
  on	
  transactions	
  and	
  other	
  activities,	
  and	
  deferred	
  income	
  taxes	
  were	
  
not	
  allocated	
  to	
  the	
  segments.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  120	
  

 
 
 
	
  
 
 
 
	
  
	
  	
  
 
 
	
  
	
   
	
  
 
 
 
	
   
 
	
  
	
  
	
  
	
  
	
  
 
	
  
	
  
	
  
 
  
 
 
 
 
	
  
	
  
	
  
 
 
 
 
 
 
 
 
 
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
For	
  the	
  year	
  ended	
  December	
  31,	
  2014,	
  the	
  segments	
  include	
  the	
  Trust’s	
  proportionate	
  share	
  of	
  its	
  joint	
  ventures.	
  The	
  column	
  
entitled	
   “Reconciliation”	
   adjusts	
   the	
   segmented	
   results	
   to	
   account	
   for	
   these	
   joint	
   ventures	
   using	
   the	
   equity	
   method	
   of	
  
accounting	
  as	
  applied	
  in	
  these	
  consolidated	
  ﬁnancial	
  statements.	
  	
  

Year	
  ended	
  	
  
December	
  31,	
  2014	
  

Operations	
  

Investment	
  properties	
  

Western	
  
Canada	
  	
  

Calgary	
  
downtown	
  	
  

Calgary	
  
suburban	
  	
  

Toronto	
  
downtown	
   	
  

Toronto	
  
suburban	
  	
  

Eastern	
  
Canada	
  	
  

Segment	
  
total(1)	
  

	
   Other(2)	
  

	
   Reconciliation(1)	
  

Total	
  

	
   revenue	
  

$	
  

	
  136,448	
  $	
  

	
  113,869	
  $	
  

	
  19,057	
  $	
  

	
  226,365	
  $	
  

	
  114,293	
  $	
  

	
  142,126	
  $	
  

	
  752,158	
   $	
  

	
  65,837	
   $	
  

	
  (112,716)	
   $	
  

	
  705,279	
  

Investment	
  properties	
  

	
   operating	
  expenses	
  

	
  (52,641)	
  	
  

	
  (44,938)	
   	
  

	
  (8,774)	
   	
  

	
  (105,857)	
   	
  

	
  (50,969)	
   	
  

	
  (65,042)	
   	
  

	
  (328,221)	
  

	
  (27,824)	
  

	
  52,274	
  

	
  (303,771)	
  

Net	
  rental	
  income	
  	
  

(segment	
  income)	
  

	
  83,807	
  

	
  68,931	
  

	
  10,283	
  

	
  120,508	
  

	
  63,324	
  

	
  77,084	
  

	
  423,937	
  

	
  38,013	
  

	
  (60,442)	
  

	
  401,508	
  

Other	
  income	
  

Other	
  expenses	
  

Fair	
  value	
  adjustments,	
  

	
   net	
  gains	
  (losses)	
  on	
  

	
   transactions	
  and	
  other	
  

	
   activities	
  

Income	
  before	
  income	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  19,199	
  

	
   	
  (184,681)	
  

	
  37,576	
  

	
  56,775	
  

17,728	
  

	
  (166,953)	
  

	
  -‐	
  

	
   	
  (136,540)	
  

	
  5,138	
  

	
  (131,402)	
  

	
   taxes	
  

	
  83,807	
  

	
  68,931	
  

	
  10,283	
  

	
  120,508	
  

	
  63,324	
  

	
  77,084	
  

	
  423,937	
  

	
   	
  (264,009)	
  

Deferred	
  income	
  taxes	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  (638)	
  

Net	
  income	
  for	
  the	
  year	
  

$	
  

	
  83,807	
  $	
  

	
  68,931	
  $	
  

	
  10,283	
  $	
  

	
  120,508	
  $	
  

	
  63,324	
  $	
  

	
  77,084	
  $	
  

	
  423,937	
   $	
   	
  (264,647)	
   $	
  

	
  -‐	
  

	
  -‐	
  

	
  159,928	
  

	
  (638)	
  

	
  -‐	
   $	
  

	
  159,290	
  

Year	
  ended	
  	
  
December	
  31,	
  2014	
  

Western	
  
Canada	
   	
  

Calgary	
  
downtown	
   	
  

Calgary	
  
suburban	
   	
  

Toronto	
  
downtown	
   	
  

Toronto	
  
suburban	
   	
  

Eastern	
  
Canada	
   	
  

Segment	
  
total(1)	
  

	
   Other(3)	
  

Reconciliation(1)(4)	
  

Total	
  

Capital	
  expenditures(5)	
  

Investment	
  properties	
  

$	
  

$	
  

	
  13,189	
  $	
  

	
  17,685	
  $	
  

	
  2,132	
  $	
  

	
  17,074	
  $	
  

	
  14,492	
  $	
  

	
  17,473	
  $	
  

	
  82,045	
   $	
  

	
  1,155	
   $	
  

	
  (5,807)	
   $	
  

	
  77,393	
  

	
  1,395,943	
  $	
  

	
  1,162,981	
  $	
  

	
  183,969	
  $	
  

	
  2,409,667	
  $	
  

	
  962,942	
  $	
  

	
  1,076,344	
  $	
  

	
  7,191,846	
   $	
  

	
  12,750	
   $	
  

	
  (1,065,526)	
   $	
   	
  6,139,070	
  

(1)  Includes	
  the	
  Trustʼs	
  proportionate	
  share	
  of	
  its	
  joint	
  ventures,	
  accounted	
  for	
  using	
  the	
  equity	
  method	
  of	
  accounting.	
  
(2)  Includes	
  corporate	
  amounts,	
  lease	
  termination	
  fees,	
  bad	
  debt	
  expense,	
  straight-‐line	
  rent	
  and	
  amortization	
  of	
  lease	
  incentives,	
  and	
  revenue	
  and	
  expenses	
  

related	
  to	
  properties	
  held	
  for	
  redevelopment,	
  properties	
  acquired	
  after	
  January	
  1,	
  2013	
  and	
  assets	
  held	
  for	
  sale.	
  

(3)  Includes	
  properties	
  held	
  for	
  redevelopment,	
  assets	
  held	
  for	
  sale	
  and	
  sold	
  properties.	
  
(4)  Includes	
  assets	
  held	
  for	
  sale.	
  
(5)  Includes	
  building	
  improvements	
  and	
  initial	
  direct	
  leasing	
  costs	
  and	
  lease	
  incentives.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  121	
  

	
  
	
   	
  
	
   	
  
	
   	
  
	
   	
  
	
   	
  
	
   	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
   	
  
	
   	
  
	
   	
  
	
   	
  
	
   	
  
	
   	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
   	
  
	
   	
  
	
   	
  
	
   	
  
	
   	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
   	
  
	
   	
  
	
   	
  
	
   	
  
	
   	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
   	
  
	
  
	
   	
  
	
   	
  
	
   	
  
	
   	
  
	
   	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
   	
  
	
  
	
   	
  
	
   	
  
	
   	
  
	
   	
  
	
   	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
   	
  
	
  
	
   	
  
	
   	
  
	
   	
  
	
   	
  
	
   	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
   	
  
	
  
	
   	
  
	
   	
  
	
   	
  
	
   	
  
	
   	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
   	
  
	
   	
  
	
   	
  
	
   	
  
	
   	
  
	
   	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
   	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
   	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
Year	
  ended	
  	
  
December	
  31,	
  2013	
  

Operations	
  

Investment	
  properties	
  

Western	
  
Canada	
  	
  

Calgary	
  
downtown	
  	
  

Calgary	
  
suburban	
  	
  

Toronto	
  
downtown	
  

Toronto	
  
suburban	
  	
  

Eastern	
  
Canada	
  	
  

Segment	
  
total(1)	
  

Other(2)	
  

	
   Reconciliation(1)	
  

Total	
  

	
   revenue	
  

$	
  

	
  135,975	
   $	
  

	
  111,127	
   $	
  

	
  19,471	
   $	
  

	
  225,778	
   $	
  

	
  117,284	
   $	
  

	
  140,848	
   $	
  

	
  750,483	
   $	
  

	
  50,048	
   $	
  

	
  (113,359)	
   $	
  

	
  687,172	
  

Investment	
  properties	
  	
  

	
   operating	
  expenses	
  

	
  (53,960)	
  	
  

	
  (42,693)	
  

	
  (9,074)	
  

	
  (107,379)	
  

	
  (51,418)	
  

	
  (64,217)	
  

	
  (328,741)	
  

	
  (18,902)	
  

	
  51,971	
  

	
  (295,672)	
  

Net	
  rental	
  income	
  	
  

(segment	
  income)	
  

	
  82,015	
  

	
  68,434	
  

	
  10,397	
  

	
  118,399	
  

	
  65,866	
  

	
  76,631	
  

	
  421,742	
  

Other	
  income	
  

Other	
  expenses	
  

Fair	
  value	
  adjustments,	
  

	
   net	
  gains	
  (losses)	
  on	
  

	
   transactions	
  

	
   and	
  other	
  activities	
  

Income	
  before	
  income	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  31,146	
  

	
  20,387	
  

	
  (61,388)	
  

	
  391,500	
  

	
  84,327	
  

	
  104,714	
  

	
  (182,858)	
  

	
  18,406	
  

	
  (164,452)	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  154,938	
  

	
  (41,345)	
  

	
  113,593	
  

	
   taxes	
  

	
  82,015	
  

	
  68,434	
  

	
  10,397	
  

	
  118,399	
  

	
  65,866	
  

	
  76,631	
  

	
  421,742	
  

	
  23,613	
  

Deferred	
  income	
  taxes	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  -‐	
  

	
  (344)	
  

Net	
  income	
  for	
  the	
  year	
  

$	
  

	
  82,015	
   $	
  

	
  68,434	
   $	
  

	
  10,397	
   $	
  

	
  118,399	
   $	
  

	
  65,866	
   $	
  

	
  76,631	
   $	
  

	
  421,742	
   $	
  

	
  23,269	
   $	
  

	
  -‐	
  

	
  -‐	
  

	
  445,355	
  

	
  (344)	
  

	
  -‐	
   $	
  

	
  445,011	
  

Year	
  ended	
  	
  
December	
  31,	
  2013	
  

Capital	
  expenditures(5)	
  

Western	
  
Canada	
  	
  

Calgary	
  
downtown	
   	
  

Calgary	
  
suburban	
  	
  

Toronto	
  
downtown	
  	
  

Toronto	
  
suburban	
  	
  

Eastern	
  
Canada	
   	
  

Segment	
  
total(1)	
  

Other(3)	
  

	
   Reconciliation(1)(4)	
  

Total	
  

$	
  

	
  9,001	
   $	
  

	
  21,231	
   $	
  

	
  752	
   $	
  

	
  19,519	
   $	
  

	
  14,611	
   $	
  

	
  8,676	
   $	
  

	
  73,790	
   $	
  

	
  1,735	
   $	
  

	
  (7,060)	
   $	
  

	
  68,465	
  

Investment	
  properties	
  

$	
   	
  1,445,127	
   $	
   	
  1,203,684	
   $	
  

	
  183,927	
   $	
   	
  2,365,230	
   $	
  

	
  967,882	
   $	
   	
  1,072,085	
   $	
   	
  7,237,935	
   $	
  

	
  85,667	
   $	
  

	
  (1,081,917)	
   $	
  

	
  6,241,685	
  

(1)  Includes	
  the	
  Trustʼs	
  proportionate	
  share	
  of	
  its	
  joint	
  ventures,	
  accounted	
  for	
  using	
  the	
  equity	
  method	
  of	
  accounting.	
  
