Dream Unlimited Corp. Reports First Quarter Results & Strongest Ever Land Presales

This press 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. All amounts are in Canadian dollars.

Dream Unlimited Corp. (TSX: DRM) (“Dream”, “the Company” or “we”) today announced its financial results for the three months ended March 31, 2024 (“first quarter”).

“As anticipated, we have started 2024 with strong results during what is typically a quieter quarter for Dream,” said Michael Cooper, Chief Responsible Officer. “Arapahoe Basin has bounced back from a weaker fall ski season, delivering the highest level of income we have ever seen during our ownership this February and March. Our Western Canada land pre-sales are continuing to track at historic highs, with an additional $162 million in sales secured for the remainder of 2024 and 2025, as well as to the sale of 146 raw acres in Edmonton. We expect to add nearly 2,000 units to our residential rental portfolio by the end of 2027, including Birch House and Cherry House at Canary Landing, Dream LeBreton, and apartment, townhome and single family rentals in our Brighton neighbourhood in Saskatoon. We continue to focus on our asset management platform, with assets under management of $25 billion, up 43% since the end of 2022. Overall, we are pleased with our progress across our recurring income and Western Canada business lines and look to carry this momentum through the rest of 2024 and onward.”

Dream has published a supplemental information package on our website concurrent with the release of our first quarter results.

Highlights: Recurring Income

• In the first quarter revenue and net operating income(1) for the segment was $61.5 million and $27.2 million, respectively, up by $2.0 million and $1.9 million from 2023. This quarter’s results were largely driven by strong results from Arapahoe Basin, with February and March 2024 income our highest under Dream’s ownership. In addition, higher occupancy rates and our increased ownership interest of the Distillery District contributed to improved results. This was partially offset by higher transactional fees earned in 2023.

• Lease up continues at Maple House at Canary Landing as the townhomes and top six floors of the tower began occupancy. As of today, the building is 63% leased, including committed and in-place residents. Leasing activity at Aalto II and Common at Zibi continues, with 51% and 19% committed and in-place occupancy as of today, respectively. The Teal, also known as Brighton Village Rentals II, commenced first occupancies in the fourth quarter of 2023. This property is the second multi-family building consisting of 120 studios, one and two bedroom rental units and is located within Brighton Village Centre, an innovative 14-acre complex of townhomes, apartments, office and high street retail. As of today, we had 80% committed and in-place occupancies. By the end of 2024, we expect to add another 358 units to our residential rental portfolio (at project level), inclusive of 238 units at Canary Landing and 120 apartment units in Saskatoon.

• In the three months ended March 31, 2024, our portfolio of stabilized properties(1) generated revenue and net operating income(1) of $43.7 million and $20.8 million, an increase of $3.4 million and $2.4 million, respectively over the prior period, largely driven by the growth in our multi-family portfolio in the GTA, National Capital Region and Western Canada. As of March 31, 2024, our portfolio comprises 2,691 apartment units (at project level) and 95% of units are occupied, excluding developments in initial lease up.

• Our asset management revenue for the quarter was $13.0 million, down slightly from 2023 due to transactional activity last year, partially offset by higher asset management fees in 2024 from acquisitions and a growing asset management fee base as the platform continues to expand through development and acquisition activity. Dream Industrial REIT’s development pipeline includes approximately 2.8 million square feet of development projects that are recently completed, currently underway or in advanced planning stages. Over the past 18 months, Dream Industrial REIT has completed or substantially completed approximately 1.1 million square feet of development projects across Canada and Europe.

• Share of earnings from equity accounted investments for the three months ended March 31, 2024 was $1.8 million down slightly from $2.3 million in 2023, largely driven by fair value losses on Dream Office REIT and Dream Residential REIT’s portfolios, driven by modest cap rate expansion on certain properties.

• Across the Dream group platform, which includes assets held through the Company, Dream Impact Trust, Dream Impact Fund, Dream Office REIT and Dream Residential REIT, we have a growing portfolio of 8,800 apartment units and 14.0 million square feet (“sf”) of gross floor area (“GFA”) in residential and gross leasable area (“GLA”) in stabilized rental, retail and commercial properties, in addition to our recreational properties. Over the next four years, an additional 2,305 apartment units comprising 1.9 million sf of residential GFA is expected to be added to our recurring income portfolio (at project level) primarily relating to Canary Landing, Zibi, LeBreton Flats and Western Canada.

