Dundee International REIT Announces $568 Million Acquisition of Office Portfolio in Germany and $220 Million Offering of Units

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED
STATES


DUNDEE INTERNATIONAL REIT (TSX:DI.UN) ("Dundee International" or the "REIT")
today announced that it has entered into an agreement (the "Purchase Agreement")
with SEB Asset Management ("SEB"), the SEB Group's specialist real estate asset
manager in Germany, to acquire a 1.5 million square foot portfolio of office
properties in Germany (the "Portfolio") for approximately $568 million (EUR420
million) from investment funds managed by SEB. In order to provide partial
funding for the acquisition, the REIT also announced that it has entered into an
agreement to sell, on a bought deal basis, 20,200,000 units of the REIT at a
price of $10.90 per unit (the "Equity Offering") for gross proceeds of $220
million to a syndicate of underwriters led by TD Securities Inc. 


"Germany continues to present a very attractive investment environment. With
this remarkable portfolio of 1.5 million square feet of high quality office
space, we will continue the transformation of our business, improve the cash
flow of the REIT's portfolio and solidify our position as a significant owner
and operator of real estate in the German office market," said Michael Cooper,
Vice Chairman of the REIT. 


Highlights:



--  Excellent locations in largest office markets in Germany - The
    properties in the Portfolio are in desirable locations in some of
    Germany's largest office markets, including Frankfurt, Hamburg, Munich,
    Cologne and Dusseldorf. 
--  Modern, institutional quality portfolio - The Portfolio consists of
    institutional quality office assets having an average age of less than
    10 years, with 37% of the portfolio completed in the last five years.
    The well-leased Portfolio features modern design and is currently 94%
    occupied. 
--  Further diversification of tenant profile - The acquisition of the
    Portfolio will increase the REIT's tenant diversity with the addition of
    major tenants such as Google, BNP Paribas Fortis and AIG and will reduce
    the gross rental income ("GRI") contributed by Deutsche Post to
    approximately 43% of the REIT's total GRI. 
--  Immediately accretive - Based on the anticipated interest rates on the
    mortgage financing being sought by the REIT, the acquisition will be
    immediately accretive to the REIT's adjusted funds from operations per
    unit.  
--  Increased scale and market capitalization - The acquisition will
    significantly increase Dundee International's scale and market
    capitalization, improving liquidity for unitholders.  



Portfolio Overview: 

The acquisition of the Portfolio will enhance the quality of the REIT's asset
base and increase its holdings in Germany's largest and most significant office
markets, with 75% of the Portfolio, as measured by gross leasable area ("GLA"),
located in Germany's top seven office markets. The Portfolio has a current
occupancy rate of 94%, a weighted average lease term of over 5.4 years and an
average in-place rent of approximately $23.61 per square foot. 


With the addition of the Portfolio, the REIT will further diversify its tenant
profile by adding a number of globally recognized tenants to the REIT's roster,
including Google, BNP Paribas Fortis and AIG, who together contributed
approximately 28% to the Portfolio's overall GRI as of January 2013.


The following table provides certain information about the 11 properties
comprising the Portfolio.




Property address                       Approx. GLA  Year built/   Occupancy 
                                         (sq. ft.)    renovated         (%) 
----------------------------------------------------------------------------
Cacilienkloster 2, 6, 8, 10, Cologne       200,900         2009         100 
Vordernbergstrasse                                                          
 6/HeilbronnerStrasse 35 (Z-UP),                                            
 Stuttgart                                  88,600         2009          84 
Speicherstrasse 55 (Werfthaus),                                             
 Frankfurt                                 151,800         2009         100 
ABC-Strasse 19 (ABC Bogen), Hamburg        158,400         2000          96 
Schlossstrasse 8, Hamburg                  165,200         1998          85 
Moskauer Strasse 25 - 27, Dusseldorf       217,200         2003          95 
Westendstrasse 160-162 / Barthstrasse                                       
 24-26, Munich                             122,200  1993 / 1996          82 
Reichskanzler-Muller-Strasse 21-25,                                         
 Mannheim                                  100,500         2008          95 
Am Stadtpark 2 (Parcside), Nuremberg        94,600         2004          99 
Lorracher Strasse 16-16a, Freiburg          56,000         1992         100 
Bertoldstrasse 48 / Sedanstrasse 7,                                         
 Freiburg                                  121,100         1998         100 
----------------------------------------------------------------------------
Total GLA and Average Occupancy          1,476,500                       94%
----------------------------------------------------------------------------
----------------------------------------------------------------------------



"The scale of this transaction and the quality and location of the assets will
improve both our risk profile and the quality of our cash flow. Including this
transaction, we will have added $1 billion of properties in excellent locations
to our portfolio since February 2012. These accretive acquisitions will not only
add significant value to our portfolio but will also create increased
efficiencies across our business," said Jane Gavan, CEO of the REIT. 


