June 08, 2020 10:50 ET
| Source: Dream Office REIT
330 Bay Street – 9th Floor
Virtual tour at 330 Bay Street
80 Richmond Street West – 19th Floor
Virtual tour at 80 Richmond Street West
This press release contains forward-looking information that is based upon assumptions and is subject to risks and uncertainties as indicated in the cautionary note contained within this press release.
TORONTO, June 08, 2020 (GLOBE NEWSWIRE) — DREAM OFFICE REAL ESTATE INVESTMENT TRUST (D.UN-TSX) or (“Dream Office REIT”, the “REIT” or “we”) today provided a business update for the month of May 2020 during the COVID-19 pandemic.
While the long-term effects of the COVID-19 pandemic remain uncertain, we believe that our well-located assets, diversified tenant base and solid balance sheet position us well to manage near-term financial and operational risks. We are looking forward to helping reopen the economy by providing our tenants with a safe and attractive office environment where they can begin their process of recovery.
MAY RENT COLLECTION & OPERATIONAL UPDATE
As of June 5, 2020, we have collected approximately 91% of May rents with an additional 1% of rents for the month of May from various government agencies due to timing of automatic payment programs that we have confirmed will be received in June.
We have agreed to work with certain tenants by deferring their gross rent for a period of one to three months. As of June 5, 2020, the REIT has agreed on May rent deferrals with repayment plans representing an additional 1.4% of May total gross rents.
Since the COVID-19 pandemic was announced, our tenant relations team has been in touch with our tenants on a bi-weekly basis, updating them on new government programs and Dream initiatives to prepare our buildings for their return. We have been educating tenants on government-led relief initiatives and assisting tenants with back to work planning for their employees.
We are actively working with smaller tenants who qualify for the Canada Emergency Commercial Rent Assistance (“CECRA”) program. Tenants who are eligible for CECRA are those who pay less than $50,000 in gross rent per month, generate less than $20 million in revenues at a corporate level and have experienced a decline in revenues of at least 70% during the months of April, May and June.
We are currently reviewing approximately 50 applications to participate in the CECRA program and we are working with those tenants to assess their eligibility and provide assistance in the application. We do not believe the financial impact from participating in CECRA will be material to the REIT. However, for our tenants, we hope these programs will assist them through these difficult times so they can recover quickly with an economically viable business for the long term.
For the remaining May rents that are either uncollected or no special arrangements made with tenants, our tenant relations team has been in active discussions with these particular tenants who are currently in arrears and we anticipate collecting the majority of the remaining rents in the near term.
Meanwhile, the REIT is working actively with various organizations to help support our local community during the pandemic. We have partnered with WoodGreen Community Services to provide financial donations and emergency food and toiletry packages for vulnerable seniors and families within the community. We have also offered our unused parking spaces in downtown Toronto free of charge to hospital workers and first responders to help combat the COVID-19 pandemic.
CAPITAL PLAN UPDATE
With the ever-evolving tenant needs and economic uncertainty in light of the COVID-19 pandemic, we have conducted a detailed review of our planned capital expenditures this year. Through the review, we have identified over $10 million of capital expenditures for 2020 that can be deferred into future years and will not impact the value or income of our assets.
We remain committed to investing in our Dream Collection – Financial District in Toronto as we believe these assets will play an integral part to the path of recovery post COVID-19 and provide a strong return on capital investments. Construction has resumed and we estimate that over 50% of the project is in various stages of construction, tendering and award, with an anticipated completion date in the first half of 2021.
In addition, we are continuing work on our redevelopment projects at 357 Bay Street in Toronto and at Sherwood Place in Saskatoon as our tenants will commence their lease in the second half of 2020 and 2021, respectively.
PORTFOLIO WELL POSITIONED IN THE POST COVID-19 WORLD
Despite market uncertainty and changing tenant behaviours, we believe our portfolio is well positioned to withstand the changing needs of office space post-COVID.