Highlights: Development

• In the three months ended March 31, 2024, our development segment generated $96.7 million in revenue and $5.8 million in net margin, an increase of $84.1 million and $0.6 million, respectively from the comparative period, primarily driven by occupancies at Ivy Condos and Riverside Square Phase 2, both buildings located in downtown Toronto. Sales for Ivy Condos launched in 2017 at fair pricing, however, subsequently construction costs increased significantly. We are very pleased to have completed this project despite limited margin, as we did not want to cancel the sales. We do not have any other projects similar to Ivy Condos in our current pipeline.

• In the three months ended March 31, 2024, we completed two transactions in which we sold an interest in two parcels of land totaling 146 raw acres in Edmonton to builders so that they can secure a pipeline of future building lots. We sold 80% and retained a 20% interest and we continue to be the development manager. The transactions generated revenue of $39.5 million and net margin of $28.1 million, reflected in our FFO for the quarter. The sale is expected to be reflected in income in the second quarter of 2024. These sales will allow us to recognize income on lands that were in our long-term development pipeline for the next 5-10 years.

• In the first quarter of 2024, we achieved 23 lot sales, 11 acres sales and 12 housing occupancies primarily across our Alpine Park, Eastbrook, Maple, Elan and Vista Crossing communities in Regina, Edmonton and Calgary, which excludes the sale of 146 raw acres in Edmonton. In addition to Western Canada land revenues recognized in the first quarter of $5.4 million and the $39.5 million of revenue completed for the raw acre sales in Edmonton, we currently have a further $122.9 million and $39.1 million in land commitments for sales in 2024 and 2025, respectively. Our presales include a 30 acre parcel in Alpine Park that will be developed by a not-for-profit into the Calgary Centre for Sport and Well-Being, a progressive sport and academic centre that will support the physical and emotional well-being of youth and seniors through positive sport, social and academic experiences.

• On March 20, 2024, the Saskatchewan provincial budget was announced and included funding for public and catholic high schools and elementary schools, as well as a large community centre, in Holmwood, our east end Saskatoon community. We expect these parcel sales to close by the end of 2025, and we are working with the city to proceed with the project as soon as possible as we welcome the addition of this outstanding infrastructure into our community.

Consolidated Results Overview

A summary of our consolidated results for the three months ended March 31, 2024 is included in the table below.

• Earnings before income taxes(1) for the three months ended March 31, 2024 was $12.1 million, down from $41.7 million in the comparative period. The decrease is attributable to lower fair value gains on Dream Impact Trust units held by other unitholders and fair value losses on investment properties, inclusive of those held in equity accounted investments.

• Dream standalone funds from operations(1) (“FFO”) for the three months ended March 31, 2024 was $0.98 per share on a pre-tax basis, up from $0.26 per share in the comparative period, primarily due to higher net operating income at Distillery from an increase in our ownership interest and occupancy rates, strong performance at Arapahoe Basin and timing of land sales in Western Canada. This was partially offset by lower transactional activity from the asset management platform and lower distributions from the Dream Group unit holdings.

• As of March 31, 2024 the Company has available liquidity(2) of $320.3 million, a slight decrease from $325.1 million as of December 31, 2023. While our liquidity is ample compared to our historical levels, our management team has intentionally maintained a high level so that we can pursue our business plan and manage through any shocks that arise in the economy.

• In the first quarter, 0.2 million Subordinate Voting Shares were purchased for cancellation by the Company at an average price of $22.88 under a normal course issuer bid (“NCIB”) for total proceeds of $5.1 million (year ended December 31, 2023 - 0.6 million Subordinate Voting Shares at an average price of $19.28).

• Dividends of $6.3 million were declared and paid on our Subordinate Voting Shares and Class B Shares in three months ended March 31, 2024 (year ended December 31, 2023 - $21.3 million).

Conference Call

Senior management will host a conference call to discuss the financial results on Wednesday, May 15, 2024, at 1:00 p.m. (ET). To access the conference call, please dial 1-844-763-8274 (toll free) or 647-484-8814 (toll). To access the conference call via webcast, please go to Dream’s website at www.dream.ca and click on the link for News, then click on Events. A taped replay of the conference call and the webcast will be available for ninety (90) days following the call.