The pro forma impact on the REIT's key portfolio metrics of the acquisitions and
dispositions completed and under contract since the end of the third quarter
2012, including the Portfolio, is detailed below:




                                                                  Pro forma 
                                                                 reflecting 
                                                               acquisitions 
                                                                        and 
                                                               dispositions 
                                                                  completed 
                                           As at September        and under 
Portfolio Metrics                                 30, 2012      contract(1) 
----------------------------------------------------------------------------
GLA (square feet)                               12,925,252       14,957,258 
Number of properties                                   294              299 
Average remaining lease term (years)                   5.5              5.5 
Average in-place rent (per square foot)    $          7.60  $         10.76 
Average market rent (per square foot)      $          8.09  $         10.97 
Occupancy rate (%)                                      82%              85%
----------------------------------------------------------------------------
(1) Since September 30, 2012, the REIT has acquired approximately 682,900   
 square feet of GLA for an aggregate purchase price of approximately $169.8 
 million and disposed of 154,400 square feet of GLA for an aggregate sale   
 price of approximately $8.8 million. In addition to the Portfolio, the REIT
 currently has two acquisitions under contract, being the previously        
 disclosed Neue Mainzer Strasse 28 property in Frankfurt and the Dillwachter
 Strasse 5 / Tubinger Strasse 11 property in Munich, comprising in aggregate
 205,200 square feet of GLA. The REIT currently has six small dispositions  
 under contract comprising approximately 178,000 square feet of GLA.        



Transaction Overview: 

Dundee International will acquire the Portfolio for an aggregate purchase price
of approximately $568 million (EUR420 million), implying a going-in
capitalization rate of 6.5%. The purchase price is expected to be funded using
approximately $354 million of new mortgage debt, the net proceeds from the
Equity Offering and cash on hand. 


The REIT has completed its due diligence on the Portfolio. The acquisition
remains subject to certain conditions in the REIT's favour, including obtaining
competition clearance from the German Federal Cartel Office, waivers of
municipal pre-emptive rights and mortgage financing. The REIT's financing
condition runs until March 18, 2013. Based on negotiations with lenders, the
REIT expects to secure mortgage financing for the Portfolio prior to such date.
As a result, the REIT anticipates that closing of the acquisition of the
Portfolio will occur towards the end of the first quarter of 2013.  


"With this transaction, Dundee International will have more than doubled the
size of its portfolio based on GRI since going public in August 2011. Our goal
continues to be to diversify our tenant base and to extend our debt maturities.
Upon closing the acquisitions under contract, including the Portfolio, we
estimate Deutsche Post will contribute 43% of the REIT's overall GRI, down from
more than 85% at the time of the REIT's initial public offering," said Ms.
Gavan. "This transaction will enhance our portfolio with high quality assets in
major cities across Germany, while significantly increasing the REIT's scale and
bringing our market capitalization to over $1 billion." 


The pro forma impact on the REIT's key financial performance indicators of the
acquisitions and dispositions completed and under contract since the end of the
third quarter 2012, including the Portfolio, is detailed below:




                                                                  Pro forma 
                                                                 reflecting 
                                                           acquisitions and 
                                                               dispositions 
                                       As at September        completed and 
                                              30, 2012    under contract(1) 
----------------------------------------------------------------------------
Enterprise value (millions)                                                 
                                    $            1,208  $          2,214(2) 
Average term to maturity of debt                                            
 (years)                                           4.3                  5.5 
Debt-to-book value (excluding                                               
 convertible debentures)                            42%                  50%
Debt-to-book value                                                          
                                                    55%                  57%
Weighted average interest rate                                              
                                                  4.12%                3.50%
----------------------------------------------------------------------------
(1) Since September 30, 2012, the REIT has acquired approximately 682,900   
 square feet of GLA for an aggregate purchase price of approximately $169.8 
 million and disposed of 154,400 square feet of GLA for an aggregate sale   
 price of approximately $8.8 million. In addition to the Portfolio, the     
 REIT currently has two acquisitions under contract, being the previously   
 disclosed Neue Mainzer Strasse 28 property in Frankfurt and the            
 Dillwachter Strasse 5 / Tubinger Strasse 11 property in Munich, comprising 
 in aggregate 205,200 square feet of GLA. The REIT currently has six small  
 dispositions under contract comprising approximately 178,000 square feet   
 of GLA.                                                                    
(2) Based on a price per unit of the REIT of $11.39                         



