Dream Impact Trust Reports Third Quarter Results

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.

TORONTO--(BUSINESS WIRE)--DREAM IMPACT TRUST (TSX:MPCT.UN) ("Dream Impact", "we" or the "Trust") today reported its financial results for the three and nine months ended September 30, 2020.

On October 13, 2020, the Trust announced its refined focus to become a pure-play impact investment vehicle. While considered new in the Canadian public markets, impact investing is the allocation of capital to generate a positive, social and environmental benefit while achieving attractive financial market returns. As part of this announcement, we have identified our three core impact verticals: Attainable and Affordable Housing, Inclusive Communities, and Resource Efficiency, which align with the widely recognized and accepted United Nations Sustainable Development Goals.

By establishing frameworks and incorporating guidelines from the world’s leading impact and environmental, social and governance ("ESG") bodies, the Trust expects to formalize its declarations and approach to impact management, over the next year. This is expected to include: creating the impact pathways for each of the Trust’s qualifying assets, measuring our impact in a repeatable and systematic manner, and having our progress and achievements audited by an independent third party. For further details on our core impact verticals and impact management approach, refer to Section 1.4, "Impact Investing", of our Management's Discussion and Analysis ("MD&A") for the quarter.

“With the fundamental objective of generating competitive market returns and creating positive social and environmental impact, we are extremely pleased to become a signatory to the Operating Principals of Impact Management," said Michael Cooper, Portfolio Manager. "We believe impact investing is ingrained in Dream’s long-standing history as a developer and have seen the phenomenal effects we can make on our communities. With Dream Impact Trust's portfolio, we have the opportunity to build best-in-class assets and foster long-standing positive change for our stakeholders. As we set up the framework for impact over the next twelve months and define our impact declarations, we are committed to providing transparency on how we measure and report on the impact we are creating."

Selected financial and operating metrics for the three and nine months ended September 30, 2020 are summarized below:

	Three months ended September 30,				Nine months ended September 30,
	2020		2019			2020		2019
Consolidated results of operations
Net income (loss)	$	(47)	$	2,855	$	1,471	$	12,408
Net income (loss) from continuing operations	(47)		(576)			1,471		3,844
Net operating income ("NOI")⁽¹⁾	3,059		10,871			8,410		33,543
Cash generated from (utilized in) operating activities from continuing operations	6,148		(245)			8,704		156
Net income (loss) per unit⁽¹⁾	—		0.04			0.02		0.18
Net income (loss) from continuing operations per unit⁽¹⁾	—		(0.01)			0.02		0.05
Cash generated from (utilized in) operating activities from continuing operations per unit⁽¹⁾	0.09		—			0.13		—
Distributions declared and paid per unit	0.10		0.10			0.30		0.30
Units outstanding – end of period	64,682,490		68,446,743			64,682,490		68,446,743
Units outstanding – weighted average	65,792,982		71,173,761			67,959,617		70,506,607

In the third quarter of 2020, the Trust reported a nominal net loss compared to $2.9 million of net income in the comparative period. The decline from prior year was primarily attributable to lower recurring income from non-core asset sales and normal course loan repayments, lower development income due to the variability in completion timelines and non-cash foreign exchange fluctuations. These items were partially offset by lower G&A and fair value adjustments. Results for the period were in line with expectations due to our focus on the development segment, which inevitably will result in fluctuations in the generation of income and cash flow due to the long-term nature of our projects. In the nine months ended September 30, 2020, we had minimal inventory available for occupancy, however, we continued to progress on our development pipeline and achieve key milestones. Our development segment is expected to generate attractive returns and NAV⁽¹⁾ accretion over the long term.

As at September 30, 2020, the Trust had ample liquidity with $114.6 million of cash on hand. The Trust’s debt-to-asset value⁽¹⁾ as at September 30, 2020 was 13.9%, relatively consistent with June 30, 2020, or 37.4% compared to 34.0% as at June 30, 2020, inclusive of project-level debt and assets within our development segment, including equity accounted investments, as a result of progress on our developments. Dream Impact has sufficient cash on hand to fund all normal course debt repayments, cash requirements for our development investments and ongoing unitholders' distributions beyond the next 18 months.

