Dream Unlimited Corp.
(DRM-T) C$32.29
Q2/22: Private AUM Growing Nicely; NAV Reduced Due to D.un
Event
Post-Q2/22 update (initial views: link)
Impact: MIXED
Q2/22 Recap: Dream's Q2/22 earnings were a slight beat due to a strong rebound at Arapahoe Basin and the receipt of an advisory fee for the Dream Residential REIT IPO (settled in units). Despite today's market volatility and macro concerns, the majority of Dream's businesses (urban/western Canada development, Arapahoe Basin, private capital fund raising) continue to perform well.
Asset Management: Total AUM increased $1.3bln q/q and over $2bln YTD to $17bln and fee-earning AUM is $10bln (up slightly q/q). Although growth in the publicly- traded vehicles has slowed, Dream continues to grow private capital AUM, with the previously announced $1.5bln GTA industrial development JV with a global sovereign wealth fund and $110mm of newly secured commitments for Dream Impact Fund's second close (new size: $255mm). As fee-earning AUM grows (which we expect), we envision the platform value representing an increasing portion of the total value, thereby helping overall NAV grow. Dream's existing private funds (at Q1/22) had $1.6bln of committed and uncalled capital.
Condominium Development: Likely due to their unique location and architectural attributes, Dream's two main active condominium sales projects (Forma Condos on King Street West and Bridge House in Port Credit) are selling well and allow Dream to sustain momentum in its overall urban for-sale development strategy through the current market slowdown.
Western Canada Development: The near-term outlook remains strong, with builder inventories remaining very low and Dream having secured sales commitments for an additional 799 lots and 32 acres to contribute to earnings in 2022.
Our NAV/share estimate decreases by 7% to $62.00 (-8% since Q1/22), primarily resulting from our reduced NAV estimate for D.un. Dream's publicly traded subsidiaries are trading at historically wide discounts to NAV. When translating this discount to Dream, it represents ~$5.50/share.
TD Investment Conclusion
During today's heightened market volatility and macro uncertainty, Dream's exposure to different businesses and markets offers both valued diversification and an increased potential opportunity set as the cycle progresses, inevitably opening up the next round of compelling investment opportunities.