(2)  Includes	
  corporate	
  amounts,	
  lease	
  termination	
  fees,	
  bad	
  debt	
  expense,	
  straight-‐line	
  rent	
  and	
  amortization	
  of	
  lease	
  incentives,	
  and	
  revenue	
  and	
  expenses	
  

related	
  to	
  properties	
  held	
  for	
  redevelopment,	
  properties	
  acquired	
  after	
  January	
  1,	
  2013	
  and	
  assets	
  held	
  for	
  sale.	
  

(3)  Includes	
  properties	
  held	
  for	
  redevelopment,	
  assets	
  held	
  for	
  sale	
  and	
  sold	
  properties.	
  
(4)  Includes	
  assets	
  held	
  for	
  sale.	
  
(5)  Includes	
  building	
  improvements	
  and	
  initial	
  direct	
  leasing	
  costs	
  and	
  lease	
  incentives.	
  

Note	
  25	
  	
  
RELATED	
  PARTY	
  TRANSACTIONS	
  AND	
  ARRANGEMENTS	
  	
  
From	
  time	
  to	
  time,	
  Dream	
  Office	
  REIT	
  and	
  its	
  subsidiaries	
  enter	
  into	
  transactions	
  with	
  related	
  parties	
  that	
  are	
  conducted	
  under	
  
normal	
  commercial	
  terms.	
  Dream	
  Office	
  REIT,	
  Dream	
  Office	
  Management	
  LP,	
  formerly	
  known	
  as	
  Dundee	
  Management	
  Limited	
  
Partnership	
  (a	
  wholly	
  owned	
  subsidiary	
  of	
  Dream	
  Office	
  LP)	
  and	
  Dream	
  Asset	
  Management	
  Corp.	
  (“DAM”),	
  formerly	
  known	
  as	
  
Dundee	
   Realty	
   Corporation,	
   a	
   subsidiary	
   of	
   Dream	
   Unlimited	
   Corp.,	
   are	
   parties	
   to	
   an	
   administrative	
   services	
   agreement	
   (the	
  
“Services	
  Agreement	
  with	
  DAM”).	
  Effective	
  August	
  24,	
  2007,	
  Dream	
  Office	
  REIT	
  also	
  has	
  an	
  asset	
  management	
  agreement	
  (the	
  
“Asset	
   Management	
   Agreement”)	
   with	
   DAM	
   pursuant	
   to	
   which	
   DAM	
   provides	
   certain	
   asset	
   management	
   services	
   to	
   Dream	
  
Office	
   REIT	
   and	
   its	
   subsidiaries.	
   Effective	
   December	
   1,	
   2013,	
   Dream	
   Office	
   REIT	
   and	
   DAM	
   entered	
   into	
   a	
   Shared	
   Services	
   and	
  
Cost	
  Sharing	
  Agreement.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  122	
  

	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
   	
  
	
  	
  
	
  	
  
	
   	
  
	
  	
  
	
  	
  
	
  
	
  
	
   	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
Asset	
  Management	
  Agreement	
  	
  
The	
  Asset	
  Management	
  Agreement	
  provides	
  for	
  a	
  broad	
  range	
  of	
  asset	
  management	
  services	
  for	
  the	
  following	
  fees:	
  

• 

• 

• 

• 

• 

base	
   annual	
   management	
   fee	
   calculated	
   and	
   payable	
   on	
   a	
   monthly	
   basis,	
   equal	
   to	
   0.25%	
   of	
   the	
   gross	
   asset	
   value	
   of	
  
properties,	
  deﬁned	
  as	
  the	
  fair	
  value	
  of	
  the	
  properties	
  at	
  August	
  23,	
  2007	
  (the	
  date	
  of	
  the	
  sale	
  of	
  our	
  portfolio	
  of	
  properties	
  
in	
  Eastern	
  Canada)	
  plus	
  the	
  purchase	
  price	
  of	
  properties	
  acquired	
  subsequent	
  to	
  that	
  date,	
  adjusted	
  for	
  any	
  properties	
  sold;	
  

incentive	
  fee	
  equal	
  to	
  15%	
  of	
  Dream	
  Office	
  REIT’s	
  adjusted	
  funds	
  from	
  operations	
  per	
  unit	
  in	
  excess	
  of	
  $2.65	
  per	
  unit;	
  	
  

capital	
  expenditures	
  fee	
  equal	
  to	
  5%	
  of	
  all	
  hard	
  construction	
  costs	
  incurred	
  on	
  each	
  capital	
  project	
  with	
  costs	
  in	
  excess	
  of	
  
$1,000,	
  excluding	
  work	
  done	
  on	
  behalf	
  of	
  tenants	
  or	
  any	
  maintenance	
  capital	
  expenditures;	
  	
  

acquisition	
  fee,	
  calculated	
  over	
  a	
  ﬁscal	
  year	
  based	
  on	
  the	
  anniversary	
  date	
  of	
  the	
  Asset	
  Management	
  Agreement,	
  equal	
  to:	
  
(i)	
  1.0%	
  of	
  the	
  purchase	
  price	
  of	
  a	
  property	
  on	
  the	
  ﬁrst	
  $100,000	
  of	
  properties	
  acquired;	
  (ii)	
  0.75%	
  of	
  the	
  purchase	
  price	
  of	
  a	
  
property	
  on	
  the	
  next	
  $100,000	
  of	
  properties	
  acquired;	
  and	
  (iii)	
  0.50%	
  of	
  the	
  purchase	
  price	
  of	
  a	
  property	
  acquired	
  in	
  excess	
  
of	
  $200,000	
  of	
  properties	
  acquired;	
  and	
  

financing	
  fee	
  equal	
  to	
  the	
  lesser	
  of	
  actual	
  expenses	
  incurred	
  by	
  DAM	
  in	
  supplying	
  services	
  relating	
  to	
  ﬁnancing	
  transactions	
  
and	
  0.25%	
  of	
  the	
  debt	
  and	
  equity	
  of	
  all	
  ﬁnancing	
  transactions	
  completed	
  on	
  behalf	
  of	
  Dream	
  Office	
  REIT.	
  

Pursuant	
   to	
   the	
   Asset	
   Management	
   Agreement	
   with	
   DAM,	
   the	
   following	
   is	
   a	
   summary	
   of	
   fees	
   incurred	
   for	
   the	
   years	
   ended	
  
December	
  31,	
  2014	
  and	
  December	
  31,	
  2013:	
  

Base	
  annual	
  management	
  fee	
  (included	
  in	
  general	
  and	
  administrative	
  expenses)	
  

Acquisition	
  fee	
  (included	
  in	
  acquisition	
  related	
  costs/investment	
  properties)	
  
Expense	
  reimbursements	
  related	
  to	
  financing	
  arrangements	
  (included	
  in	
  debt/unitholdersʼ	
  equity)	
  	
  
Total	
  incurred	
  under	
  the	
  Asset	
  Management	
  Agreement	
  

Year	
  ended	
  December	
  31,	
  

2014	
  

	
   $	
  

	
  17,093	
  

	
  $	
  

	
  -‐	
  
	
  319	
  
	
  17,412	
  

	
  $	
  

$	
  

2013	
  

	
  16,568	
  

	
  3,201	
  
	
  825	
  
	
  20,594	
  

Shared	
  Services	
  and	
  Cost	
  Sharing	
  Agreement	
  
The	
   existing	
   Asset	
   Management	
   Agreement	
   provides	
   the	
   Trust	
   and	
   DAM,	
   from	
   time	
   to	
   time,	
   the	
   opportunity	
   to	
   agree	
   on	
  
additional	
  services	
  to	
  be	
  provided	
  to	
  the	
  Trust	
  for	
  which	
  DAM	
  is	
  to	
  be	
  reimbursed	
  for	
  its	
  costs.	
  To	
  formalize	
  and	
  expand	
  this	
  
arrangement,	
   the	
   Trust	
   entered	
   into	
   a	
   Shared	
   Services	
   and	
   Cost	
   Sharing	
   Agreement	
   with	
   DAM	
   on	
   December	
   1,	
   2013.	
   The	
  
agreement	
  is	
  for	
  a	
  one-‐year	
  term	
  and	
  will	
  be	
  automatically	
  renewed	
  for	
  further	
  one-‐year	
  terms	
  unless	
  and	
  until	
  the	
  agreement	
  
is	
   terminated	
   in	
   accordance	
   with	
   its	
   terms	
   or	
   by	
   mutual	
   agreement	
   of	
   the	
   parties.	
   Pursuant	
   to	
   the	
   agreement,	
   DAM	
   will	
   be	
  
providing	
  additional	
  administrative	
  and	
  support	
  services	
  in	
  order	
  to	
  expand	
  and	
  improve	
  DAM’s	
  service	
  capability	
  in	
  connection	
  
with	
   the	
   provision	
   of	
   its	
   asset	
   management	
   services.	
   DAM	
   will	
   receive	
   an	
   annual	
   fee	
   sufficient	
   to	
   reimburse	
   it	
   for	
   all	
   the	
  
expenses	
  incurred	
  in	
  providing	
  these	
  additional	
  administrative	
  and	
  support	
  services.	
  Additionally,	
  the	
  Trust	
  will	
  also	
  reimburse	
  
DAM	
  in	
  each	
  calendar	
  year	
  for	
  its	
  share	
  of	
  costs	
  incurred	
  in	
  connection	
  with	
  certain	
  business	
  transformation	
  services	
  provided	
  
by	
  DAM.	
  