|1)||Smaller Floor Plates: The average floor plate in our portfolio is 14,000 square feet and we have nine buildings with floor plates of less than 7,000 square feet. These smaller floor plates would provide prospective tenants with an opportunity to lease the entire floor, minimizing the sharing of washrooms or physical interactions with other tenants.|
|2)||Elevator Modernization: We have fully modernized 44% of the elevators in the Toronto Downtown and the Greater Toronto Area with 50% scheduled for upgrade over the next five years. This will help improve tenant flow and reduce wait times in elevator lobbies.|
|3)||Medium Rise Buildings: The average building height across our portfolio is only 14 floors. Therefore, our tenants would have a shorter wait and ride time at our buildings compared to high-rise buildings.|
|4)||HVAC & Other Building Improvements: The REIT is following all Public Health, ASHRAE and BOMA recommendations with regards to operating building HVAC systems. In recent years, we have made significant investments into air filtration systems for all of the REIT’s buildings and we are exploring further improvements in HVAC systems such as portable filters and air purifiers in elevators to minimize the risk of COVID-19 spread. We are also investigating the installation of thermal cameras at entrances, anti-microbial door handles, and other safety improvements.|
We are looking forward to welcoming our tenants and employees back to our offices as regional governmental restrictions are lifted. To keep our tenants and employees safe and healthy, we have made a number of changes to our buildings, both visible and behind the scenes. To promote physical distancing, building lobbies have separate entry and exit points and unidirectional traffic flows. As tenants enter our buildings, they will be greeted with hand sanitizer stations and clear signage to help them move safely. We also have frequent enhanced cleaning in high touchpoint areas to help mitigate the risk of spreading disease. In addition, to minimize outside visitor traffic flow within our buildings, we have introduced designated courier drop-off points.
Dream Office REIT is also a tenant in our own building. In order to help keep our employees healthy and safe, we have developed a comprehensive return to work plan that outlines the changes we have made to our offices so that our employees who wish to return to the office can do so safely. Please click link to see our “Better Together” plan for all Dream employees.
We have also created building specific plans for our assets to help guide our tenants back to work. Please click link to see an example for our head office at 30 Adelaide Street East in downtown Toronto.
Furthermore, we are actively implementing the following measures across our portfolio to better protect our tenants and make them feel safer to return to work. We anticipate all of these projects to be substantially complete by August 2020:
- UV hand rails for all our buildings with escalators that actively kill 99.9% of the virus in contact with hand rail when in operation;
- UV filtration in air handling units that actively kill 99.9% of the virus when in operation across a number of buildings in our portfolio, including its elevators;
- Portable UV filters for common areas, including remote controlled robots with UV lamps that disinfects unoccupied areas;
- Antimicrobial protection and protective covers that prevents and controls growth on all high touch surfaces in common areas, including elevator buttons, stairwell rails, and doors; and
- Health Canada certified organic disinfectant sprayers to proactively eliminate dust, mold, bacteria & other viruses.
Despite COVID-19’s disruption to the leasing market and physical distancing measures currently in place, the REIT is managing an active pipeline of renewals and new leases with existing and prospective tenants.
In addition to the previously announced 206,000 square feet renewal with a government tenant, we are currently working on approximately 370,000 square feet of leasing deals across the portfolio.
While government restrictions preclude showing our properties to prospective tenants in person, we have been developing virtual models of our space. These models allow prospective tenants to take virtual tours of currently vacant units and see examples of finished spaces.
We have highlighted two examples of our virtual tour program in links below:
ANNUAL GENERAL MEETING
Due to the emerging health impacts of COVID-19, Dream Office REIT’s Annual General Meeting of Unitholders will be held in a virtual only meeting format on June 30, 2020 at 12:00 p.m. (ET). Instructions for attending and voting at the meeting are included in the REIT’s Notice of Annual Meeting of Unitholders and Management Information Circular dated May 15, 2020 available at www.dreamofficereit.ca and on www.sedar.com.
FORWARD LOOKING INFORMATION
This press release may contain forward-looking information within the meaning of applicable securities legislation, including statements regarding our objectives and strategies to achieve those objectives, asset management strategies, development plans, the future composition of our portfolio, the terms of and duration of secured tenant renewals, the timing of committed occupancies, renewal and leasing assumptions, the desirability of our buildings, estimated market rents and the timing of our capital program and its expected returns. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond Dream Office REIT’s control, which could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking information. These risks and uncertainties include, but are not limited to, general and local economic and business conditions; employment levels; uncertainties surrounding the COVID-19 pandemic; the financial condition of tenants; the collectability of tenant balances in arrears; the ability of our tenants to qualify for, and availability funds from, the CECRA program; leasing risks, including those associated with the ability to lease vacant space; rental rates on future leasing; and interest and currency rate fluctuations. Our objectives and forward-looking statements are based on certain assumptions, including that the general economy remains stable, interest rates remain stable, conditions within the real estate market remain consistent, competition for acquisitions remains consistent with the current climate and that the capital markets continue to provide ready access to equity and/or debt. All forward-looking information in this press release speaks as of the date of this press release. Dream Office REIT does not undertake to update any such forward-looking information whether as a result of new information, future events or otherwise except as required by law. Additional information about these assumptions and risks and uncertainties is contained in Dream Office REIT’s filings with securities regulators, including its latest annual information form and MD&A. These filings are also available at Dream Office REIT’s website at www.dreamofficereit.ca.
For further information, please contact:
|Michael J. Cooper||Jay Jiang|
|Chairman and Chief Executive Officer||Chief Financial Officer|
|(416) 365-5145||(416) 365-6638|
Photos accompanying this announcement are available at