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Dundee Industrial REIT Reports Solid Q1 2013 Results

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TORONTO, ONTARIO -- (Marketwired) -- 05/07/13 -- This news release contains forward-looking information that is based upon assumptions and is subject to risks and uncertainties as indicated in the cautionary note contained within this press release.

DUNDEE INDUSTRIAL REIT (TSX: DIR.UN) today announced its financial results for the three months ended March 31, 2013.

HIGHLIGHTS

-- Occupancy and rental rate increases - 96.5% occupancy rate, well ahead of national average. More than 340,000 square feet of GLA leased during the quarter at incrementally higher rental rates. Estimated market rents remain 6% above expiring rents.-- Bench strength continues to grow - Dedicated team members continue to be added across the company with key leadership roles being filled in both Eastern and Western Canada.-- Strengthened capital structure through debt financings - $98.6 million of new mortgage financing for an average term of 8.5 years and with an average 3.8% interest rate. Eliminated variable rate debt and paid down credit facility.-- Focused execution of growth strategy - Dundee Industrial continues to expand its national footprint, committing to approximately $378 million of high quality acquisitions during the quarter, further diversifying its portfolio and strengthening its cash flow. Acquisitions include the $151.5 million purchase of a 22 building portfolio from CanFirst Capital Management that closed on April 24, 2013 and the proposed take-over of C2C Industrial Properties and its 2.5 million square foot portfolio.-- Increased enterprise value and market cap - issued 10.5 million units at $11.00 per unit during the quarter, contributing to an 85% increase in market capitalization and 92.7% increase in enterprise value since initial public offering. Pro forma closing the proposed takeover of C2C Industrial Properties market capitalization will increase to approximately $767.0 million and enterprise value will increase to $1.6 billion.--------------------------------------------------------------------------------------------------------------------------------------------------------SELECTED FINANCIAL INFORMATION(unaudited) Three Months Ended ---------------------------------------($000's except unit and per unit amounts) March 31, 2013 December 31, 2012----------------------------------------------------------------------------Investment properties revenue $ 29,250 $ 17,202Net operating income ("NOI") (1) 19,892 12,535Funds from operations ("FFO") (1) 11,993 8,452Adjusted funds from operations ("AFFO") (1) 9,275 6,492Investment properties value 1,148,845 1,147,410Debt 659,504 649,845Per unit data (basic)FFO 0.22 0.22AFFO 0.17 0.17Distributions 0.17 0.16Units (period end)REIT Units 46,749,543 36,257,538LP Class B Units, Series 1 16,282,096 16,198,747 ----------------------------------------Total number of units 63,031,639 52,456,285 ---------------------------------------- ----------------------------------------Portfolio gross leasable area (sq. ft.) 11,434,418 11,438,195Occupied and committed space 96.5% 96.3%--------------------------------------------------------------------------------------------------------------------------------------------------------See footnotes on page 4



"We are very pleased with the high quality of the properties being acquired and the contribution that they will make to our business going forward," said Randy Cameron, President and CEO, Dundee Industrial REIT. "In addition to providing cash flow growth, increased scale allows us to better meet the changing needs of our tenants and to also better manage geographic and tenant exposure," said Mr. Cameron.

FINANCIAL HIGHLIGHTS

-- First full quarter of operations and financial results are in-line with expectations - Q1 2013 was the Trust's first full quarter of operations and also reflects a full quarter of results for all of the properties acquired in Q4 2012. AFFO for the quarter was $9.3 million or $0.17 per unit, representing an increase of $2.8 million or 42.9% over the prior operating period (October 4, 2012 to December 31, 2012) and no change on a per unit basis over the prior period. The increase in AFFO is largely due to a full quarter of earnings from the KingSett Portfolio, acquired on December 19, 2012, as well as a full quarter of earnings for the Initial Properties, acquired on October 4, 2012. Per unit results were flat over the prior period; however Q1 results included approximately $0.01 per unit of temporary dilution relating to delayed deployment of the proceeds from the March 6, 2013 equity offering.-- Q1 2013 FFO was $12.0 million or $0.22 per unit, representing an increase of $3.5 million or 41.9% over the prior period and no change on a per unit basis over the prior period. For the reasons noted above, FFO increased largely due to the timing of acquisitions, and on a per unit basis was partially diluted from cash related to the equity offering which was not deployed in the quarter.-- Q1 2013 NOI was $19.9 million, representing an increase of $7.4 million or 58.7% over the prior period due mainly to the timing of the KingSett Portfolio acquisition in Q4 2012.