Pursuant	
  to	
  the	
  Shared	
  Services	
  and	
  Cost	
  Sharing	
  Agreement	
  with	
  DAM,	
  the	
  following	
  is	
  a	
  summary	
  of	
  fees	
  incurred	
  for	
  the	
  year	
  
ended	
  December	
  31,	
  2014	
  and	
  December	
  31,	
  2013: 	
  

Business	
  transformation	
  costs	
  
Strategic	
  services	
  and	
  other	
  
Total	
  costs	
  incurred	
  under	
  the	
  Shared	
  Services	
  and	
  Cost	
  Sharing	
  Agreement	
  

Year	
  ended	
  December	
  31,	
  

2014	
  
	
  1,100	
  
	
  405	
  
	
  1,505	
  

	
  $	
  

	
  $	
  

$	
  

$	
  

2013	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  

The	
  Trust’s	
  future	
  commitment	
   under	
  the	
  Shared	
  Services	
  and	
  Cost	
  Sharing	
   Agreement,	
  which	
  expires	
  on	
   December	
  1,	
  2020,	
  	
  
is	
  $5,490.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  123	
  

	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  	
  
 
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  	
  
Services	
  Agreement	
  with	
  DAM	
  
Pursuant	
  to	
  the	
  Services	
  Agreement	
  with	
  DAM,	
  the	
  Trust	
  received	
  from	
  or	
  paid	
  to	
  DAM	
  costs	
  incurred	
  on	
  behalf	
  of	
  the	
  other	
  
party.	
   For	
   the	
   year	
   ended	
   December	
   31,	
   2014,	
   the	
   Trust	
   processed	
   on	
   behalf	
   of	
   DAM	
   certain	
   costs	
   and	
   shared	
   services	
   of	
  	
  
$5,007	
   (year	
   ended	
   December	
   31,	
   2013	
   –	
   $8,525).	
   For	
   the	
   year	
   ended	
   December	
   31,	
   2014,	
   the	
   Trust	
   processed	
   on	
   behalf	
  	
  
of	
  DAM,	
  at	
  cost,	
  operating	
  and	
  administration	
  costs	
  of	
  regional	
  offices	
  of	
  $8,705	
  (year	
  ended	
  December	
  31,	
  2013	
  –	
  $14,412).	
  
For	
  the	
  year	
  ended	
  December	
  31,	
  2014,	
  DAM	
  processed	
  certain	
  costs	
  on	
  behalf	
  of	
  the	
  Trust	
  of	
  $37	
  (year	
  ended	
  December	
  31,	
  
2013	
  –	
  $1,429).	
  

Services	
  Agreement	
  with	
  Dream	
  Industrial	
  REIT	
  
Effective	
   October	
  4,	
  2012,	
  Dream	
  Office	
  Management	
  Corp.	
  and	
  Dream	
  Industrial	
   REIT	
   entered	
  into	
  a	
  Services	
  Agreement,	
  in	
  
which	
  the	
  Trust	
  provides	
  certain	
  services	
  to	
  Dream	
  Industrial	
  REIT	
  on	
  a	
  cost	
  recovery	
  basis.	
  

The	
   following	
   is	
   a	
   summary	
   of	
   the	
   cost	
   recoveries	
   from	
   Dream	
   Industrial	
   REIT	
   for	
   the	
   years	
   ended	
   December	
   31,	
   2014	
   and	
  
December	
  31,	
  2013:	
  

Cost	
  recoveries	
  from	
  Dream	
  Industrial	
  REIT:	
  
Total	
  cost	
  recoveries	
  from	
  Dream	
  Industrial	
  REIT	
  

Year	
  ended	
  December	
  31,	
  

2014	
  	
  
	
  5,999	
   $	
  
	
  5,999	
   $	
  

2013	
  
	
  5,130	
  
	
  5,130	
  

$	
  
$	
  

Other	
  transactions	
  with	
  Dream	
  Industrial	
  REIT	
  
As	
   discussed	
   in	
   Note	
   9	
   and	
   Note	
   20,	
   the	
   Trust	
   completed	
   the	
   sale	
   of	
   four	
   investment	
   properties	
   to	
   Dream	
   Industrial	
   REIT	
   on	
  
September	
  9,	
  2014.	
  A	
  total	
  loss	
  of	
  $141	
  was	
  recognized	
  in	
  the	
  statements	
  of	
  comprehensive	
  income	
  upon	
  disposal	
  and	
  related	
  
to	
   the	
   write-‐off	
   of	
   financing	
   costs	
   and	
   fair	
   value	
   adjustments	
   associated	
   with	
   the	
   debt	
   discharged,	
   transaction	
   costs	
   and	
   the	
  
write-‐off	
  of	
  goodwill	
  associated	
  with	
  the	
  cash-‐generating	
  unit.	
  

Amounts	
  due	
  to/from	
  related	
  parties	
  

Amounts	
  due	
  from	
  DAM:	
  

Services	
  Agreement	
  with	
  DAM	
  
Parking	
  revenue	
  received	
  on	
  behalf	
  of	
  the	
  Trust	
  

Total	
  amounts	
  due	
  from	
  DAM	
  

Amounts	
  due	
  to/(from)	
  DAM:	
  
	
   Asset	
  Management	
  Agreement	
  with	
  DAM	
  

Shared	
  Services	
  and	
  Cost	
  Sharing	
  Agreement	
  with	
  DAM	
  

Total	
  amounts	
  due	
  to	
  DAM	
  

Amounts	
  due	
  from	
  Dream	
  Industrial	
  REIT:	
  

Service	
  Agreement	
  with	
  Dream	
  Industrial	
  REIT	
  

	
   Distributions	
  from	
  Dream	
  Industrial	
  REIT	
  
Total	
  amounts	
  due	
  from	
  Dream	
  Industrial	
  REIT	
  	
  
Total	
  amounts	
  due	
  to	
  Dream	
  Industrial	
  REIT	
  related	
  to	
  Dream	
  Industrial	
  REIT	
  properties	
  

December	
  31,	
  	
  

December	
  31,	
  

2014	
  	
  

2013	
  

	
  447	
   $	
  
	
  546	
  	
  
	
  993	
   $	
  

	
  2,815	
  
	
  2,386	
  
	
  5,201	
  

December	
  31,	
  	
  

	
   December	
  31,	
  

2014	
  	
  

2013	
  

	
  (245)	
   $	
  
	
  97	
  	
  
	
  (148)	
   $	
  

	
  3,332	
  
	
  -‐	
  
	
  3,332	
  

December	
  31,	
  	
  

	
   December	
  31,	
  

2014	
  	
  

2013	
  

	
  808	
   $	
  

	
  1,082	
  	
  
	
  1,890	
  

	
  35	
   $	
  

	
  917	
  
	
  950	
  
	
  1,867	
  
	
  75	
  

$	
  

$	
  

$	
  

$	
  

$	
  

$	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  124	
  

	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
Compensation	
  of	
  key	
  management	
  personnel	
  
Compensation	
  of	
  key	
  management	
  personnel	
  for	
  the	
  years	
  ended	
  December	
  31	
  is	
  as	
  follows:	
  

Year	
  ended	
  December	
  31,	
  

Unit-‐based	
  awards(1)	
  
(1)	
  Deferred	
  trust	
  units	
  granted	
  vest	
  over	
  a	
  five-‐year	
  period	
  with	
  one	
  fifth	
  of	
  the	
  deferred	
  trust	
  units	
  vesting	
  each	
  year.	
  	
  Amounts	
  are	
  determined	
  based	
  on	
  the	
  

	
   $	
  

	
   $	
  

2014	
  
	
  925	
  

2013	
  
	
  1,201	
  

grant	
  date	
  fair	
  value	
  of	
  deferred	
  trust	
  units	
  multiplied	
  by	
  the	
  number	
  of	
  deferred	
  trust	
  units	
  granted	
  in	
  the	
  year.	
  

Note	
  26	
  	
  
SUPPLEMENTARY	
  CASH	
  FLOW	
  INFORMATION	
  
The	
  components	
  of	
  amortization	
  and	
  depreciation	
  under	
  operating	
  activities	
  include:	
  

Year	
  ended	
  December	
  31,	
  

Amortization	
  of	
  lease	
  incentives	
  

Amortization	
  of	
  external	
  management	
  contracts	
  

Amortization	
  of	
  financing	
  costs	
  

Amortization	
  of	
  fair	
  value	
  adjustments	
  on	
  assumed	
  debt	
  
Depreciation	
  on	
  property	
  and	
  equipment	
  
Total	
  amortization	
  and	
  depreciation	
  

The	
  components	
  of	
  changes	
  in	
  other	
  adjustments	
  under	
  operating	
  activities	
  include:	
  

Reinvestment	
  in	
  subsidiary	
  redeemable	
  units	
  
Debt	
  settlement	
  and	
  Unit	
  issue	
  costs	
  

Net	
  loss	
  on	
  sale	
  of	
  investment	
  properties	
  

Deferred	
  unit	
  compensation	
  expense	
  
Straight-‐line	
  rent	
  adjustment	
  

Deferred	
  income	
  taxes	
  
Total	
  other	
  adjustments	
  	
  

	
  Note	
  

	
  8	
  

	
  11	
  

	
  21	
  

	
  21	
  

	
  Note	
  

	
  21	
  
	
  32	
  

	
  20,	
  32	
  

	
  15	
  

	
  23	
  

	
   $	
  

	
   $	
  

	
   $	
  

2014	
  

	
   $	
  

	
  9,893	
  

	
  $	
  

	
  1,292	
  

	
  3,178	
  

	
  (4,754)	
  
	
  1,678	
  
	
  11,287	
  

	
  $	
  

2013	
  

	
  6,471	
  

	
  1,338	
  

	
  3,034	
  

	
  (6,633)	
  