Annual Meeting of Shareholders

Senior management will host its annual meeting of shareholders on Wednesday, June 12, 2024 at 2:00 PM (ET) at the TMX Market Centre, 120 Adelaide Street West, Toronto, Ontario, M5H 1S3. To access the annual meeting of shareholders via webcast, please go to Dream’s website at www.dream.ca and click on the link for News, then click on Events. A taped replay of the annual meeting of shareholders and the webcast will be available for ninety (90) days following the meeting.

Other Information

Information appearing in this press release is a select summary of results. The financial statements and MD&A for the first quarter of 2024 for the Company are available at www.dream.ca and on www.sedarplus.com.

About Dream Unlimited Corp.

Dream is a leading developer of exceptional office and residential assets in Toronto, owns stabilized income generating assets in both Canada and the U.S., and has an established and successful asset management business, inclusive of $25 billion of assets under management(1) across four Toronto Stock Exchange ("TSX") listed trusts, our private asset management business and numerous partnerships. We also develop land, residential and income generating assets in Western Canada. Dream expects to generate more recurring income in the future as its urban development properties are completed and held for the long term. Dream has a proven track record for being innovative and for our ability to source, structure and execute on compelling investment opportunities. A comprehensive overview of our holdings is included in the "Summary of Dream's Assets and Holdings" section of our MD&A for the first quarter of 2024.

Non-GAAP Measures and Other Disclosures

In addition to using financial measures determined in accordance with IFRS, we believe that important measures of operating performance include certain financial measures that are not defined under IFRS. Throughout this press release, there are references to certain non-GAAP financial measures and ratios including Dream standalone FFO per share, Dream consolidated FFO per share, Dream standalone FFO, Dream consolidated FFO, Dream Impact Trust & consolidation and fair value adjustments, and earnings before income taxes, which management believes are relevant in assessing the economics of the business of Dream. These performance and other measures are not financial measures under IFRS, and may not be comparable to similar measures disclosed by other issuers. However, we believe that they are informative and provide further insight as supplementary measures of financial performance, financial position or cash flow, or our objectives and policies, as applicable. Certain additional disclosures such as the composition, usefulness and changes, as applicable, of the non-GAAP financial measures and ratios included in this press release have been incorporated by reference from the management’s discussion and analysis of Dream for the three months ended March 31, 2024, dated May 14, 2024 (the “MD&A for the first quarter of 2024”) and can be found under the section “Non-GAAP Ratios and Financial Measures”, subheadings “Dream standalone FFO” and “Dream consolidated FFO”, “Dream standalone FFO per share” and “Dream consolidated FFO per share”, “Net operating income” and “Dream Impact Trust & Consolidation and fair value adjustments”. The composition of supplementary financial measures included in this press release has been incorporated by reference from the MD&A for the first quarter of 2024 and can be found under the section “Supplementary and Other Financial Measures”. The MD&A for the first quarter of 2024 is available on SEDAR+ at www.sedarplus.com under Dream’s profile and on Dream’s website at www.dream.ca under the Investors section.

Non-GAAP Ratios and Financial Measures

"Dream Impact Trust & Consolidation and fair value adjustments" represent certain IFRS adjustments required to reconcile Dream standalone and Dream Impact Trust results to the consolidated results as at March 31, 2024 and December 31, 2023 and for the three months ended March 31, 2024 and December 31, 2023. Management believes Dream Impact Trust & Consolidation and fair value adjustments provides investors useful information in order to reconcile it to the Dream Impact Trust financial statements.

Consolidation and fair value adjustments relate to business combination adjustments on acquisition of Dream Impact Trust on January 1, 2018 and related amortization, elimination of intercompany balances including the investment in Dream Impact Trust units, adjustments for co-owned projects, fair value adjustments to the Dream Impact Trust units held by other unitholders, and deferred income taxes.

"Dream standalone FFO" and "Dream consolidated FFO", are non-GAAP financial measures and are key measures of our financial performance. We use Dream standalone FFO and Dream consolidated FFO to assess operating results and the pre-tax performance of our businesses on a divisional basis.

Dream standalone FFO is calculated as the sum of FFO for all of our divisions, excluding Dream Impact Trust and consolidation adjustments, and Dream consolidated FFO is calculated as Dream standalone FFO plus Dream Impact Trust and consolidation adjustments. We use Dream standalone FFO and Dream consolidated FFO, to assess operating results and the performance of our businesses on a divisional basis. The most directly comparable measure to Dream standalone FFO and Dream consolidated FFO is net income.

