Thank you. Good morning, everyone.

Thank you for joining us today for Dream Industrial REIT's 2021 first quarter conference call. Speaking with me today is Lenis Quan, our Chief Financial Officer; and Alex Sannikov, our Chief Operating Officer.

Dream Industrial carried a strong momentum into 2021 with an extremely active first quarter. In just over 90 days, we've completed significant strategic initiatives to grow and upgrade portfolio quality, strengthen our balance sheet, all while achieving solid rental rate increases and FFO per unit growth.

We reported a 10% increase in FFO per unit in Q1, driven by CP NOI growth, rapid pace of capital deployment, and a lower cost of debt. Our pace of CP NOI growth continues to improve and was 3.1% in Q1, as leases signed over the past six months took effect.

Our pace of acquisitions has been robust. We have closed on over CAD 350 million of assets already this year and have a CAD 155 million of additional acquisitions under contract or in exclusive negotiations.

We have advanced our development pipeline with nearly 700,000 square feet of projects currently underway in Canada and the US. Since the beginning of 2020 we have closed or have contracted over CAD 1.1 billion of acquisitions across Canada, the US and Europe, a significant achievement given the challenges presented by the ongoing pandemic.

Our local on the ground acquisition teams across our three operating regions provide us with a wide range of opportunities, while our geographic diversity allows us to access capital at the most optimal costs. Our acquisitions activity continues to enhance our portfolio quality.

In the past 40 months we have more than doubled our asset value, while focusing on acquiring larger properties leased to high quality credit tenants. Thus far in 2021 we have closed or have under contract or in exclusive negotiations over CAD 500 million of assets across Canada, the US and Europe.

These acquisitions add over 3 million square feet of high quality logistics GLA to the portfolio. Built in the 2000s and with an average clear height of approximately 30 feet, these assets are above the average quality of our portfolio.

In-place rents for these assets are 10% below market, and we have the opportunity to drive cash flows higher as leases roll. We have closed on CAD 350 million of these assets with the remainder expected to close in the next 45 to 60 days.

A recently completed CAD 201 million equity offering in April of 2021 provides us capacity to execute on our sizeable pipeline and we expect to have our remaining acquisition capacity committed by the end of Q2.

Thank you, Brian. Good morning everyone.

Industrial market fundamentals remain robust across all our markets supported by accelerated penetration of e-commerce. Availability rates have continued to trend down in most of our markets.

Our predominantly urban portfolio is quite attractive to logistic focus tenants, and we continue to achieve strong rental rate growth. Since the end of Q4 we have signed about 2 million square feet of renewals and new leases at an average rental spread of 20%.

On these leases, we also achieved annual contractual rental growth of 2.4%. Our leasing activity resulted in our Q1 places - in-place occupancy increasing 100 basis points compared to Q4 2020 to 95.7%.

We also have lease commitments for about 450,000 square feet of vacancy, most of which are expected to commence in the first half of 2021 taking occupancy to above 97%. Property that was recently vacated by Spectra, we already signed a new lease with a national logistics company for five years at higher rents along with 2.5% annual contractual rent growth, which was absent in the prior lease.

With the leasing activity over the past few months, our CP NOI growth profile has improved significantly for 2021 compared to 2020. And we reported 3.1% year-over-year growth this quarter.

We reiterate our previous forecast mid-single-digit organic growth in 2021. In terms of quarterly guidance, we expect the same-property NOI growth will accelerate through the year, as new leases takes effect.

We are also increasing our focus on development as a key aspect of our strategy to add high quality space to our portfolio, which will allow us to drive strong organic growth over the long term. We have three pillars to our development strategy, Greenfield development, expansion opportunities within our current portfolio, and redevelopment of existing properties.

Greenfield development is underway with construction commencing on previously announced 460,000 square foot distribution facility in Las Vegas. We also recently acquired a 30-acre land parcel in Brampton, where we can build approximately 550,000 square feet of prime logistics space.

Thank you, Alex. Our financial results for the first quarter were strong and in line with our expectations.