	
  1,189	
  
	
  5,399	
  

Year	
  ended	
  December	
  31,	
  

2014	
  

	
  -‐	
  
	
  1,927	
  

	
  738	
  

	
  3,707	
  
	
  (3,929)	
  

	
  638	
  
	
  3,081	
  

	
  $	
  

	
  $	
  

2013	
  

	
  361	
  
	
  (241)	
  

	
  283	
  

	
  4,087	
  
	
  (6,767)	
  

	
  344	
  
	
  (1,933)	
  

The	
  components	
  of	
  the	
  changes	
  in	
  non-‐cash	
  working	
  capital	
  under	
  operating	
  activities	
  include:	
  

Decrease	
  in	
  amounts	
  receivable	
  
Decrease	
  in	
  prepaid	
  expenses	
  and	
  other	
  assets	
  
Decrease	
  in	
  other	
  non-‐current	
  assets	
  
Decrease	
  in	
  amounts	
  payable	
  and	
  accrued	
  liabilities	
  
Increase	
  in	
  non-‐current	
  liabilities	
  
Change	
  in	
  non-‐cash	
  working	
  capital	
  

The	
  following	
  amounts	
  were	
  paid	
  on	
  account	
  of	
  interest:	
  

Interest:	
  
	
   Debt	
  	
  
	
   Subsidiary	
  redeemable	
  units	
  

Year	
  ended	
  December	
  31,	
  

2014	
  
	
  12,043	
  
	
  857	
  
	
  794	
  
	
  (8,301)	
  
	
  255	
  
	
  5,648	
  

	
  $	
  

	
  $	
  

2013	
  
	
  2,642	
  
	
  264	
  
	
  47	
  
	
  (12,896)	
  
	
  877	
  
	
  (9,066)	
  

	
   $	
  

	
   $	
  

	
   Note	
  

	
   21 
	
   21 

Year	
  ended	
  December	
  31,	
  

2014	
  

2013	
  

	
   $	
  

	
  134,792	
  
	
  5,186	
  

	
  $	
  

	
  133,188	
  
	
  7,524	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  125	
  

	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
 
     
     
 
 
 
 
 
 
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
   	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
 
 
 
   
 
 
 
 
 
 
Note	
  27	
  
ACCUMULATED	
  OTHER	
  COMPREHENSIVE	
  INCOME	
  (LOSS)	
  

Unrealized	
  gain	
  (loss)	
  on	
  interest	
  rate	
  swaps	
  
Unrealized	
  foreign	
  currency	
  translation	
  gain	
  	
  
Accumulated	
  other	
  comprehensive	
  income	
  (loss)	
  

$	
  

	
   $	
  

	
  (336)	
  	
   $	
  
	
  2,020	
   	
  
	
  1,684	
   	
   $	
  

	
   Opening	
  
balance	
  
	
   January	
  1	
  

	
   Net	
  change	
  
	
   during	
  the	
  
change	
  

2014	
  	
  
Closing	
  	
  	
  
balance	
  	
  
year	
   December	
  31	
  	
  
	
  (1,002)	
  
	
  5,230	
  
	
  4,228	
  

	
  (666)	
  
	
  3,210	
  
	
  2,544	
  

	
  $	
  

	
  $	
  

	
   Opening	
  
balance	
  
	
   January	
  1	
  

	
  $	
  

	
  $	
  

	
  (375)	
  	
   $	
  
	
  78	
   	
  
	
  (297)	
  	
   $	
  

Year	
  ended	
  December	
  31,	
  
2013	
  
Closing	
  
balance	
  
December	
  31	
  
	
  (336)	
  
	
  $	
  
	
  2,020	
  
	
  1,684	
  

	
  Net	
  change	
  
	
   during	
  the	
  
year	
  
	
  39	
  
	
  1,942	
  
	
  1,981	
  

	
  $	
  

Note	
  28	
  	
  
COMMITMENTS	
  AND	
  CONTINGENCIES	
  	
  
Dream	
  Office	
  REIT	
  and	
  its	
  operating	
  subsidiaries	
  are	
  contingently	
  liable	
  under	
  guarantees	
  that	
  are	
  issued	
  in	
  the	
  normal	
  course	
  of	
  
business	
  and	
  with	
  respect	
  to	
  litigation	
  and	
  claims	
  that	
  arise	
  from	
  time	
  to	
  time.	
  In	
  the	
  opinion	
  of	
  management,	
  any	
  liability	
  that	
  
may	
  arise	
  from	
  such	
  contingencies	
  would	
  not	
  have	
  a	
  material	
  adverse	
  effect	
  on	
  the	
  consolidated	
  ﬁnancial	
  statements	
  of	
  Dream	
  
Office	
  REIT.	
  

At	
   December	
   31,	
   2014,	
   Dream	
   Office	
   REIT’s	
   future	
   minimum	
   commitments	
   under	
   operating	
   leases,	
   ﬁnance	
   leases,	
   and	
   fixed	
  
price	
  contracts	
  to	
  purchase	
  electricity	
  are	
  as	
  follows:	
  

Operating	
  lease	
  payments	
  
Finance	
  lease	
  payments	
  
Electricity	
  
Total	
  

	
   <	
  1	
  year	
  
	
  1,019	
  
	
  28	
  
5,788	
  
	
  6,835	
  

	
  $	
  

	
  $	
  

	
  $	
  

	
  $	
  

1–5	
  years	
  
	
  1,183	
  
	
  35	
  
	
  2,873	
  
	
  4,091	
  

	
  $	
  

	
  $	
  

Minimum	
  payments	
  due	
  

>	
  5	
  years	
  
	
  8,288	
  
	
  -‐	
  
	
  -‐	
  
	
  8,288	
  

Total	
  
	
  10,490	
  
	
  63	
  
	
  8,661	
  
	
  19,214	
  

	
  $	
  

	
  $	
  

During	
  the	
  year	
  ended	
  December	
  31,	
  2014,	
  the	
  Trust	
  paid	
  $1,065	
  (December	
  31,	
  2013	
  –	
  $1,122)	
  in	
  minimum	
  lease	
  payments,	
  
which	
  has	
  been	
  included	
  in	
  comprehensive	
  income	
  for	
  the	
  period.	
  

The	
  Trust	
  has	
  entered	
  into	
  lease	
  agreements	
  that	
  may	
  require	
  tenant	
  improvement	
  costs	
  of	
  approximately	
  $26,366.	
  

The	
  Trustʼs	
  share	
  of	
  contingent	
  liabilities	
  arising	
  from	
  its	
  investments	
  in	
  joint	
  ventures	
  is	
  as	
  follows:	
  

Contingent	
  liabilities	
  for	
  the	
  obligation	
  of	
  the	
  other	
  owners	
  of	
  investments	
  in	
  joint	
  ventures	
  

$	
  

December	
  31,	
  	
  	
  

December	
  31,	
  

2014	
  
	
  282,738	
  

	
  $	
  

2013	
  
	
  305,850	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  126	
  

 
 
 
 
 
 
 
 
 
 
 
 
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  	
  
	
  	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
Note	
  29	
  	
  
CAPITAL	
  MANAGEMENT	
  	
  
The	
  primary	
  objectives	
  of	
  the	
  Trust’s	
  capital	
  management	
  are	
  to	
  ensure	
  it	
  remains	
  within	
  its	
  quantitative	
  banking	
  covenants	
  and	
  
to	
  improve	
  its	
  credit	
  rating.	
  The	
  Trust	
  was	
  assigned	
  for	
  the	
  first	
  time	
  a	
  credit	
  rating	
  of	
  BBB	
  (low)	
  with	
  a	
  stable	
  trend	
  as	
  part	
  of	
  
the	
  Series	
  A	
  and	
  Series	
  B	
  Debentures	
  offering	
  during	
  2013.	
  

The	
  Trust’s	
  capital	
  consists	
  of	
  debt,	
  including	
  mortgages,	
  convertible	
  debentures,	
  debentures,	
  subsidiary	
  redeemable	
  units	
  and	
  
demand	
   revolving	
   credit	
   facilities,	
   and	
   unitholders’	
   equity.	
   The	
   Trust’s	
   objectives	
   in	
   managing	
   capital	
   are	
   to	
   ensure	
   adequate	
  
operating	
  funds	
  are	
  available	
  to	
  maintain	
  consistent	
  and	
  sustainable	
  unitholder	
  distributions,	
  to	
  fund	
  leasing	
  costs	
  and	
  capital	
  
expenditure	
   requirements,	
   and	
   to	
   provide	
   for	
   resources	
   needed	
   to	
   acquire	
   new	
   properties.	
   The	
   Trust’s	
   maximum	
   credit	
  
exposure	
  is	
  equal	
  to	
  the	
  trade	
  receivables	
  at	
  December	
  31,	
  2014.	
  	
  

Various	
  debt,	
  equity	
  and	
  earnings	
  distribution	
  ratios	
  are	
  used	
  to	
  ensure	
  capital	
  adequacy	
  and	
  monitor	
  capital	
  requirements.	
  The	
  
primary	
   ratios	
   used	
   for	
   assessing	
   capital	
   management	
   are	
   the	
   interest	
   coverage	
   ratio	
   and	
   net	
   debt-‐to-‐gross	
   carrying	
   value.	
  
Other	
   signiﬁcant	
   indicators	
   include	
   weighted	
   average	
   interest	
   rate,	
   average	
   term	
   to	
   maturity	
   of	
   debt	
   and	
   variable	
   debt	
   as	
   a	
  
portion	
   of	
   total	
   debt.	
   These	
   indicators	
   assist	
   the	
   Trust	
   in	
   assessing	
   that	
   the	
   debt	
   level	
   maintained	
   is	
   sufﬁcient	
   to	
   provide	
  
adequate	
  cash	
  ﬂows	
  for	
  unitholder	
  distributions	
  and	
  capital	
  expenditures,	
  and	
  for	
  evaluating	
  the	
  need	
  to	
  raise	
  funds	
  for	
  further	
  
expansion.	
   Various	
   mortgages	
   have	
   debt	
   covenant	
   requirements	
   that	
   are	
   monitored	
   by	
   the	
   Trust	
   to	
   ensure	
   there	
   are	
   no	
  
defaults.	
   These	
   covenants	
   include	
   loan-‐to-‐value	
   ratios,	
   cash	
   ﬂow	
   coverage	
   ratios,	
   interest	
   coverage	
   ratios	
   and	
   debt	
   service	
  
coverage	
  ratios.	
  These	
  covenants	
  are	
  measured	
  at	
  the	
  subsidiary	
  limited	
  partnership	
  level,	
  and	
  all	
  have	
  been	
  complied	
  with	
  in	
  
all	
  material	
  respects.	
  

