Dream Office Real Estate Investment Trust (D-UN) Q4 2025 earnings summary

Executive summary

• Achieved strongest leasing year since before the pandemic, completing 827,000–830,000 sq ft of leasing in 2025, with Toronto accounting for the majority and 84% of portfolio fair value concentrated in this market.

• Downtown Toronto committed occupancy reached 87.4% at year-end 2025, exceeding internal targets and reflecting significant leasing activity.

• Portfolio transformation since 2016 reduced property count from 166 to 24, focusing on core Toronto assets and divesting non-core markets.

• Strong management alignment with ~33.7% insider ownership and active management partnerships.

• Major renovations and redevelopment completed in Toronto, including 67 Richmond and Adelaide Place, with high occupancy secured.

Financial highlights

• Q4 2025 diluted FFO per unit was CAD 0.56; full-year FFO per unit reached CAD 2.46, slightly above guidance, though FFO and NAV per unit declined year-over-year.

• Full-year same-property NOI growth was 0.5%, at the lower end of guidance; comparative NOI in Toronto downtown rose 1.8% year-over-year.

• Year-end net asset value per unit was CAD 49.92, down from CAD 59.47 at year-end 2024, due to cap rate increases and fair value adjustments.

• Liquidity increased to CAD 97.6 million–$173 million at year-end, aided by asset sales and credit facility extension.

• Total assets of $2.3 billion as of Q4 2025.

Outlook and guidance

• 2026 FFO per unit projected at CAD 2.25–2.30, a 7.5% decline year-over-year, mainly due to asset sales and conversion projects.

• Targeting downtown Toronto committed occupancy of 88–89% and in-place occupancy of 82–85% by year-end 2026.

• Comparative NOI growth for downtown Toronto expected at 2–5% in 2026; total portfolio NOI growth at 1–3%.

• Focus remains on achieving 90% occupancy in downtown Toronto within two years, which could drive FFO per unit to CAD 3.00.

• All six major banks and key government entities have implemented mandatory four- to five-day return-to-office policies, expected to drive higher office utilization.