Subsequent to September 30, 2020, the Province of Ontario approved zoning for West Don Lands Blocks 3/4/7 and 20 through a Municipal Zoning Order ("MZO") which provides for approximately 1,516 rental units, including 455 affordable, and 300,000 square feet ("sf") of commercial space in downtown Toronto. This is in addition to the 770 rental units, including 231 affordable, currently under construction on Block 8. The MZO approval is a significant milestone as it provides timing and density certainty to deliver one of the largest affordable housing programs in Canada and assists all three levels of government in achieving their affordable policy objectives. Upon completion, the West Don Lands will deliver, under the Province's Affordable Housing Lands Program, an aggregate 2,286 purpose-built rental units, including 686 affordable, and 300,000 sf of commercial space.

Throughout 2020 we have made significant progress towards key milestones and/or completion of our existing developments, which will be reflected in our financial results upon completion. Over 70% of our projects are zoned, with the remaining 30% of Dream Impact's development projects or assets with redevelopment potential currently in the rezoning process. Depending on the specific municipality, this process may take upwards of 2-3 years from the timing of submission. Over the next 24 months we anticipate obtaining significant zoning approvals, including 49 Ontario, an income property with significant redevelopment potential in downtown Toronto.

RESULTS HIGHLIGHTS BY SEGMENT

Development
In the third quarter, the Trust's development segment recorded a net loss of $0.5 million relative to net income of $5.4 million in the comparative period. The decrease was primarily related to occupancy income generated from the completion of the Axis Condominiums project in the comparative period and fluctuations in foreign exchange related to our Virgin Hotels Las Vegas investment. Due to the long-term nature of projects in the development segment, the Trust expects results will fluctuate between periods due to the various construction timelines and availability of completed inventory. As our development projects progress towards completion and achieve various milestones, we expect an increase in income and cash flows from this segment over time. The Trust has historically targeted a pre-tax internal rate of return ("IRR")⁽¹⁾ of at least 15%-20% on new equity investments in residential and mixed-use development projects.

During the third quarter, the Trust had the following key achievements and activity within its development segment:

Empire Lakeshore is a 1,280-unit residential condominium project located in close proximity to downtown Toronto. In the three months ended September 30, 2020, the Trust received cash distributions from the project of $43.2 million, representing our return of capital on the project. The Trust anticipates receiving further cash distributions over the next 18-month period from this non-core legacy asset.

In the third quarter, we successfully launched sales for the first two condominium buildings at Brightwater, a 72-acre waterfront community in Port Credit. The site was originally home to an oil refinery and required significant remediation work along with rezoning by the Trust and its partners. As of November 2, 2020, 89% of the 311 units brought to market have been sold, with first occupancies expected in 2023. Substantially all of the remaining units are currently under contract and are subject to rescission. In aggregate, between 2023 and 2032, Brightwater is expected to generate approximately 3,000 residential units and nearly 400,000 sf of retail and commercial space. To date, we have contributed $38.6 million for a 23% ownership interest in this impact investment.

In the three months ended September 30, 2020, Zibi, our 34-acre mixed-use waterfront community along the Ottawa River, received loan proceeds of $10.0 million from the CMHC Innovation Fund. The goal of the CMHC Innovation Fund is to encourage new funding models and innovative building techniques in the affordable housing sector. The funding received will be used to support affordable housing units for various blocks within the multi-phase development that includes over 4.0 million sf of density consisting of over 1,000 residential units and over 2.0 million sf of commercial space. As at September 30, 2020, $3.1 million of the funding is available for Block 10, a 162-unit rental building in Gatineau, Quebec, which is currently under construction, with the remainder of funding allocated to future blocks. As of September 30, 2020, Dream Impact increased its ownership in this impact investment to 44% from 40%.

Year to date, the Trust has invested $15.9 million into Zibi, which includes an investment in Zibi Community Utility, a District Thermal Energy System which will provide zero-carbon heating and cooling for all Zibi tenants and residents, in partnership with Hydro Ottawa. Upon completion, Zibi is expected to be one of Canada’s most sustainable communities and the country’s first "One Planet Master-Planned Community".