The	
  Trust’s	
  equity	
  consists	
  of	
  Units,	
  in	
  which	
  the	
  carrying	
  value	
  is	
  impacted	
  by	
  earnings	
  and	
  unitholder	
  distributions.	
  The	
  Trust	
  
endeavours	
   to	
   make	
   annual	
   distributions	
   of	
   $2.24	
   per	
   unit.	
   Amounts	
   retained	
   in	
   excess	
   of	
   the	
   distributions	
   are	
   used	
   to	
   fund	
  
leasing	
   costs,	
   capital	
   expenditures	
   and	
   working	
   capital	
   requirements.	
   Management	
   monitors	
   distributions	
   through	
   various	
  
ratios	
   to	
   ensure	
   adequate	
   resources	
   are	
   available.	
   These	
   ratios	
   include	
   the	
   proportion	
   of	
   distributions	
   paid	
   in	
   cash,	
   DRIP	
  
participation	
  ratio,	
  and	
  total	
  distributions	
  as	
  a	
  percent	
  of	
  distributable	
  income	
  and	
  distributable	
  income	
  per	
  unit.	
  

During	
  the	
  year,	
  there	
  were	
  no	
  events	
  of	
  default	
  on	
  any	
  of	
  the	
  Trust’s	
  obligations	
  under	
  its	
  credit	
  facilities	
  or	
  mortgage	
  loans.	
  

Note	
  30	
  	
  
FINANCIAL	
  INSTRUMENTS	
  	
  
Risk	
  management	
  	
  
IFRS	
  7,	
  “Presentation	
  of	
  Financial	
  Statements”	
  (“IFRS	
  7”),	
  places	
  emphasis	
  on	
  disclosures	
  about	
  the	
  nature	
  and	
  extent	
  of	
  risks	
  
arising	
  from	
  ﬁnancial	
  instruments	
  and	
  how	
  the	
  Trust	
  manages	
  those	
  risks,	
  including	
  market,	
  credit	
  and	
  liquidity	
  risks.	
  	
  

Market	
  risk	
  is	
  the	
  risk	
  the	
  fair	
  value	
  or	
  future	
  cash	
  ﬂows	
  of	
  a	
  ﬁnancial	
  instrument	
  will	
  ﬂuctuate	
  because	
  of	
  changes	
  in	
  market	
  
prices.	
   Market	
   risk	
   consists	
   of	
   interest	
   rate	
   risk,	
   currency	
   risk	
   and	
   other	
   market	
   price	
   risk.	
   The	
   Trust	
   has	
   some	
   exposure	
   to	
  
interest	
  rate	
  risk	
  primarily	
  as	
  a	
  result	
  of	
  its	
  variable	
  rate	
  debt.	
  In	
  addition,	
  there	
  is	
  interest	
  rate	
  risk	
  associated	
  with	
  the	
  Trust’s	
  
ﬁxed	
  rate	
  debt	
  due	
  to	
  the	
  expected	
  requirement	
  to	
  reﬁnance	
  such	
  debts	
  in	
  the	
  year	
  of	
  maturity.	
  The	
  Trust	
  is	
  exposed	
  to	
  the	
  
variability	
  in	
  market	
  interest	
  rates	
  on	
  maturing	
  debt	
  to	
  be	
  renewed.	
  Variable	
  rate	
  debt	
  at	
  December	
  31,	
  2014	
  was	
  8.9%	
  of	
  the	
  
Trust’s	
  total	
  debt	
  (December	
  31,	
  2013	
  —	
  10.1%).	
  Included	
  in	
  ﬁxed	
  rate	
  debt	
  is	
  the	
  term	
  loan	
  facility	
  of	
  $183,453,	
  which	
  has	
  a	
  
variable	
  rate	
  of	
  interest	
  at	
  bankers’	
  acceptances	
  plus	
  1.85%	
  payable	
  monthly.	
  The	
  Trust	
  had	
  entered	
  into	
  two	
  interest	
  rate	
  swap	
  
agreements,	
  one	
  for	
  three	
  years	
  at	
  3.03%	
  for	
  a	
  notional	
  value	
  of	
  $53,670	
  and	
  one	
  for	
  ﬁve	
  years	
  at	
  3.52%	
  for	
  a	
  notional	
  value	
  of	
  
$129,783,	
  ﬁxing	
  the	
  rate	
  of	
  interest	
  at	
  3.38%.	
  On	
  August	
  15,	
  2014,	
  the	
  three-‐year	
  interest	
  rate	
  swap	
  on	
  the	
  notional	
  balance	
  of	
  
$53,670	
  expired	
  and	
  was	
  not	
  subsequently	
  renewed.	
  In	
  order	
  to	
  manage	
  exposure	
  to	
  interest	
  rate	
  risk,	
  the	
  Trust	
  endeavours	
  to	
  
maintain	
  an	
  appropriate	
  mix	
  of	
  ﬁxed	
  and	
  variable	
  rate	
  debt,	
  manage	
  maturities	
  of	
  ﬁxed	
  rate	
  debt	
  and	
  match	
  the	
  nature	
  of	
  the	
  
debt	
  with	
  the	
  cash	
  ﬂow	
  characteristics	
  of	
  the	
  underlying	
  asset.	
  	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  127	
  

	
  
	
  
The	
   following	
   interest	
   rate	
   sensitivity	
   table	
   outlines	
   the	
   potential	
   impact	
   of	
   a	
   1%	
   change	
   in	
   the	
   interest	
   rate	
   on	
   variable	
   rate	
  
financial	
  assets	
  and	
  liabilities	
  for	
  the	
  prospective	
  12-‐month	
  period.	
  A	
  1%	
  change	
  is	
  considered	
  a	
  reasonable	
  level	
  of	
  ﬂuctuation	
  
on	
  variable	
  rate	
  financial	
  assets	
  and	
  liabilities.	
  	
  

   Amount	
  

Income	
  

	
  -‐1%	
  

Equity	
  

Income	
  

Interest	
  rate	
  risk	
  

+1%	
  

Equity	
  

$	
  

	
  10,920	
  

	
  	
  $	
  

(109)	
  

	
  	
  $	
  

(109)	
  

	
  	
  $	
  

	
  109	
  

	
  	
  $	
  

	
  109	
  

Financial	
  assets	
  	
  
Cash	
  and	
  cash	
  equivalents(1)	
  
Financial	
  liabilities	
  	
  
Fixed	
  rate	
  debt	
  due	
  to	
  mature	
  in	
  2015	
  

and	
  total	
  variable	
  debt	
  

	
  	
  $	
  
(1)	
  Cash	
  and	
  cash	
  equivalents	
  are	
  short-‐term	
  investments	
  with	
  an	
  original	
  maturity	
  of	
  three	
  months	
  or	
  less,	
  and	
  exclude	
  cash	
  subject	
  to	
  restrictions	
  that	
  
prevent	
  the	
  Trustʼs	
  use	
  for	
  current	
  purposes.	
  These	
  balances	
  generally	
  receive	
  interest	
  income	
  at	
  the	
  bankʼs	
  prime	
  rate	
  less	
  1.85%.	
  Cash	
  and	
  cash	
  
equivalents	
  are	
  short	
  term	
  in	
  nature	
  and	
  the	
  current	
  balance	
  may	
  not	
  be	
  representative	
  of	
  the	
  balance	
  for	
  the	
  rest	
  of	
  the	
  year.	
  

$	
   	
  518,190	
  

	
  (5,182)	
  

	
  (5,182)	
  

	
  5,182	
  

	
  	
  $	
  

	
  	
  $	
  

	
  	
  $	
  

	
  5,182	
  

The	
  Trust	
  is	
  not	
  exposed	
  to	
  significant	
  foreign	
  exchange	
  risks.	
  

The	
  Trust’s	
  assets	
  consist	
  of	
  ofﬁce	
  properties.	
  Credit	
  risk	
  arises	
  from	
  the	
  possibility	
  that	
  tenants	
  in	
  investment	
  properties	
  may	
  
not	
   fulﬁll	
   their	
   lease	
   or	
   contractual	
   obligations.	
   The	
   Trust	
   mitigates	
   its	
   credit	
   risks	
   by	
   attracting	
   tenants	
   of	
   sound	
   ﬁnancial	
  
standing	
  and	
  by	
  diversifying	
  its	
  mix	
  of	
  tenants.	
  It	
  also	
  monitors	
  tenant	
  payment	
  patterns	
  and	
  discusses	
  potential	
  tenant	
  issues	
  
with	
  property	
  managers	
  on	
  a	
  regular	
  basis.	
  Cash	
  and	
  cash	
  equivalents,	
  deposits	
  and	
  restricted	
  cash	
  carry	
  minimal	
  credit	
  risk	
  as	
  
all	
  funds	
  are	
  maintained	
  with	
  highly	
  reputable	
  ﬁnancial	
  institutions.	
  	
  

Liquidity	
   risk	
   is	
   the	
   risk	
   the	
   Trust	
   will	
   encounter	
   difﬁculty	
   in	
   meeting	
   obligations	
   associated	
   with	
   the	
   maturity	
   of	
   ﬁnancial	
  
obligations.	
  The	
  Trust	
  manages	
  maturities	
  of	
  the	
  ﬁxed	
  rate	
  debts,	
  and	
  monitors	
  the	
  repayment	
  dates	
  to	
  ensure	
  sufﬁcient	
  capital	
  
will	
  be	
  available	
  to	
  cover	
  obligations	
  as	
  they	
  become	
  due.	
  

Derivatives	
  and	
  hedging	
  activities	
  
The	
  Trust	
  uses	
  interest	
  rate	
  swaps	
  to	
  manage	
  its	
  cash	
  flow	
  associated	
  with	
  changes	
  in	
  interest	
  rates	
  on	
  variable	
  rate	
  debt.	
  	
