Dream Office Real Estate Investment Trust (DUN) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Annual Meeting of Unitholders of Dream Office REIT. Your host for today is Mr. Michael Cooper, Chair and CEO of Dream Office REIT. Mr. Cooper, please go ahead.

Thank you, operator. Good afternoon, everyone. As this meeting is held virtually via live audio webcast, for the purposes of the meeting today, voting on all matters will be conducted by electronic ballot. Registered unitholders and duly-appointed proxy holders will be asked to vote on each business item. At any time during the meeting, registered unitholders, who have not already provided voting instructions, or appointed a proxy holder that are logged on and wish to vote their units, may do so by clicking on the Vote Here button on your screen and following the instructions provided. Proxy holders may also vote now using the same method. The polls will remain open until just before the conclusion of the formal business meeting. If you've voted your units prior to the start of the meeting, your vote has been received by the scrutineers, and there is no need to vote those units during the meeting, unless you wish to revoke or change your vote. We've been advised by Broadridge Financial Solutions that based on the proxies already deposited with them enough votes -- enough votes have been cast to carry each of the motions. Unitholders or proxy holders may ask questions at any time during the meeting by submitting the question and writing to the text box labeled Ask A Question. We will respond to questions received on the matters of formal business just prior to closing the polls for voting. Questions that are not received by that time or which do not relate to the formal business of the meeting, will be addressed in the question-and-answer session following the conclusion of the meeting. If unitholders or proxy holders wish to ask questions about the REIT's business, you may do so any time during the meeting or during the question-and-answer session following the conclusion of the formal business of the meeting. We will now proceed with the formal portion of today's meeting. To expedite the formal part of the meeting, I will move and Shannon Macri will second all motions. I will act as Chair of the meeting, Robert Hughes will act as Secretary of the meeting. For purpose of this meeting, I appoint Leanne and Rosemary of Broadridge to act as scrutineers to compute the votes of any polls taken at the meeting and to report thereon. The Board of Trustees fixed April 16, 2021, as the record date for determining unitholders entitled to vote at this meeting. An affidavit has been delivered from Broadridge attesting to the mailing of the notice of availability of proxy materials and the voting instructions form or form of proxy. Our circular and other meeting materials were made available through the notice and access system. I would ask that the Secretary place the affidavit before the meeting and to keep the affidavit with the corporate records. I am pleased to announce that there are present of proxy -- by proxy a sufficient number of the voting units of the REIT to constitute a quorum. Accordingly, this meeting is duly called to order and properly constituted for the transaction of business. After our formal business concluded, we will provide a few brief remarks, and there will be an opportunity to ask questions. The first item of business is the presentation of the REIT's 2020 Annual Report, which contains the REIT's audited financial statements for 2020. I note that the secretary has put before the meeting a copy of the 2020 annual report. The next item of business is the election of trustees. The 8 trustees to be elected by the unitholders of the REIT shall hold office until the close of business of the first annual meeting of unitholders REIT following the election or until their successors are elected or appointed. The 8 nominees are Detlef Bierbaum, Donald Charter, Jane Gravan, Robert Goodall, Kellie Leitch, Karine McIndoe, Qi Tang and myself. Each of the persons nominated has confirmed that he or she is prepared to serve as a trustee. Mr. Hughes, have we received any other nominations?

No, we have not.

Since there are no other nominations, I declare the nomination closed and I move the motion to elect the trustees. The next item of business is the appointment of auditors. The Audit Committee and the Board of Trustees have recommended the reappointment of PricewaterhouseCoopers. I move PricewaterhouseCoopers be appointed auditor of the REIT until the next annual meeting of unitholders and that the Board of Trustees be authorized to fix their remuneration. May I have a seconder?

I second the motion.

Thank you. We will be closing the polls for voting momentarily. But before we do so, I will ask Mr. Hughes whether we have received any questions relating to the formal items of business on our agenda today.

No, we have not. [Voting]

Now that everyone has had the opportunity to vote, I now declare the poll to the 2021 Annual Meeting of Unitholders of Dream Office REIT closed. I've been advised by the scrutineers of a significant majority of the proxies received by management prior to the meeting have been voted for the election of trustees and the appointment of auditors. I, therefore, confirm that 8 nominees for election as trustees have been elected as trustees, and they appoint -- and that the motion to appoint the auditors is carried. I was asked -- I would ask that the scrutineers compile the report regarding the results of voting on all business matters and results will be published on SEDAR and by press release later today. The formal items of business is settled and those in the notice of meeting dealt with. As there is no further business to come before the meeting, I declare the formal part of the meeting to be concluded. With that, I'll now provide a brief update on the business, and then we'll be happy to answer questions. Today, I'm here with Gord Wadley and Jay Jiang, who will help me answer questions to the extent there are any. The first thing I want to do is thank all of our colleagues, who have worked very hard over the last 16 months, dealing with tenants and dealing with government rules and just generally making our buildings fit for habitation whenever the rules allow us and for communicating with tenants and keeping them informed. And we've also began a lot of construction and improvements of our buildings, and we're really excited about them. But all of this is only possible through the commitment of so many people, who are part of our team. I'd also like to thank our Board, as this has been a tough year. And in addition to that, I'd like to thank our shareholders. Over the last 16 months, there have been actually infrequent periods of time when our buildings are legally available to be occupied by that many people. Whatever has happened over the last 16 months, we never expected that it would go this long and that the longer the lockdowns have gone, the more difficult it is to lease new space. And there is a little bit of attrition as most of the tenants renew, but some don't. So to me, it's really astounding how well the company is doing, considering we own buildings that are barely occupied. Having said that, it's looking more and more likely that it's going to open up very, very soon, and we expect that within a couple of weeks, buildings will have the legal ability for nonessential employees to work out of office space. There's been a lot of talk about the future of work from the office. We're quite bullish about it, and we've asked all our employees to plan on coming in occasionally throughout the summer on a voluntary basis, but to be prepared to come back to work full-time after Labor Day. We're seeing more and more companies taking similar positions and we expect that there'll be quite a few people coming back to the office after Labor Day and increasing even further by the first of the year. However, with so much uncertainty, we're actually kind of pleased that we're currently trading at about 11% discount to consensus net asset value. We believe that what we're seeing in the market today is that office buildings like we own are very, very valuable. That's what's happening today. We think that's going to persist, and we think it's going to go up further. With regards to occupancy, that's where we need -- it needs to be proven out. And I think that there's more uncertainty around occupancy in the future for office REITs than there is for most asset classes, but we're very confident. It's just that we have to live it to see it. And it's also encouraging to see that our rental rates are holding pretty firm. We're really quite pleased with them. So we appreciate everybody's commitment to the company. We're pleased with -- that the stock is hanging in there. We're looking forward to having our buildings full again and seeing the kind of stock price we had in February of 2020. So I want to thank everybody. And I think at this point, if there are any questions, we'd be happy to answer them.

Mr. Cooper, we have received no questions. You may conclude the meeting.

Thank you very much, Mr. Hughes. And with that, I'd like to thank everybody for spending their 9 minutes with us this morning. And Jay, Gordon and I are always available to answer your questions. Be well.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.