OPERATIONAL HIGHLIGHTS

-- Portfolio occupancy remains ahead of national industry average - At March 31, 2013, the overall percentage of occupied and committed space across the Trust's portfolio was strong at 96.5%, well above the national industry average of 94.2%.-- Leasing Profile - Leasing activity during the first quarter included approximately 101,100 square feet of new leases and approximately 240,400 square feet of renewals, more than offsetting approximately 316,700 square feet of expiries and early terminations. At period-end, the Trust had approximately 486,700 square feet of vacant space, of which 92,000 square feet is committed for future occupancy. The average remaining lease term at March 31, 2013 is 5.1 years.-- Average in-place rents 6% below market rents - At quarter-end, the portfolio average in-place rent was $7.18 per square foot (December 31, 2012 - $7.12), approximately 6% below estimated market rents. GLA Occupancy Average Average in- Estimated (sq. ft.) (%) lease term place rent market rent (years) (per sq. ft.) (per sq. ft.)----------------------------------------------------------------------------Western Canada 4,121,299 96.4 3.85 $ 8.46 $ 9.44Central Canada 5,121,917 97.3 6.75 6.29 6.22Eastern Canada 2,191,202 95.0 3.55 6.85 7.25----------------------------------------------------------------------------Total 11,434,418 96.5 5.10 $ 7.18 $ 7.58------------------------------------------------------------------------------ Bench strength continues to grow - Dedicated team members continue to be added across the company with key leadership roles being filled in both Eastern and Western Canada. The Trust has hired Joe Iadeluca as Senior Vice President, Eastern Canada. Joe has more than 25 years of experience in commercial real estate and is based in Montreal. Prior to joining Dundee, Joe spent six years at GE Real Estate. Between 1998 and 2007, Joe held a similar leadership position with Dundee REIT, until his employment was transferred to GE Real Estate as part of a portfolio sale. The Trust has also hired Yanick Frappier as Vice President, Western Canada. Yanick has 15 years of experience in commercial real estate. Prior to joining Dundee, he worked for SITQ/Ivanhoe Cambridge. Also in place are dedicated leasing teams for both the Eastern and Western Canada portfolios.



CAPITAL STRUCTURE

-- New equity issue helps increase market capitalization to $673.6 million - On March 6, 2013, the Trust completed a public offering of 10,465,000 Units issued at a price of $11.00 per unit for gross proceeds of $115.1 million. Since completing its Initial Public Offering in October 2012, the Trust has completed two equity offerings, each at successively higher prices, increasing the public float by approximately 130% and, together with higher trading prices, resulting in an 85% increase in total market capitalization.-- Strengthened capital structure through debt financings - During the quarter, the Trust secured $50.0 million in 7-year mortgage financing at a fixed face interest rate of 3.68% and $48.6 million in 10-year mortgage financing at 3.95%. The proceeds of these financings were used to repay $42.0 million in promissory notes due to Dundee REIT, as well as the $32.5 million variable rate bridge loan used to partially fund the KingSett Portfolio acquisition and $10.0 million drawn on its revolving credit facility. As a result, the Trust has eliminated its variable rate debt, lowered is effective interest rate and lengthened its term to maturity.



Key performance indicators(2) March 31, 2013 December 31, 2012----------------------------------------------------------------------------Level of debt (debt-to-gross book value)(3) 50.1% 54.3%Interest coverage ratio(4) 2.7 times 3.0 timesAverage face interest rate 4.25% 4.19%Debt - average term to maturity (years) 5.0 4.1----------------------------------------------------------------------------See footnotes on page 4



Subsequent to completing the CanFirst Portfolio acquisition and the acquisition of C2C Industrial Properties, the Trust's debt ratio will return to approximately 54%.

ACQUISITION ACTIVITY

The Trust continues to pursue strategic acquisitions. During the quarter, the Trust sourced and conducted due diligence on a portfolio of 22 properties comprising 1.6 million square feet of gross leasable area in key industrial nodes and situated along major transportation corridors in the Greater Toronto Area (the "CanFirst Portfolio"). The CanFirst Portfolio complements the REIT's existing assets in terms of asset type and quality, as well as other key portfolio metrics. The Portfolio has a current in-place occupancy rate of 96%, a weighted average lease term of approximately 3.7 years and an average in-place rent of $5.83 per square foot. The acquisition was completed subsequent to quarter-end, on April 24, 2013, for a total purchase price of approximately $(151.5) million.

