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Dream Unlimited Corp.
(DRM-T) C$32.67
Q2/22 First Look: EPS Beat; Businesses Continue to Perform Well
Event
Q2/22 results.
Impact: SLIGHTLY POSITIVE
Our Initial Take: Dream's Q2/22 results represented a slight beat on earnings and while market volatility and macro concerns persist, many parts of the business continue to perform well – including on the development side, Arapahoe Basin, and in private capital fund raising.
Q1 Results vs. Estimate: Q2/22 EPS (standalone basis) of $0.45 slightly beat our $0.40 estimate. The main sources of the beat were:
EBITDA at Arapahoe Basin increasing $4.5mm y/y (+200%) to $6.7mm (despite below-average snowfall), and;
a $2.8mm advisory fee for Dream Residential REIT IPO, which was settled in DRR units.
Additionally, higher equity-accounted earnings and lower taxes were partially offset by the absence of fair value gains.
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). In addition to growth at DIR and the DRR IPO, Dream continues to grow private capital AUM, with the previously-announced $1.5bln GTA industrial development JV with a global sovereign wealth fund. Subsequent to quarter-end, Dream secured $110mm of commitments for the second close of the Dream Impact Fund (new size: $255mm), with new investors including Meridian, AIMCo and RBC.
Condominium Development
Completion of Canary Commons enabled Dream to repay the $127.5mm (100% basis) related construction facility and receive $27.5mm in cash distributions subsequent to quarter-end. At Forma Condos on King Street West in downtown Toronto, half of the East tower units have been pre-sold and at prices we believe to set market records. Both towers will include over 2,000 units and significant office and retail space as well as a two-level space for OCAD University.
Western Canada Development
Lot sales were unusually low at 28 (y/y: 91) but this was offset by the sale of 13 acres. However, the near-term outlook remains strong with Dream having secured sales commitments for an additional 799 lots and 32 acres to contribute to earnings in 2022.
Balance Sheet
Dream's debt-to-total-assets ratio increased to 40.1% (Q1/22: 39.5%). NCIB activity slowed since Q1/22 (YTD repurchases remain 0.4mm shares). Liquidity at August 9 totals $246mm.
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