Dream Office Real Estate Investment Trust : 2023 Q2 Report

Dream Office REIT

Q2 Report 2023

Table of Contents

Management's discussion and analysis

(All dollar amounts in our tables are presented in thousands of Canadian dollars, except for rental rates and per unit amounts, or unless otherwise stated)

SECTION I

KEY PERFORMANCE INDICATORS AT A GLANCE

Performance is measured by these and other key indicators:

1. Total properties excludes properties held for sale and investments in joint ventures that are equity accounted at the end of each period.
2. Total portfolio excludes properties held for sale, properties under development and investments in joint ventures that are equity accounted at the end of each period.

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1. FFO, comparative properties NOI and available liquidity are non-GAAP financial measures. Diluted FFO per unit, interest coverage ratio (times), net total debt- to-normalized adjusted EBITDAFV ratio (years), level of debt (net total debt-to-net total assets) and NAV per unit are non-GAAP ratios. Unencumbered assets is a supplementary financial measure. Please refer to the sections "Non-GAAP Financial Measures and Ratios" and "Supplementary Financial Measures and Other Disclosures" for details of these measures.
2. Current and comparative period excludes acquired properties, properties sold and held for sale, properties under development, completed properties under development and joint ventures that are equity accounted as at June 30, 2023. Properties acquired and properties under development completed subsequent to January 1, 2022 along with properties under development are excluded from comparative properties NOI.
3. Diluted weighted average number of units is used in the calculation of diluted FFO per unit. Diluted weighted average number of units is defined in the "Supplementary Financial Measures and Other Disclosures" section under the heading "Weighted average number of units".
4. Weighted average face rate of interest on debt is calculated as the weighted average contractual face rate of all interest-bearing debt balances excluding debt in joint ventures that are equity accounted.
5. Total number of REIT A Units and LP B Units includes 5.2 million LP B Units (or subsidiary redeemable units) that are classified as a liability under IFRS.

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") should be read in conjunction with the audited consolidated financial statements of Dream Office REIT and the accompanying notes for the year ended December 31, 2022 and the unaudited condensed consolidated financial statements of Dream Office REIT and the accompanying notes for the three and six months ended June 30, 2023. Such consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS"). The Canadian dollar is the functional and reporting currency for the purposes of preparing the condensed consolidated financial statements.

This management's discussion and analysis (this "MD&A") is dated August 3, 2023.

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

• "REIT A Units", meaning the REIT Units, Series A of the Trust;
• "REIT B Units", meaning the REIT Units, Series B of the Trust;
• "REIT Units", meaning the REIT A Units and REIT B Units, collectively;
• "Units", meaning the REIT Units and Special Trust Units, collectively; and
• "LP B Units" and "subsidiary redeemable units", meaning the LP Class B, Series 1 limited partnership units of Dream Office LP (a subsidiary of the Trust).

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

Certain figures in this document are presented on a comparative portfolio basis. Comparative portfolio figures represent the results of investment properties that the Trust has owned in all periods presented. Properties acquired and properties under development completed subsequent to January 1, 2022, along with properties under development, are excluded from comparative portfolio figures. Except as specifically noted, the results of investments that are equity accounted are excluded from disclosures in this document.

Market rents disclosed throughout this MD&A are management's estimates as at June 30, 2023 and are subject to change based on future market conditions.

In addition, certain disclosures incorporated by reference into this MD&A include information regarding our largest tenants that has been obtained from available public information. We have not verified any such information independently.

FORWARD-LOOKING DISCLAIMER

Certain information herein contains or incorporates comments that constitute forward-looking information within the meaning of applicable securities legislation, including but not limited to statements relating to the Trust's objectives, strategies to achieve those objectives, the Trust's beliefs, plans, estimates, projections and intentions, and similar statements concerning anticipated future events, future growth, stability of NOI at our properties, results of operations, performance, business prospects and opportunities, acquisitions or divestitures, tenant base, rent collection, future maintenance and development plans and costs, capital investments, financing, the availability of financing sources, income taxes, vacancy, renewal and leasing assumptions, future leasing costs and lease incentives, litigation and the real estate industry in general; as well as specific statements regarding our distributions and net income; our development, redevelopment, rezoning and intensification plans and timelines, including in respect of type and number of units, affordable housing and retail space; expectations regarding occupancy levels in our portfolio and in certain locations, occupancy commitments and related timelines; our expectations regarding tenant requirement trends in respect of workspace preferences and upgrades, including demand for built out space; expectations and plans for repositioning