  As	
  at	
  
December	
  31,	
  2014,	
  the	
  Trust	
  had	
  the	
  following	
  interest	
  rate	
  swaps	
  outstanding	
  (December	
  31,	
  2013	
  –	
  $183,453):	
  

Hedging	
  item	
  

Interest	
  rate	
  swap	
  

   Notional	
  
$	
   129,783	
  

Rate	
  (%)	
  

Maturity	
  

Fair	
  value	
  

Hedged	
  item	
  

3.52	
  

	
   August	
  15,	
  2016	
  

	
  	
  $	
  

	
  592	
  

Interest	
  payments	
  on	
  forecasted	
  
issuance	
  of	
  bankersʼ	
  acceptances	
  

The	
   maximum	
   term	
   over	
   which	
   interest	
   rate	
   hedging	
   gains	
   and	
   losses	
   reflected	
   in	
   other	
   comprehensive	
   income	
   will	
   be	
  
recognized	
  is	
  five	
  years	
  as	
  the	
  hedged	
  interest	
  payments	
  occur.	
  	
  

Note	
  31	
  
FAIR	
  VALUE	
  MEASUREMENTS	
  
Quoted	
  market	
  prices	
  represent	
  a	
  Level	
  1	
  valuation.	
  When	
  quoted	
  market	
  prices	
  are	
  not	
  available,	
  the	
  Trust	
  maximizes	
  the	
  use	
  
of	
  observable	
  inputs.	
  When	
  all	
  significant	
  inputs	
  are	
  observable,	
  the	
  valuation	
  is	
  classified	
  as	
  Level	
  2.	
  Valuations	
  that	
  require	
  the	
  
significant	
  use	
  of	
  unobservable	
  inputs	
  are	
  considered	
  Level	
  3.	
  The	
  Trust’s	
  policy	
  is	
  to	
  recognize	
  transfers	
  into	
  and	
  transfers	
  out	
  
of	
  fair	
   value	
   hierarchy	
  levels	
  as	
  of	
  the	
  date	
  of	
  the	
  event	
  or	
  change	
  in	
  circumstances	
   that	
  caused	
  the	
  transfer.	
   There	
   were	
  no	
  
transfers	
  between	
  Levels	
  1,	
  2	
  and	
  3	
  during	
  the	
  year.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  128	
  

  
   
  
  
   
  
	
  	
  	
  	
  
  
   
	
  	
  	
  	
  
	
  	
  	
  	
  
	
  	
  	
  	
  
	
  	
  	
  	
  
	
  	
  
  
  	
  	
  
  
  	
  	
  
  
  	
  	
  
  
  	
  	
  
  
	
  	
  
	
  
   	
  	
  
	
  
   	
  	
  
	
  
   	
  	
  
	
  
   	
  	
  
	
  
	
  	
  
	
  
   	
  	
  
	
  
   	
  	
  
	
  
   	
  	
  
	
  
   	
  	
  
	
  
	
  	
  
	
  
	
  	
  	
  	
  
	
  	
  	
  	
  
	
  	
  	
  	
  
	
  	
  	
  	
  
	
  	
  
	
  
	
  	
  
	
  	
  
	
  
   	
  	
  	
  
	
  	
  
	
  	
  
	
  	
  	
  	
  
	
  	
  
	
  	
  	
  	
  
	
  	
  
	
  	
  	
  	
  
	
  	
  
	
  	
  	
  	
  
	
  
	
  
The	
  following	
  tables	
  summarize	
  fair	
  value	
  measurements	
  recognized	
  in	
  the	
  consolidated	
  financial	
  statements	
  by	
  class	
  of	
  asset	
  
or	
  liability	
  and	
  categorized	
  by	
  level	
  according	
  to	
  the	
  significance	
  of	
  the	
  inputs	
  used	
  in	
  making	
  the	
  measurements.	
  	
  

Carrying	
  value	
  as	
  at	
  	
  

Fair	
  value	
  as	
  at	
  December	
  31,	
  2014	
  

Note	
  

December	
  31,	
  2014	
  

Level	
  1	
  

Level	
  2	
  

Level	
  3	
  

Recurring	
  measurements	
  
Non-‐financial	
  assets	
  

Investment	
  properties	
  
Financial	
  liabilities	
  (assets)	
  
Interest	
  rate	
  swap	
  
Conversion	
  feature	
  on	
  the	
  convertible	
  debentures	
  

8	
  	
  

13	
  	
  
13	
  	
  

$	
  

$	
  
$	
  

	
  6,139,070	
  

	
  $	
  

-‐	
  

	
  $	
  

-‐	
  

	
  $	
   	
  6,139,070	
  

	
  592	
  
	
  (760)	
  

	
   $	
  
	
   $	
  

-‐	
  	
  
-‐	
  	
  

$	
  
$	
  

	
  592	
   	
  
	
  (760)	
  	
  

$	
  
$	
  

-‐	
  
-‐	
  

Recurring	
  measurements	
  
Non-‐financial	
  assets	
  

Investment	
  properties	
  
Financial	
  liabilities	
  (assets)	
  

Interest	
  rate	
  swaps	
  

	
   Conversion	
  feature	
  on	
  the	
  convertible	
  debentures	
  

	
   Carrying	
  value	
  as	
  at	
  

Fair	
  value	
  as	
  at	
  December	
  31,	
  2013	
  

	
   Note	
  

	
   December	
  31,	
  2013	
  

Level	
  1	
  

Level	
  2	
  

Level	
  3	
  

8	
  	
   $	
  

	
  6,241,685	
  

	
  $	
  

	
  -‐	
  

	
  $	
  

	
  -‐	
  

	
  $	
  

	
  6,241,685	
  

13	
   	
   $	
  

13	
   	
   $	
  

	
  336	
  

	
   $	
  

	
  (317)	
   	
   $	
  

	
  -‐	
  

	
  -‐	
  

	
   $	
  

	
   $	
  

	
  336	
  	
   $	
  
	
  (317)	
  	
   $	
  

	
  -‐	
  

	
  -‐	
  

Financial	
  instruments	
  carried	
  at	
  amortized	
  cost	
  where	
  the	
  carrying	
  value	
  does	
  not	
  approximate	
  fair	
  value	
  are	
  noted	
  below:	
  

Fair	
  values	
  disclosed	
  
Mortgages	
  
Term	
  loan	
  facility	
  
Convertible	
  debentures	
  
Debentures	
  
Investment	
  in	
  Dream	
  Industrial	
  REIT	
  

Fair	
  values	
  disclosed	
  
Mortgages	
  
Term	
  loan	
  facility	
  
Convertible	
  debentures	
  
Debentures	
  
Investment	
  in	
  Dream	
  Industrial	
  REIT	
  

	
   Carrying	
  value	
  as	
  at	
  	
  

Fair	
  value	
  as	
  at	
  December	
  31,	
  2014	
  

Note	
  

	
   December	
  31,	
  2014	
  

Level	
  1	
  

Level	
  2	
  

Level	
  3	
  

	
  $	
  

13	
  
13	
  
13	
  
13	
  
9	
  

$	
  

	
  2,380,708	
   $	
  
	
  182,260	
  
	
  51,160	
  
	
  482,700	
  
	
  191,691	
  

	
  -‐	
   $	
  
	
  -‐	
  
	
  51,641	
  
	
  485,200	
  
	
  -‐	
  

	
  -‐	
   $	
   	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  
	
  156,206	
  

	
  2,282,145	
  
	
  186,069	
  
	
  -‐	
  
	
  -‐	
  
	
  -‐	
  

	
   Carrying	
  value	
  as	
  at	
  	
  

	
   December	
  31,	
  2013	
  

Fair	
  value	
  as	
  at	
  December	
  31,	
  2013	
  

Level	
  1	
  

Level	
  2	
  

Level	
  3	
  

	
  2,477,183	
   $	
  
	
  181,530	
  
	
  51,885	
  
	
  333,647	
  
	
  166,317	
  

	
  -‐	
   $	
  
	
  -‐	
  
	
  52,718	
  
	
  335,311	
  
	
  -‐	
  

-‐	
   $	
   	
   2,507,543	
  
	
  184,635	
  
-‐	
   	
  
-‐	
  
-‐	
   	
  
-‐	
  
-‐	
   	
  
-‐	
  

	
  144,096	
  

Amounts	
   receivable,	
   cash	
   and	
   cash	
   equivalents,	
   subsidiary	
   redeemable	
   units,	
   tenant	
   security	
   deposits,	
   the	
   Deferred	
   Unit	
  
Incentive	
   Plan,	
   amounts	
   payable	
   and	
   accrued	
   liabilities,	
   and	
   distributions	
   payable	
   are	
   carried	
   at	
   amortized	
   cost	
   which	
  
approximates	
  fair	
  value	
  due	
  to	
  their	
  short-‐term	
  nature.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  129	
  

	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
   	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
   	
  
	
  
	
  
	
  	
  
	
   	
  
	
  
	
   	
  
	
  
	
  
	
  
	
  
	
  
	
   	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
   	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
   	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
   	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
   	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
 
	
  
Investment	
  properties	
  
The	
  Trust’s	
  accounting	
  policy	
  as	
  indicated	
  in	
  Note	
  3	
  is	
  applied	
  to	
  fair	
  value	
  investment	
  properties	
  using	
  the	
  income	
  approach,	
  
which	
  is	
  derived	
  from	
  two	
  methods:	
  overall	
  capitalization	
  rate	
  method	
  and	
  discounted	
  cash	
  flow	
  method,	
  which	
  result	
  in	
  these	
  
measurements	
  being	
  classified	
  as	
  Level	
  3	
  in	
  the	
  fair	
  value	
  hierarchy.	
  Valuations	
  of	
  investment	
  properties	
  are	
  most	
  sensitive	
  to	
  
changes	
  in	
  discount	
  rates	
  and	
  capitalization	
  rates.	
  In	
  applying	
  the	
  overall	
  capitalization	
  rate	
  method	
  the	
  stabilized	
  net	
  operating	
  
income	
  (“stabilized	
  NOI”)	
  of	
  each	
  property	
  is	
  divided	
  by	
  any	
  appropriate	
  capitalization	
  rate	
  (“cap	
  rate”).	
  	
  

The	
  key	
  assumptions	
  in	
  the	
  valuation	
  of	
  investment	
  properties	
  are	
  as	
  follows:	
  

• 

• 

Cap	
  rate	
  –	
  based	
  on	
  actual	
  location,	
  size	
  and	
  quality	
  of	
  the	
  properties	
  and	
  taking	
  into	
  account	
  any	
  available	
  market	
  data	
  at	
  
the	
  valuation	
  date.	
  	