Diluted funds from operations was CAD 0.19 per unit for the quarter, 10% higher than the prior year comparative quarter due to higher NOI from our comparative properties and recent acquisitions, and lower borrowing costs as we executed on our European debt strategy. The pace of our capital deployment remains strong and we have closed, contracted or achieved exclusivity on over CAD 500 million of acquisitions thus far in 2021.

Specifically, we have acquired just over CAD 350 million of assets to date in 2021, CAD 274 million in Q1 with another CAD 76 million since March 31, and have another CAD 155 million expected to close in the next 45 to 60 days subject to satisfactory due diligence. With access to euro denominated debt at rates below 1%, we expect these acquisitions to be accretive to FFO per unit at our targeted leverage in the mid to high-30% range.

In April, we completed a CAD 201 million equity offering, which will allow us to execute on our near term acquisitions pipeline and fund approximately CAD 90 million of identified development costs.

Thank you, Lenis. Just to clarify, I think Alex might went out for a part of his presentation he was making the point that the Laval property recently vacated by Spectra is now leased to a national logistics tenant, so all part of our progress during the quarter.

But following a strong 2020, we've hit the ground running this year with a focus on making the business even stronger and more valuable. We continue to take significant steps in positioning DIR as the premier industrial REIT in Canada and delivering attractive overall returns to our unitholders.

We'd now be happy to open it up for questions.

Congratulations on a really good quarter. I just wanted to touch on, I guess Brian, if you could give us your thoughts, the portfolio as you mentioned has grown significantly over the last, I guess, 15 months.

And with the sort of evolving profile of the portfolio how are you looking at dispositions from their strategic sense at this point going forward?

Yes. Sam, thanks.

We analyze all of our assets. We've got an IRR model for every property in our portfolio.

And we're looking to kind of recycle ones that are at the bottom of that, where maybe we've either realized the greater side of the IRR or its best days are behind it or it's not as accretive as opportunities that we're seeing going forward. So, we do look at geographic regions.

Certainly, the West we're not buying as much as we are selling and we keep kind of top grading we call it or upgrading the quality of the portfolio. Anything we sell would be on the bottom half.

Anything we'd buy would be on the on the top half.

Okay. Thank you.

Sam, Just to add to that as well.

Go ahead.

Just some color. We are seeing, specifically in the West, where most of our non-strategic assets are.

We're seeing that over the last three, four months, there's been a significant improvement and increase in demand. And we're starting to see that translate into offers and pricing.

So, - as we communicated in prior calls these are non-strategic assets to us, but it's not non-core assets, so we don't - we're not in a rush to sell anything. And obviously, we're price sensitive.

And with the pricing momentum we're starting to see in the West we want to make sure that we're capturing as much of that momentum as we can in terms of .

Thanks Alex. That's much appreciated.

That was actually my second question, so thank you for answering that. So, I'll flip to my third, which is just on the development pipeline, I guess there're couple of questions.

I noticed the payable in the MD&A didn't include the Frankfurt area project unless I missed it. Just wondering what happened there?

And secondly, if you could provide any details on the address or specific location of the Brampton parcel that was acquired?

You bet Alex. You want to speak to that?

Yes. So, the Frankford opportunity, I think Sam you're referring to .

We were working through that. There is a much, much longer list compared to what's included in the MD&A, including in the MD&A something that is well underway.

The expansion in the Frankfurt area would be - it would be a relatively small expansion as we pointed out when we acquired the asset. The expansion or addition is on the table when - that's a much larger project that well over 200,000 feet.

And we are working to get construction started on that this year. But as we continue working through the pipeline and our intensification opportunities we'll be adding much more projects to the list.

Does that answer your question, Sam?

Thank you. Yes.

I was just wondering on the Brampton if you have any details you can share on that?

Yes. We will be disclosing the address and obviously the kind of the drawings as we continue working through it and rendering them, absolutely, it's not in the press release yet, but yes, we will be providing that.

Bruce, do you want to comment a little bit more about the location of the site?