Equity Offering: 

In order to provide partial funding for the acquisition of the Portfolio, the
REIT has entered into an agreement to sell 20,200,000 units at a price of $10.90
per unit for gross proceeds of approximately $220 million. The Equity Offering
is being sold on a bought deal basis to a syndicate of underwriters led by TD
Securities Inc. The REIT has granted the underwriters an over-allotment option
to purchase up to an additional 3,030,000 units, exercisable, in whole or in
part, for a period of 30 days following the closing of the Equity Offering. If
the over-allotment option is exercised in full, the gross proceeds of the Equity
Offering will total approximately $253 million. 


The REIT expects to file a preliminary short form prospectus relating to the
issuance of the units with the securities commissions or other similar
regulatory authorities in each of the provinces of Canada on or before February
8, 2013. Closing of the Equity Offering is expected to occur on or about March
5, 2013, and is subject to regulatory approval, including the approval of the
Toronto Stock Exchange. 


Debt financing: 

The REIT is seeking mortgage financing for the Portfolio from four German
lenders for an aggregate amount of approximately $354 million at an expected
average interest rate of 2.74% and an average term to maturity of 6.8 years. The
mortgage financing will be secured by a discrete pool of assets in the Portfolio
specific to each lender. The lenders are in advanced stages of obtaining credit
committee approval for the financing. 


This press release is not an offer of securities for sale in the United States.
The units being offered have not been and will not be registered under the
United States Securities Act of 1933 and accordingly are not being offered for
sale and may not be offered, sold or delivered, directly or indirectly within
the United States, its possessions and other areas subject to its jurisdiction
or to, or for the account or for the benefit of a U.S. person, except pursuant
to an exemption from the registration requirements of that Act.


Dundee International REIT is an unincorporated, open-ended real estate
investment trust that provides investors with the opportunity to invest in
commercial real estate exclusively outside of Canada. Dundee International
REIT's portfolio currently consists of approximately 13.5 million square feet of
gross leasable area of office, industrial and mixed use properties across
Germany. For more information, please visit www.dundeeinternational.com. 


This press release contains forward-looking statements with respect to Dundee
International and its operations, strategy, financial performance and financial
condition, as well as with respect to the acquisition of the Portfolio. These
statements generally can be identified by the use of forward-looking words such
as "forecast", "may", "will", "would", "expect", "estimate", "anticipate",
"intend", "believe" or "continue" or the negative thereof or similar variations.
The actual results and performance of Dundee International and the Portfolio
discussed herein could differ materially from those expressed or implied by such
statements. See the risk factors in the public filings of Dundee International.
Such statements are qualified in their entirety by the inherent risks and
uncertainties surrounding future expectations. Some important factors that could
cause actual results to differ materially from expectations include, among other
things, general economic and market factors, competition, the failure to receive
any required approvals or consents in connection with the acquisition of the
Portfolio or the failure to satisfy or waive any other condition to the
acquisition of the Portfolio, the failure of Dundee International to realize
expected benefits from the acquisition of the Portfolio, the performance of the
Portfolio generally, changes in securities or other laws or regulations or the
application thereof. The cautionary statements qualify all forward-looking
statements attributable to Dundee International and persons acting on its
behalf. The assumptions made in making forward-looking statements are referred
to in the public filings of Dundee International. Unless otherwise stated, all
forward-looking statements speak only as of the date of this press release.
Except as required by applicable law, Dundee International specifically
disclaims any obligation to update or revise any forward-looking statements,
whether as a result of new information, future developments or otherwise.
Additional information about these assumptions and risks and uncertainties is
contained in Dundee International's filings with securities regulators,
including its latest annual information form and MD&A. These filings are also
available at Dundee International's website at www.dundeeinternational.com. 


FOR FURTHER INFORMATION PLEASE CONTACT: 
Dundee International REIT
Michael J. Cooper
Vice Chairman
[phone]
[e-mail]


Dundee International REIT
P. Jane Gavan
President and Chief Executive Officer
[phone]
[e-mail]


Dundee International REIT
Rene Gulliver
Chief Financial Officer
[phone]
[e-mail]
www.dundeeinternational.com