Subsequent to September 30, 2020, Dream Impact increased its equity ownership in the Frank Gehry development, from 18.75% to approximately 25%, with no additional capital investment. To date, the Trust has invested $36.6 million in the landmark residential project located in the heart of downtown Toronto. Each partner holds a third of the interest in the project, including Dream Unlimited/Dream Impact's combined ownership of 33%.

In the nine months ended September 30, 2020, the Trust contributed $24.2 million, including transaction costs, to projects within its development segment, with a further $5-$10 million anticipated to be contributed to its development projects by the end of 2020. The Trust's contributions year to date were primarily related to Zibi, Brightwater and the West Don Lands, our affordable housing development in downtown Toronto. We anticipate making further capital investments in our development projects in the range of $30-$40 million over the next 18 months.

Based on current development timelines, over the next five-year period, an additional 2,100 residential units and 0.4 million sf of retail and commercial product are expected to be completed (at the 100% project level). This includes both assets we intend to hold and those for immediate sale. For full details, refer to Sections 1.7, "Summary of Portfolio Assets", and 10.1, "Summary of Development and Recurring Income Assets" in our MD&A for the three and nine months ended September 30, 2020. Build-to-hold assets, such as West Don Lands and future blocks at Zibi, are part of the Trust's long-term impact investing strategy.

Recurring Income
In the third quarter, the Trust's recurring income segment generated net income of $2.1 million compared to a net loss of $1.1 million in the comparative period. The increase was primarily driven by a fair value loss recognized on a non-core income property which was subsequently sold in the fourth quarter of 2019, partially offset by reduced income contribution from the Trust's lending portfolio and income properties due to normal course loan repayments and asset dispositions in the prior period.

In response to the ongoing COVID-19 pandemic, the Trust has continued to support our tenants through temporary rent deferrals on an as needed basis and through the Canada Emergency Commercial Rent Assistance ("CECRA") program. The CECRA program is intended to provide relief to small businesses impacted by COVID-19. The net impact of this program was minimal to Dream Impact's financial results for the period.

Other⁽²⁾
In the three months ended September 30, 2020, the Other segment recorded a net loss of $1.6 million relative to a net loss of $4.9 million in the comparative period. The improvement of $3.3 million was due to a lower income tax expense and reduced asset management fees due to a lower asset base and the settlement of fees in Trust units based on relative market pricing. Effective April 2019, Dream Impact and Dream Asset Management Corporation ("DAM") agreed to satisfy management fees payable to DAM in units of the Trust. The Trust units were valued at $8.74 per unit, equal to the net asset value ("NAV")⁽¹⁾ as at December 31, 2018, for purposes of determining the number of units to be issued. For accounting purposes, the asset management fees are recorded at the Trust's trading price of $5.32 per unit on the date of settlement for the third quarter. As a result, the Trust's asset management fees recognized in the period were lower relative to the prior period to the benefit of the Trust.

Unit Buyback Activity
From the inception of the Trust's unit buyback program in December 2014 to November 2, 2020, the Trust has repurchased 13.8 million units for cancellation, for a total cost of $85.9 million. Year to date in 2020, the Trust has repurchased 5.0 million units for a total cost of $23.5 million.

As at November 2, 2020, the Trust's asset manager, DAM, owns 16.8 million units of the Trust, inclusive of 1.3 million units acquired under the Trust's distribution reinvestment plan, 1.7 million units through the asset management fee settlement, and the remainder acquired on the open market for DAM's own account. In aggregate, DAM owns 26% of the Trust.

Cash Generated from Operating Activities - Continuing Operations
Cash generated from operating activities in the third quarter of 2020 was $6.1 million compared with cash utilized in operating activities of $0.2 million in the comparative period. The increase in cash generated of $6.3 million was primarily attributable to changes in non-cash working capital and the settlement of specific amounts receivable for the guarantee of third-party debt.