Yes. Hi, Sam.

The location is in - on Countryside Drive in Brampton. So, it's in an area where a lot of the big players are developing and it's within the official plan, industrial - it's already industrial designated.

So, it's very near-term land in an area that's seen a lot of demand. You're close to a lot of tenants like Amazon, maybe entire other tenants are really seeking out that area because as you - I'm sure you know Brampton is the heart of the GTA in terms of logistics, close to the CN and the CP intermodal terminals.

Maybe just following up on the line of questioning on the Brampton acquisition. Can you provide any color or details around cost per square foot or expected net rents in terms of your underwriting assumptions to get to the 6% unlevered yield?

Sure, Brendon. Let me start, and I'll turn it over to Alex for a little more detail.

What we're seeing is prices for existing properties are approaching, and in some cases, going higher than replacement costs for new. So, development we see is a really good opportunity for us.

Certainly, we're in the low to mid-200s on a price per square foot, all in. But at yields that are higher than what you would pay in the going in cap rate.

So, Alex, do you want to elaborate a little bit about just the development pro forma metrics?

Yes. Thanks, Brian.

So, we're forecasting all-in costs of just - in the low CAD 200 per square foot range, including the land. As far as the rent goes, we are already hitting in our portfolio, CAD 12.50 in some cases.

So, that's something that we're targeting for core locations in Mississauga, Brampton and not only targeting, but hitting that in our leasing. So, we expect that something like this will come and rent rents certainly greater than that.

And obviously, we're expecting that the rents will continue growing over the next 18 to 30 months.

Okay. That's - yes, that's very helpful.

And maybe just starting to leasing spreads, currently its very strong during the quarter especially in the Ontario portfolio, just wondering was there any one or two leases that drove the Ontario leasing spread to be so much higher than I guess what you're showing as kind of the estimated mark to market for the broader Ontario portfolio. It seems every quarter leasing spreads in Ontario are well above kind of what you indicate as the mark to market.

So, just wondering if there's - if there is one or two leases that - or anomalies or - that drove that above 50% of the leasing spread in Ontario?

That's a fair observation and the market rents continue evolving every quarter. And Q1 has seen a pretty significant pace of growth in market rents generally, and - so, this is something that we continue catching up on if you will in our disclosure.

Keep in mind that our disclosure generally is covering when we say Ontario we include Ottawa. We include Toronto.

We include Kitchener and Cambridge portfolio of ours. So, it's a much larger portfolio than the GTA.

In the GTA there was a few anomalies that drove the spreads higher. Our financial drive asset is one of them, where we acquired the assets in the third quarter of 2020, with really low in-place rents and the tenant was vacating, and so we more or less doubled the rent compared to the expiring.

So, there were a few deals like that, including in and Mississauga. So, there was a few outliers that's kind of one contributing factor and the other one is the market continues to do well there quickly.

So, just to follow-up on the Brampton land acquisition, is the land already zoned for industrial use? And then you mentioned 18 to 20 months before you start construction, why is such a there?

Yes, you bet Himanshu. I'll let Bruce Traversy, who runs our acquisitions talk a little bit about the process and what we expect for timing.

Sure. Yes, so the lands right now are within the official plan for industrial use.

Rezoning therefore can follow fairly quickly. Obviously, municipalities are unable to move maybe as quickly today.

There's certainly a lot of activity there. So, to move through the process of site plan approval and getting the rezoning formally signed off on can take 12 months easily.

Even if you were to buy a site that was already zoned it would take 12 months just to the process and on the goes with that. So, that gives us also time to prepare our marketing and get ready to launch the project.

But we think that, that 18 to 30 months to get shovels in the ground is very realistic.

And then on the cost escalation, I mean, are you seeing cost escalation compared to last year with respect to labor costs or material costs for the development in GTA?

Yes. We are seeing that costs are rising.

Steel, for example, is one of the factors that is increasing generally. And we are trying to hedge that risk as much as we can when it comes to buildings that we are starting to construct, and we generally are not exposed to significant risks on that with Vegas or the expansions that we are currently pursuing in Montréal and the GTA.