  

Stabilized	
   NOI	
   –	
   revenues	
   less	
   property	
   operating	
  expenses	
   adjusted	
   for	
   items	
   such	
   as	
   average	
   lease-‐up	
   costs,	
   long-‐term	
  
vacancy	
  rates,	
  non-‐recoverable	
  capital	
  expenditures,	
  management	
  fees,	
  straight-‐line	
  rents	
  and	
  other	
  non-‐recurring	
  items.	
  	
  

•  Discount	
  rate	
  –	
  reflecting	
  current	
  market	
  assessments	
  of	
  the	
  uncertainty	
  in	
  the	
  amount	
  and	
  timing	
  of	
  cash	
  flows.	
  
• 
• 

Terminal	
  rate	
  –	
  taking	
  into	
  account	
  assumptions	
  regarding	
  vacancy	
  rates	
  and	
  market	
  rents.	
  	
  

Cash	
  flows	
  –	
  based	
  on	
  the	
  actual	
  location,	
  type	
  and	
  quality	
  of	
  the	
  properties	
  and	
  supported	
  by	
  the	
  terms	
  of	
  any	
  existing	
  
lease,	
  other	
  contracts	
  or	
  external	
  evidence	
  such	
  as	
  current	
  market	
  rents	
  for	
  similar	
  properties.	
  

In	
  accordance	
  with	
  IFRS	
  5,	
  “Non-‐current	
  assets	
  held	
  for	
  sale	
  and	
  discontinued	
  operations”,	
  the	
  Trust	
  classified	
  its	
  investment	
  in	
  
joint	
  venture	
  totalling	
  $2,968	
  as	
  assets	
  held	
  for	
  sale.	
  The	
  fair	
  value	
  of	
  the	
  assets	
  held	
  for	
  sale	
  approximates	
  the	
  carrying	
  value	
  of	
  
the	
  net	
  assets.	
  	
  

Investment	
  properties	
  are	
  valued	
  on	
  a	
  highest-‐and-‐best-‐use	
  basis.	
  For	
  all	
  of	
  the	
  Trust’s	
  investment	
  properties	
  the	
  current	
  use	
  is	
  
considered	
  the	
  highest	
  and	
  best	
  use.	
  	
  	
  

Investment	
  properties	
  valuation	
  process	
  
The	
   Trust	
   is	
   responsible	
   for	
   determining	
   the	
   fair	
   value	
   measurements	
   included	
   in	
   the	
   consolidated	
   financial	
   statements.	
   The	
  
Trust	
  includes	
  a	
  valuations	
  team	
  that	
  prepares	
  a	
  valuation	
  of	
  each	
  investment	
  property	
  every	
  quarter.	
  The	
  valuations	
  team	
  is	
  
headed	
  by	
  an	
  experienced	
  valuator.	
  On	
  a	
  quarterly	
  basis,	
  the	
  Trust	
  engages	
  independent	
  professionally	
  qualified	
  valuators	
  who	
  
hold	
   a	
   recognized	
   relevant	
   professional	
   qualification	
   and	
   have	
   recent	
   experience	
   in	
   the	
   locations	
   and	
   categories	
   of	
   the	
  
investment	
  properties	
  to	
  complete	
  valuations	
  of	
  selected	
  properties.	
  The	
  Trust’s	
  objective	
  is	
  to	
  have	
  each	
  property	
  valued	
  by	
  an	
  
independent	
  valuator	
  at	
  least	
  once	
  every	
  three	
  years.	
  For	
  properties	
  subject	
  to	
  an	
  independent	
  valuation	
  report,	
  the	
  valuations	
  
team	
   verifies	
   all	
   major	
   inputs	
   to	
   the	
   valuation	
   and	
   reviews	
   the	
   results	
   with	
   the	
   independent	
   valuators.	
   The	
   valuations	
   team	
  
reports	
   directly	
   to	
   the	
   Chief	
   Financial	
   Officer	
   (“CFO”)	
   and	
   the	
   Chief	
   Operating	
   Officer	
   (“COO”)	
   of	
   the	
   Trust.	
   Discussion	
   of	
  
valuation	
  processes,	
  key	
  inputs	
  and	
  results	
  are	
  held	
  between	
  the	
  CFO,	
  COO	
  and	
  the	
  valuations	
  team	
  at	
  least	
  once	
  every	
  quarter,	
  
in	
  line	
  with	
  the	
  Trust’s	
  quarterly	
  reporting	
  rules.	
  Changes	
  in	
  Level	
  3	
  fair	
  values	
  are	
  analyzed	
  at	
  each	
  reporting	
  date	
  during	
  the	
  
quarterly	
  valuation	
  discussions	
  between	
  the	
  CFO,	
  COO	
  and	
  the	
  valuations	
  team.	
  	
  

Convertible	
  debentures	
  and	
  interest	
  rate	
  swaps	
  
The	
  convertible	
  debentures	
  have	
  two	
  components	
  of	
  value	
  –	
  a	
  conventional	
  bond	
  and	
  a	
  call	
  on	
  the	
  equity	
  of	
  the	
  Trust	
  through	
  
conversion.	
  Based	
  on	
  its	
  terms	
  (see	
  Note	
  13)	
  the	
  conversion	
  feature	
  is	
  an	
  embedded	
  derivative	
  and	
  has	
  been	
  separated	
  from	
  
the	
  host	
  contract	
  and	
  classified	
  as	
  a	
  financial	
  liability	
  or	
  asset	
  through	
  profit	
  and	
  loss.	
  	
  

The	
   fair	
   value	
   of	
   the	
   conversion	
   feature,	
   categorized	
   in	
   Level	
   2,	
   is	
   calculated	
   based	
   on	
   the	
   paper	
   by	
   K.	
   Tsiveriotis	
   and	
  	
  
C.	
  Fernandes.	
  In	
  this	
  model,	
  a	
  convertible	
  bond	
  consists	
  of	
  two	
  components,	
  an	
  equity	
  component	
  and	
  a	
  debt	
  component,	
  and	
  
these	
  components	
  have	
  different	
  default	
  risks.	
  The	
  equity	
  component	
  is	
  discounted	
  at	
  the	
  risk-‐free	
  rate.	
  The	
  equity	
  component	
  
has	
  no	
  default	
  risk	
  since	
  the	
  Trust	
  can	
  always	
  issue	
  its	
  own	
  units.	
  The	
  debt	
  component	
  is	
  discounted	
  at	
  the	
  risk-‐free	
  rate	
  plus	
  a	
  
credit	
  spread.	
  	
  

The	
  fair	
  value	
  of	
  the	
  conversion	
  feature	
  on	
  the	
  convertible	
  debentures	
  was	
  determined	
  using	
  critical	
  inputs,	
  some	
  of	
  which	
  are	
  
not	
   directly	
   observable	
   based	
   on	
   market	
   data.	
   The	
   critical	
   inputs	
   are	
   the	
   unit	
   price	
   and	
   the	
   units’	
   distribution	
   yield,	
   the	
  
underlying	
  unit	
  volatility,	
  the	
  risk-‐free	
  rate	
  and	
  the	
  assumed	
  credit	
  spread.	
  	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  130	
  

	
  
	
  
A	
   qualified	
   independent	
   consultant	
   calculates	
   the	
   fair	
   value	
   measurement	
   for	
   the	
   financial	
   liability	
   classified	
   as	
   Level	
   2.	
   The	
  
valuation	
   processes	
   and	
   results	
   are	
   determined	
   and	
   reviewed	
   by	
   senior	
   management.	
   The	
   inputs	
   and	
   processes	
   used	
   in	
   the	
  
valuation	
  and	
  the	
  results	
  thereof	
  are	
  reviewed	
  by	
  senior	
  management	
  and	
  discussed	
  with	
  the	
  qualified	
  independent	
  consultant	
  
to	
  ensure	
  conformity	
  with	
  IFRS.	
  	
  

The	
  significant	
  observable	
  inputs	
  used	
  in	
  the	
  fair	
  value	
  measurement	
  of	
  the	
  conversion	
  feature	
  as	
  at	
  December	
  31,	
  2014	
  and	
  
December	
  31,	
  2013	
  are	
  the	
  following:	
  

•  Volatility:	
  Historical	
  volatility	
  as	
  at	
  December	
  31,	
  2014	
  and	
  December	
  31,	
  2013	
  was	
  derived	
  from	
  the	
  historical	
  prices	
  of	
  the	
  

Trust	
  with	
  maturity	
  equal	
  to	
  the	
  term	
  to	
  maturity	
  of	
  the	
  convertible	
  debentures.	
  	
  

• 

Credit	
   spread:	
   The	
   credit	
   spread	
   of	
   the	
   convertible	
   debentures	
   was	
   imputed	
   from	
   the	
   traded	
   price	
   of	
   the	
   convertible	
  
debentures	
  as	
  at	
  December	
  31,	
  2014	
  and	
  December	
  31,	
  2013.	
  

5.5%	
  Series	
  H	
  Debentures	
  
Credit	
  spread	
  
Volatility	
  

2014	
  	
  
2.39%	
  	
  
13.6%	
  	
  

December	
  31,	
  

2013	
  
2.54%	
  
14.2%	
  

A	
   higher	
   volatility	
   will	
   increase	
   the	
   value	
   of	
   the	
   conversion	
   option.	
   A	
   lower	
   credit	
   spread	
   will	
   decrease	
   the	
   value	
   of	
   the	
  
conversion	
  option.	
  	
  

The	
  following	
  table	
  shows	
  the	
  changes	
  in	
  fair	
  value	
  of	
  the	
  conversion	
  option	
  from	
  a	
  5%	
  increase	
  or	
  decrease	
  in	
  volatility	
  and	
  a	
  
100	
  bps	
  increase	
  or	
  decrease	
  in	
  credit	
  spread,	
  holding	
  all	
  other	
  inputs	
  constant.	
  	