In addition, on March 19, 2013, the Trust announced that it had entered into a support agreement pursuant to which it had agreed to make an offer to acquire all of the issued and outstanding shares of C2C Industrial Properties Inc. ("C2C") in exchange for units of Dundee Industrial REIT. The C2C portfolio comprises 25 properties totalling 2.5 million square feet of gross leasable area located primarily in Halifax, Edmonton, Greater Toronto Area and Greater Montreal Area, and complements the Trust's existing assets in terms of asset type and quality, as well as other key portfolio metrics. The portfolio has a current occupancy rate of 96%, a weighted average lease term of approximately 3.7 years and an average in-place rent of $5.65 per square foot. The take-over bid circular and the offer to acquire the outstanding shares of C2C was mailed to C2C shareholders on April 5, 2013 and expires on May 11, 2013.

The pro forma impact of the acquisition on Dundee Industrial REIT's key portfolio metrics is detailed below:

Pro forma CanFirst Pro formaPortfolio March 31, 2013 Portfolio CanFirst & C2C----------------------------------------------------------------------------Gross leasable area (square feet) 11.4 million 13.1 million 15.6 millionNumber of properties 158 180 205Average remaining lease term (years) 5.1 4.9 4.7Average in-place rent (per square foot) $ 7.18 $ 7.00 $ 6.79Average market rent (per square foot) $ 7.58 $ 7.39 $ 7.17Average tenant size (square feet) 11,164 11,353 11,769Number of tenants 990 1,110 1,276Proportion NOI from Multi- tenant / Single-tenant 61% / 39% 62% / 38% 66% / 34%Occupancy rate (%) 97% 96% 96%----------------------------------------------------------------------------



CONFERENCE CALL

Senior management will host a conference call to discuss the results tomorrow, May 8, 2013 at 2:00 p.m. (ET). To access the call, please dial: (647) 317-3471 or toll free at 1-866-551-3680 and using passcode 65951571#. A taped replay of the call will be available for 30 days. To access the conference call via webcast, please go to Dundee Industrial REIT's website at www.dundeeindustrial.com and, in the Investor Centre, click on Calendar of Events. The webcast will be archived for 90 days.

Other information

Information appearing in this news release is a select summary of results. The consolidated financial statements and management's discussion and analysis for the Trust, as well as its Supplementary Information Package will be available at www.dundeeindustrial.com and on www.sedar.com.

Dundee Industrial REIT is an unincorporated, open-ended real estate investment trust. Dundee Industrial REIT owns a portfolio of 180 primarily light industrial properties comprising approximately 13.1 million square feet of gross leasable area in key industrial markets across Canada. Its objective is to build upon and grow its portfolio and to provide stable, sustainable and growing cash distributions to its unitholders. For more information, please visit www.dundeeindustrial.com.

FOOTNOTE

(1) NOI, FFO and AFFO - are key measures of performance used by real estate operating companies; however, they are not defined by International Financial Reporting Standards ("IFRS"), do not have standard meanings and may not be comparable with other industries or income trusts.

(2) The key performance indicators include the results of operations for the period from January 1, 2013 to March 31, 2013.

(3) Level of debt is determined as total debt before deferred financing costs and mark-to-market adjustments, divided by total assets.

(4) The interest coverage ratio for the period, is calculated as net rental income plus interest and fee income, less general and administrative expenses, all divided by interest expense on debt, excluding deferred financing and mark-to-market adjustments.

Forward-looking information

This press release may contain forward-looking information within the meaning of applicable securities legislation. 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 Dundee Industrial REIT's control, which could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking information. These risks and uncertainties include, but are not limited to, general and local economic and business conditions; the financial condition of tenants; our ability to refinance maturing debt; leasing risks, including those associated with the ability to lease vacant space; and interest and currency rate functions. Our objectives and forward-looking statements are based on certain assumptions, including that the general economy remains stable, interest rates remain stable, conditions within the real estate market remain consistent, competition for acquisitions remains consistent with the current climate and that the capital markets continue to provide ready access to equity and/or debt. All forward-looking information in this press release speaks as of the date of this press release. Dundee Industrial REIT does not undertake to update any such forward-looking information whether as a result of new information, future events or otherwise. Additional information about these assumptions and risks and uncertainties is contained in Dundee Industrial REIT's filings with securities regulators, including its latest annual information form and MD&A. These filings are also available at Dundee Industrial REIT's website at www.dundeeindustrial.com.



Contacts:
Dundee Industrial REIT
Michael Cooper
Chairman, Executive Committee
(416) 365-5145
mcooper@dundeeindustrial.com

Dundee Industrial REIT
Randy Cameron
President & Chief Executive Officer (Interim)
(403) 270-2480
rcameron@dundeeindustrial.com

Dundee Industrial REIT
Mario Barrafato
Chief Financial Officer
(416) 365-4132
mbarrafato@dundeeindustrial.com
www.dundeeindustrial.com



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