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certain properties, including properties held vacant for future occupancy; our strategy to pursue premium retail offerings at our properties; the expectation that restaurants at certain of our assets will provide benefits to such assets, including to increase traffic; our commitment to invest in our downtown Toronto portfolio and retrofit our properties in the Bay Street corridor; our modernization, decarbonization and retrofit plans for certain properties, including 366 Bay Street and 67 Richmond Street West, and in respect of attaining the Dream Collection standard; our plans in respect of the joint venture partnership with CentreCourt for the mixed-use development of Block 2 at 2200-2206 Eglinton Avenue and 1020 Birchmount Road, and characteristics and targets in respect of such projects; our objective of selling or partnering in respect of our assets to reduce leverage and increase the value of our business; expected capital requirements and cost to complete development projects; timing of project completion, including in respect of revitalization and renovation projects; the effect of building improvements and redevelopments on tenant experience, building quality, performance, and higher rents; our ability to attract and retain tenants, including in respect of ongoing prospective tenant negotiations; our acquisition and leasing pipeline; leasing velocity, square footage expected to be leased, property operating costs and rates on future leasing; expected progress on leasing, increasing our occupancy, enhancing the value of our assets, and improving our financial metrics; our conviction that the quality and location of our assets will result in certain benefits; our ability to achieve building certifications; our ability to increase building performance and achieve energy efficiency and GHG reduction goals, including in respect of retrofits made in connection with the CIB Facility; our expectation that operating cash flows less interest paid may be less than total distributions; the expectation that net income will vary from total distributions; the expectation that there could be timing differences on distributions as a result of intensification and redevelopment projects; the future composition of our portfolio; our ability to mitigate certain risks; expected tax obligations; our capital commitments in respect of certain investment properties; future cash flows, debt levels, liquidity and leverage; our ability to refinance our debt; our ability to meet obligations with current cash and cash equivalents on hand, cash flows generated from operations, revolving credit facilities and conventional mortgage refinancing; our future capital requirements and ability to meet those requirements; and our overall financial performance, profitability and liquidity for future periods and years. Forward-looking statements generally can be identified by words such as "outlook", "objective", "may", "will", "would", "expect", "intend", "estimate", "anticipate", "believe", "should", "could", "likely", "plan", "project", "budget", "continue" or similar expressions suggesting future outcomes or events.

Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond Dream Office REIT's control, which could cause actual results to differ materially from those disclosed in or implied by such forward-looking information. These assumptions include, but are not limited to: that no unforeseen changes in the legislative and operating framework for our business will occur, including unforeseen changes to tax laws; that we will meet our future objectives and priorities; that we will have access to adequate capital to fund our future projects and plans; that our future projects and plans will proceed as anticipated; that government restrictions due to COVID-19 will continue to ease and will not be reimposed in any material respects that affect our and our tenants' ability to operate our businesses at our properties; that inflation and interest rates will not materially increase beyond current market expectations; that we will have the ability to refinance our debts as they mature; and that future market and economic conditions will develop as expected. Risks and uncertainties include, but are not limited to, general and local economic and business conditions, including in respect of real estate; foreign exchange rates; employment levels; mortgage and interest rates and regulations; inflation; risks related to a potential economic slowdown in certain of the jurisdictions in which we operate and the effect inflation and any such economic slowdown may have on market conditions and lease rates; risks associated with unexpected or ongoing geopolitical events, including disputes between nations, war, terrorism or other acts of violence; the uncertainties around the availability, timing and amount of future equity and debt financings; the impact of the COVID-19 pandemic on the Trust; the effect of government restrictions on leasing and building traffic; the ability of the Trust and its tenants to access government programs; regulatory risks; environmental risks; consumer confidence; the financial condition of tenants and borrowers; the timing and extent of current and prospective tenants' return to the office; our ability to sell investment properties at a price that reflects fair value; leasing risks, including those associated with the ability to lease vacant space and rental rates on future leases; our ability to source and complete accretive acquisitions; the ability to effectively integrate acquisitions; development risks, including construction costs, project timings and the availability of labour; NOI from development properties on completion; tax risks, including 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.

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 the sections "Our Objectives", "Business Update" and "Comparative Properties NOI".

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