The following table defines and illustrates how Dream standalone FFO is calculated by division:

The following table reconciles Dream consolidated FFO and Dream Consolidated FFO to net income (loss):

“Dream standalone FFO per share” and “Dream consolidated FFO per share” are non-GAAP ratios. Dream standalone FFO per share is calculated as Dream standalone FFO divided by the weighted average number of Dream shares outstanding. Dream consolidated FFO per share is calculated as Dream consolidated FFO divided by weighted average number of Dream shares outstanding. We use these ratios to assess operating results and the pre-tax performance of our businesses on a per share basis.

Dream standalone FFO per share and Dream consolidated FFO per share per share for the three months ended March 31, 2024 and 2023 are shown in the table included under the "Funds From Operations" section of the MD&A for the first quarter of 2024.

“Net operating income" is a non-GAAP measure and represents revenue, less (i) direct operating costs and (ii) selling, marketing, depreciation and other indirect costs, but including: (iii) depreciation; and (iv) general and administrative expenses. The most directly comparable financial measure to net operating revenue is net margin. This non-GAAP measure is an important measure used by management to assess the profitability of the Company's recurring income segment. Net operating income for the recurring income segment for the three months ended March 31, 2024 and 2023 is calculated and reconciled to net margin as follows:

“Portfolio of stabilized properties” is a non-GAAP measure and represents recurring income assets, less (i) asset and development management contracts with the Dream group of companies and management fees from our private asset management business and (ii) Dream Impact Trust & Consolidation and fair value adjustments. The most directly comparable measure to the portfolio of stabilized properties is the recurring income reporting segment. This non-GAAP financial measure is an important measure used to assess the Company’s portfolio of stabilized properties. Revenue and net operating income from our portfolio of stabilized properties for the three months ended March 31, 2024 and 2023 is reconciled to revenue and net operating income for the recurring income segment and is calculated as follows:

Forward-Looking Information

This press release may contain forward-looking information within the meaning of applicable securities legislation, including, but not limited to, statements regarding our objectives and strategies to achieve those objectives; our beliefs, plans, estimates, projections and intentions, and similar statements concerning anticipated future events, future growth, expected net proceeds from sales or transactions, results of operations, performance, business prospects and opportunities, acquisitions or divestitures, tenant base, future maintenance and development plans and costs, capital investments, financing, the availability of financing sources, income taxes, vacancy and leasing assumptions, litigation and the real estate industry in general; as well as specific statements in respect of our expectations regarding the number of apartment units, townhomes and single family rental units that will start construction in the coming years; the number of units that will be added to our residential rental portfolio in the coming years and the location of such units; the number apartment units and residential GFA to be added the recurring income portfolio across the Dream group platform and the location of such units and GFA; anticipated sale of Arapahoe Basin and the resulting increase in our liquidity and our ability to maintain such liquidity levels; Dream Industrial REIT’s development pipeline; and the timing of closing of parcel sales in Holmwood. 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 Dream’s control, which could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking information. These assumptions include, but are not limited to: the nature of development lands held and the development potential of such lands, interest rates and inflation remaining in line with management expectations, our ability to bring new developments to market, anticipated positive general economic and business conditions, including low unemployment and interest rates, positive net migration, oil and gas commodity prices, our business strategy, including geographic focus, anticipated sales volumes, performance of our underlying business segments and conditions in the Western Canada land and housing markets. Risks and uncertainties include, but are not limited to, general and local economic and business conditions, the impact of public health crises and epidemics, employment levels, risks associated with unexpected or ongoing geopolitical events, including disputes between nations, terrorism or other acts of violence, international sanctions and the disruption of movement of goods and services across jurisdictions, inflation or stagflation, regulatory risks, mortgage and interest rates and regulations, risks related to a potential economic slowdown in certain of the jurisdictions in which we operate and the effect inflation and any such economic slowdown may have on market conditions and lease rates, environmental risks, consumer confidence, seasonality, adverse weather conditions, reliance on key clients and personnel and competition. All forward-looking information in this press release speaks as of May 14, 2024. Dream does not undertake to update any such forward-looking information whether as a result of new information, future events or otherwise, except as required by law. Additional information about these assumptions and risks and uncertainties is disclosed in filings with securities regulators filed on SEDAR+ (www.sedarplus.com).

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