  

Increase	
  (decrease)	
  in	
  fair	
  value	
  as	
  at	
  December	
  31,	
  2014	
  

$	
  

Increase	
  (decrease)	
  in	
  fair	
  value	
  as	
  at	
  December	
  31,	
  2013	
  

$	
  

Impact	
  of	
  change	
  to	
  volatility	
   
-‐5%	
   
3	
  	
  

+5%	
   
	
  (44)	
  

	
  $	
  

Impact	
  of	
  change	
  to	
  volatility	
   
-‐5%	
   
	
  (229)	
  	
  

+5%	
   
	
  542	
  

	
  $	
  

Impact	
  of	
  change	
  to	
  credit	
  spread	
  

+100	
  bps	
   
	
  461	
  

	
  $	
  

-‐100	
  bps	
  
	
  (481)	
  

Impact	
  of	
  change	
  to	
  credit	
  spread	
  

+100	
  bps	
   
	
  481	
  

	
  $	
  

-‐100	
  bps	
  
	
  (510)	
  

$	
  

$	
  

The	
  Trust	
  also	
  uses	
  the	
  following	
  techniques	
  in	
  determining	
  the	
  fair	
  value	
  disclosed	
  for	
  the	
  following	
  financial	
  liabilities	
  classified	
  
as	
  Level	
  1,	
  2	
  and	
  3:	
  	
  

Mortgages	
  and	
  term	
  loan	
  facility	
  
The	
   fair	
   value	
   of	
   mortgages	
   and	
   term	
   loan	
   facility	
   as	
   at	
   December	
   31,	
   2014	
   is	
   determined	
   by	
   discounting	
   the	
   expected	
   cash	
  
flows	
   of	
   each	
   mortgage	
   and	
   term	
   loan	
   facility	
   using	
   spreads	
   ranging	
   from	
   1.60%	
   to	
   1.70%	
   (December	
   31,	
   2013	
   –	
   1.85%	
   to	
  
2.00%).	
  The	
  spreads	
  are	
  determined	
  using	
  the	
  Government	
  of	
  Canada	
  benchmark	
  bond	
  yield	
  for	
  instruments	
  of	
  similar	
  maturity	
  
adjusted	
  for	
  the	
  Trust’s	
  specific	
  credit	
  risk.	
  In	
  determining	
  the	
  adjustment	
  for	
  credit	
  risk,	
  the	
  Trust	
  considers	
  market	
  conditions,	
  
the	
  value	
  of	
  the	
  properties	
  that	
  the	
  mortgage	
  is	
  secured	
  by	
  and	
  other	
  indicators	
  of	
  the	
  Trust’s	
  creditworthiness.	
  	
  

Convertible	
  debentures	
  
The	
   fair	
   value	
   of	
   convertible	
   debentures	
   as	
   at	
   December	
   31,	
   2014	
   and	
   December	
   31,	
   2013	
   is	
   based	
   on	
   the	
   convertible	
  
debentures’	
  trading	
  price	
  on	
  or	
  about	
  December	
  31,	
  2014	
  and	
  December	
  31,	
  2013,	
  respectively.	
  

Debentures	
  
The	
   fair	
   value	
   of	
   debentures	
   that	
   are	
   traded	
   as	
   at	
   December	
   31,	
   2014	
   and	
   December	
   31,	
   2013,	
   is	
   based	
   on	
   the	
   debentures’	
  
trading	
  price	
  on	
  or	
  about	
  December	
  31,	
  2014	
  and	
  December	
  31,	
  2013,	
  respectively.	
  The	
  fair	
  values	
  of	
  debentures	
  that	
  are	
  non-‐
trading	
  as	
  at	
  December	
  31,	
  2013	
  are	
  based	
  on	
  the	
  debentures’	
  par	
  value.	
  

Demand	
  revolving	
  credit	
  facilities	
  
The	
   fair	
   value	
   of	
   the	
   demand	
   revolving	
   credit	
   facilities	
   as	
   at	
   December	
   31,	
   2014	
   and	
   December	
   31,	
   2013	
   approximates	
   their	
  
carrying	
  value	
  due	
  to	
  their	
  short-‐term	
  nature.	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  131	
  

	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
 
 
 
 
 
 
 
 
 
	
  
 
 
 
 
 
 
 
 
 
	
  	
  
Note	
  32	
  
NET	
  GAINS	
  (LOSSES)	
  ON	
  TRANSACTIONS	
  AND	
  OTHER	
  ACTIVITIES	
  

Debt	
  settlement	
  costs	
  
Net	
  loss	
  on	
  sale	
  of	
  investment	
  properties	
  
Internal	
  leasing	
  costs	
  
Business	
  transformation	
  costs	
  
Total	
  

Note	
  

20	
  	
  

25	
  	
  

Year	
  ended	
  December	
  31,	
  

$	
  

2014	
  
	
  (1,892)	
  	
  
	
  (738)	
  	
  
	
  (6,118)	
  	
  
	
  (1,100)	
  	
  
	
  (9,848)	
  	
   $	
  

2013	
  
	
  (241)	
  
	
  (283)	
  
	
  (6,468)	
  
	
  -‐	
  
	
  (6,992)	
  

$	
  

	
  	
   $	
  

Debt	
  settlement	
  costs	
  related	
  to	
  the	
  discharge	
  of	
  mortgages	
  prior	
  to	
  the	
  original	
  maturity	
  dates	
  during	
  the	
  year	
  and	
  write-‐off	
  of	
  
associated	
   fair	
   value	
   adjustments	
   and	
   financing	
   costs.	
   Net	
   loss	
   on	
   sale	
   of	
   investment	
   properties	
   for	
   the	
   year	
   related	
   to	
   the	
  
write-‐off	
  of	
  financing	
  costs,	
  fair	
   value	
  adjustments	
  associated	
   with	
  the	
  debt	
  discharged	
  and	
  transaction	
  costs	
  associated	
   with	
  
the	
   cash-‐generating	
   unit.	
   Effective	
   January	
   1,	
   2014,	
   the	
   Trust	
   adopted	
   a	
   new	
   accounting	
   policy,	
   which	
   was	
   applied	
  
retrospectively,	
   to	
   recognize	
   internal	
   leasing	
   costs	
   as	
   an	
   expense	
   when	
   incurred	
   (see	
   Note	
   5).	
   Business	
   transformation	
   costs	
  
related	
   to	
   process	
   and	
   technology	
   improvement	
   costs	
   incurred	
   pursuant	
   to	
   the	
   Shared	
   Services	
   and	
   Cost	
   Sharing	
   Agreement	
  
(see	
  Note	
  25).	
  

Dream	
  Office	
  REIT	
  2014	
  Annual	
  Report	
  	
  |	
  	
  132	
  

	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  	
  
	
  
	
  	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  
	
  
Trustees

Detlef Bierbaum 1, 2  
Köln, Germany 
Corporate Director

Donald K. Charter 1, 3 
Toronto, Ontario 
Corporate Director

Michael J. Cooper 2 
Toronto, Ontario 
Chief Executive Officer 
Dream Unlimited Corp.

Peter A. Crossgrove 1 
Toronto, Ontario 
Corporate Director

Joanne Ferstman 2, 4 
Toronto, Ontario 
Corporate Director

Robert G. Goodall 3 
Mississauga, Ontario  
President 
Canadian Mortgage Capital Corporation

Duncan Jackman 1, 3 
Toronto, Ontario 
Chairman, President and CEO 
E-L Financial Corporation Limited

1  Member of the Audit Committee
2  Member of the Investment Committee
3 

 Member of the Governance, Compensation 
and Environmental Committee
4  Chair of the Board of Trustees

Corporate Information

HEAD OFFICE

Dream Office Real Estate  
Investment Trust 
State Street Financial Centre 
30 Adelaide Street East, Suite 1600 
Toronto, Ontario  M5C 3H1 
Phone: (416) 365-3535 
Fax: (416) 365-6565

TRANSFER AGENT
(for change of address, registration  
or other unitholder enquiries)

Computershare Trust  
Company of Canada 
100 University Avenue, 9th Floor 
Toronto, Ontario  M5J 2Y1 
Phone: (514) 982-7555 or 
1 800 564-6253 
Fax: (416) 263-9394 or 
1 888 453-0330 
E-mail: service@computershare.com

AUDITORS

PricewaterhouseCoopers LLP 
PwC Tower, 18 York Street, Suite 2600 
Toronto, Ontario  M5J 0B2

CORPORATE COUNSEL

Osler, Hoskin & Harcourt LLP 
Box 50, 1 First Canadian Place, Suite 6100 
Toronto, Ontario  M5X 1B8

INVESTOR RELATIONS

Phone: (416) 365-3538 
Toll free: 1 877 365-3535 
E-mail: officeinfo@dream.ca 
Website: www.dreamofficereit.ca

TAXATION OF DISTRIBUTIONS

Distributions paid to unitholders in respect 
of the tax year ending December 31, 2014,  
are taxed as follows:
Other income: 21.9% 
Capital gains: 5.6% 
Return of capital: 72.5%

STOCK EXCHANGE LISTING

The Toronto Stock Exchange 
Listing symbols: 
REIT Units, Series A: D.UN 
5.5% Series H Convertible Debentures: 
D.DB.H 
5.95% Senior Unsecured Debentures, 
Series K: D.DB.K

ANNUAL MEETING  
OF UNITHOLDERS

Thursday, May 7, 2015 at 4:00 pm (EST) 
Corporate office of Dream Office REIT 
30 Adelaide Street East, Suite 300 
Toronto, Ontario, Canada

DISTRIBUTION REINVESTMENT AND  
UNIT PURCHASE PLAN

The purpose of our Distribution Reinvestment 
and Unit Purchase Plan (“DRIP”) is to 
provide unitholders with a convenient way of 
investing in additional units without incurring 
transaction costs such as commissions, service 
charges or brokerage fees. By participating in 
the Plan, you may invest in additional units in 
two ways:

Distribution reinvestment: Unitholders will 
have cash distributions from Dream Office 
REIT reinvested in additional units as and when 
cash distributions are made. If you register 
in the DRIP you will also receive a “bonus” 
distribution of units equal to 4% of the amount 
of your cash distribution reinvested pursuant 
to the Plan. In other words, for every $1.00 of 
cash distributions reinvested by you under the 
Plan, $1.04 worth of units will be purchased. 

Cash purchase: Unitholders may invest in 
additional units by making cash purchases.

To enrol, contact:

Computershare Trust Company of Canada 
100 University Avenue, 9th Floor  
Toronto, Ontario  M5J 2Y1 
Attention: Dividend Reinvestment Services

Or call their Customer Contact Centre at 
1 800 564-6253 (toll free) 
or (514) 982-7555

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dream.ca/office