Dream Industrial Real Estate Invest Trst Q2 Earnings Call Highlights

Key Points

• Strong second-quarter performance: Comparable-property NOI grew 10.3% year over year, diluted FFO per unit rose 7.8% to CAD 0.28, and the REIT announced a 2.5% distribution increase—the first since 2013.
• Full-year outlook raised: Dream Industrial now expects comparable-property NOI growth of 7% to 8% and FFO per unit slightly above the midpoint of its CAD 1.08–CAD 1.10 forecast range, supported by leasing momentum and acquisitions.
• Expansion and capital redeployment continued: The REIT completed or contracted more than CAD 550 million of acquisitions, expanded into the U.K. through Chancerygate, and is pursuing additional European partnerships while maintaining ample liquidity and targeting leverage in the high-30% range.

Dream Industrial Real Estate Invest Trst TSE: DIR.UN reported second-quarter results marked by double-digit comparable-property net operating income growth, higher funds from operations per unit and a distribution increase, while advancing a capital redeployment program and expanding its European industrial platform.

Chief Executive Officer Alex Sannikov said comparable-properties NOI rose 10.3% from a year earlier, supported by leasing activity, rental spreads and occupancy. The company’s Canadian portfolio generated 14.6% comparable-properties NOI growth, while its European portfolio posted 5.6% growth.

Diluted funds from operations per unit increased 7.8% year over year to CAD 0.28. The REIT also announced a 2.5% distribution increase, its first since 2013. The higher distribution will take effect with the Sept. 15 payment and brings the annualized distribution rate to CAD 0.7175 per unit.

Chief Financial Officer Lenis Quan said the quarterly FFO payout ratio was 63%, and management intends to keep future distribution increases below the pace of FFO-per-unit growth to preserve cash flow for reinvestment. Management did not commit to annual distribution increases, but said recurring growth in distributions is part of the REIT’s evolving total-return model.

Guidance raised as leasing momentum continues

The REIT raised its full-year outlook for comparable-properties NOI growth to 7% to 8%, citing stronger-than-expected first-half results, contracted leasing and retention. The revised outlook compares with 5.7% growth reported in 2025.

Management maintained its 2026 average in-place occupancy outlook of 94% to 96%. It also said full-year FFO per unit is expected to come slightly ahead of its previous expectations. The company maintained its stated range of CAD 1.08 to CAD 1.10 per unit and now expects results to be slightly above the midpoint.

Quan said occupancy, leasing activity and the contribution from acquisitions helped offset the impact of refinancing at higher interest rates and operating at lower leverage after asset sales to its DCI joint venture with CPP Investments.

At June 30, Dream Industrial had about CAD 750 million of available liquidity, leverage of 35.8% and net debt to EBITDA of 6.6 times. As it deploys capital during the rest of the year, management expects leverage to move toward its target range in the high 30% area and run-rate net debt to EBITDA to approach the mid-7-times range.

Portfolio operations and development leasing

Chief Operating Officer Gord Wadley said Canadian committed occupancy reached 96.8% at quarter-end, up 150 basis points from a year earlier, while in-place occupancy rose 200 basis points to 96%. The gains reflected leasing of vacancies in Québec and full lease-up of a completed Alberta development.

Across the overall platform, including private ventures, the REIT completed 247 lease deals totaling more than 6.1 million square feet since the beginning of 2026. Its wholly owned portfolio accounted for 173 deals covering 3.3 million square feet, with a weighted average rental spread of 21.1% over prior or expiring rents. New leasing represented 1.1 million square feet of that activity.

The company signed more than 370,000 square feet of development leases during the quarter. That included a 265,000-square-foot, 10-year lease with a global automotive manufacturer at its Cambridge, Ontario, project, bringing that property to full occupancy beginning in the third quarter. The project has generated an unlevered yield on cost of 6.7%, management said.

Subsequent to quarter-end, Dream Industrial entered a binding lease for 127,000 square feet at a recently completed Whitby redevelopment and was in advanced negotiations for another 110,000 square feet. If completed, those leases would raise occupancy at the property above 60%.

In Europe, in-place occupancy was 92.5%, reflecting a planned temporary vacancy in Spain and a vacant value-add asset acquired in the Netherlands. Management said it was in advanced negotiations to lease both properties. The European leasing pipeline included more than 35 deals totaling 2.5 million square feet in various stages of negotiation.

Acquisitions and European expansion

Sannikov said the REIT has completed or placed under contract more than CAD 550 million of acquisitions since the beginning of the year, alongside activity under its normal course issuer bid. It completed CAD 332 million of wholly owned acquisitions, adding more than 2 million square feet of urban infill, small-bay and mid-bay industrial properties in Canada and Europe.

Those acquisitions carried an approximately 6.3% going-in yield and an estimated mark-to-market yield of about 7.4%, according to management. The company also acquired an 11-property portfolio across major German urban markets with in-place rents approximately 20% below market. It had a further CAD 140 million of acquisitions under contract or in exclusive negotiations, expected to close during the third quarter.

Dream Industrial also announced a transaction involving Chancerygate, giving it entry into the U.K. multi-let industrial market. Management expects to invest CAD 150 million in recently completed development assets and two projects under construction, with an anticipated yield on cost of 8%.

The company said one completed Chancerygate asset, totaling just under 300,000 square feet, had more than 100,000 square feet delivered in the first quarter. It was nearing completion of a lease for about 30% of that space and was in advanced negotiations for another 15%. Management expects lease-up to progress over roughly the next 12 months, potentially sooner.

The transaction also includes more than CAD 40 million of co-investment interests alongside institutional partners in several joint ventures with gross asset value exceeding CAD 2 billion. Dream Industrial said those assets are expected to generate a stabilized unlevered yield on cost of 7.5%.

Separately, the REIT is in advanced negotiations for a new continental European partnership targeting CAD 800 million of gross asset value, focused primarily on multi-let industrial assets. Dream Industrial expects to hold a 5% stake and provide property management and leasing services in Germany and the Netherlands if the venture proceeds.

Management also said it is advancing a power-procurement initiative for selected potential data-center sites. The company identified approximately 250 megawatts of potential power capacity across three Greater Toronto Area sites and said it responded to more requests for proposals during the second quarter than during all of 2025.

About Dream Industrial Real Estate Invest Trst (TSE:DIR.UN)

Dream Industrial Real Estate Investment Trust is an unincorporated, open-ended real estate investment trust. Its portfolio comprises industrial properties located in key markets across Canada and the U.S. Its objective is to build upon and grow its portfolio and to provide stable and sustainable cash distributions to its unitholders. Geographically the business is organized into Ontario, Quebec, Western Canada, Europe and the USA. Substantial revenue is derived from the Canadian portfolio.

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