But generally for the development projects that are further out there is that factor and we - however, what effect that is the rents continue to increase at a much faster pace as compared to .

Yes. I'd just add to that, Himanshu, that most of the Las Vegas project has been already bought out and committed to.

Lumber has been the largest increase in costs by a long shot. Most of our buildings are concrete, steel and glazing.

So, those materials have gone up, not quite as bad as lumber. So, we're not saying - you can't really compare it to say residential construction costs.

However, they are going up and we're managing that and watching it very closely.

Thank you for that. And then, just turning to the moving activity in the quarter, I'm looking at 196,000 square feet of renewal in the Netherlands, but almost 20% higher than the expiring rent.

So, is that a function of a very low expiring rents or do you think it's more like the market rents in Netherlands are rising at a fairly good .

It is a combination of both. We know - we are seeing the market rents increasing.

And we expect that market rents will continue increasing faster in Europe generally. And that particular lease that particular asset did have a low in-place - low in-place rent.

So, there is both factors at play, and we expect that the market rent growth is going to continue to drive our performance in Europe.

Okay. Fair enough.

So - and then, maybe you know maybe a final question for me on the acquisition front. Obviously you guys have been very active almost CAD 5 million of acquisitions in the year so far.

So, can you talk about the acquisition strategy here? I mean what's your focus.

Is it the size of the property, or are you growth opportunity, or do you have you know certain geographical focus in minds, which is driving your acquisition strategy?

Yes. Let me start Himanshu, and then I'll let Alex and Bruce comment as well.

Maybe - everything you mentioned is a factor. Certainly we're looking at quality.

We're looking at geographic focus something that's complementary to what we currently have. In our portfolio, those are the things we're chasing, we are not chasing yield at any cost where we're looking at quality.

We're looking at location, and we're looking at kind of long term value. We do look at total return.

We look at IRRs. We look at the opportunity to grow rents.

And I think I've mentioned before that we look at really kind of three - look at opportunities through three lenses. We look at the cap rate.

We look at the in-place rents compared to the market. And then we also look at our overall price per foot compared to replacement cost.

So, those three things paint a pretty good picture of the quality of the acquisition or the opportunity we're looking at. When you layer on top of that geography and where we want to be, we want to be proximate to population centers.

We want to be in the path of progress for logistics and distribution. So, all of those things factor into the opportunities we look at.

We have - and I'll let the team to talk a little bit about this, but we have boots on the ground in many markets. So, we have longstanding relationships, experience in the markets that we're doing acquisitions in.

So, we're able to basically see all the deals that happen and chase the ones that fit our profile or fit our strategy. Alex, you may want to add to that, as well as Bruce.

Yes. So, just to maybe add a little bit of examples.

So, what you've seen from us recently is a reflection of what we want to continue pursuing, more modern, a larger bay logistics state generally. We are looking to buy assets that have intensification opportunities and not only have the opportunities, but we intend to execute on those opportunities as we did with Marie Curie.

You recall we acquired it in January. We started construction on Phase 1 of expansion in April.

We're looking at buying vacancy and rollover risk with high quality assets, so as we did with financial drive it was a low going in cap rate, but we doubled the rent in less than four months. And we're looking at a couple of assets right now in clusters that we already - where we're already present, where there is maybe a bit of vacancy and we're looking to take that vacancy risk and because we are comfortable with those nodes, we expect that we'll be achieving sort of value add returns, and lastly, and also with importantly is we're looking to continue pursuing our clustering strategy.

We have clusters in many markets and including places like Mississauga and Brampton, Kitchener and Cambridge, many central locations in Montréal, and we're gradually adding to our clusters and that is a - has been a very successful strategy for us, resourcing those, a lot of these deals of market and pursuing a much larger footprint and in one node, give those economies of scale, operational synergies and also long term - opens up long term redevelopment opportunities.

Thank you everyone for your time today. We look forward to speaking again soon.

In the meantime stay healthy and stay safe. Take care.