The table below provides a summary of the Trust's portfolio as at September 30, 2020, including total unitholders' equity:

As at	September 30, 2020		December 31, 2019
Development	$	261,181	$	271,130
Recurring income	169,859		197,197
Other^(2)	99,860		99,224
Total unitholders' equity	530,900		567,551
Total unitholders' equity per unit^(1)	8.21		8.25
Total debt	88,615		89,269
Total assets	637,219		696,141
Cash	114,599		117,787

Footnotes
^(1)	For the Trust's definition of the following non-IFRS measures: NAV, debt-to-total asset value inclusive of project-level debt, IRR, NOI, net income (loss) per unit, net income (loss) from continuing operations per unit, cash generated from (utilized in) operating activities from continuing operations per unit, total unitholders' equity per unit and a reconciliation of NOI to net income (loss), please refer to the Non-IFRS Measures and Other Disclosures section of the Trust's MD&A for the three and nine months ended September 30, 2020.
^(2)	Includes other Trust amounts not specifically related to the segments.

Conference Call
Senior management will host a conference call on Friday, November 13, 2020 at 11:00am (ET). To access the call, please dial 1.888.465.5079 in Canada or 1.416.216.4169 elsewhere and use passcode 9919 703#. To access the conference call via webcast, please go to Dream Impacts' website at www.dreamimpacttrust.ca and click on Calendar of Events in the News and Events section. A taped replay of the conference call and the webcast will be available for 90 days.

About Dream Impact
Dream Impact is a real estate impact investing vehicle that targets projects that create positive and lasting impacts on communities and the environment, while achieving market returns. Dream Impact provides investors with access to an exceptional portfolio of real estate development and income properties that would not be otherwise available in a public and fully transparent vehicle, managed by an experienced team with a successful track record in these areas. The objectives of the Trust are to provide investors with a portfolio of high-quality real estate development opportunities that generate both strong financial returns and provide positive, social and environmental impacts in our communities; balance growth and stability of the portfolio, increasing cash flow, unitholders' equity and NAV⁽¹⁾ over time; provide predictable cash distributions to unitholders on a tax-efficient basis; and leverage access to an experienced management team and strong partnerships to generate investment opportunities, capitalize on strong market fundamentals and generate attractive returns for investors. For more information, please visit: www.dreamimpacttrust.ca.

Non-IFRS Measures
The Trust’s condensed consolidated financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”). In this press release, as a complement to results provided in accordance with IFRS, the Trust discloses and discusses certain non-IFRS financial measures including NAV, debt-to-total asset value, debt-to-total asset value inclusive of project-level debt, IRR, NOI, net income (loss) per unit, net income (loss) from continuing operations per unit, cash generated from (utilized in) operating activities from continuing operations per unit, and total unitholders' equity per unit, as well as other measures discussed elsewhere in this release. These non-IFRS measures are not defined by IFRS, do not have a standardized meaning and may not be comparable with similar measures presented by other issuers. The Trust has presented such non-IFRS measures as management believes they are relevant measures of our underlying operating performance and debt management. Non-IFRS measures should not be considered as alternatives to unitholders' equity, net income, total comprehensive income or cash flows generated from operating activities (continuing), or comparable metrics determined in accordance with IFRS as indicators of the Trust’s performance, liquidity, cash flow and profitability. For a full description of these measures and, where applicable, a reconciliation to the most directly comparable measure calculated in accordance with IFRS, please refer to the “Non-IFRS Measures and Other Disclosures” section in the Trust’s Management’s Discussion and Analysis for the three and nine months ended September 30, 2020.

Forward-Looking Information
This press release may contain forward-looking information within the meaning of applicable securities legislation, including statements relating to our objectives, strategies to achieve those objectives, our beliefs, plans, estimates, projections and intentions, and similar statements concerning anticipated future events, future growth, results of operations, performance, business prospects and opportunities, as well as statements regarding: the Trust's focus on becoming a pure-play impact investment vehicle and expectations for formalizing its approach to impact management over the next year; our ability to achieve our impact and sustainability goals; our plans and proposals for current and future development projects, including projected sizes, density and uses, timing for expected zoning approvals and expected sustainability impact; the demand for and expected returns on our impact investments; development timelines, including commencement of construction and/or revitalization of our development projects; anticipated returns from our development projects and the timing thereof, including expected returns from the Empire Lakeshore development; the Trust's expectations regarding the amount of capital investments it expects to make in its development projects by end of 2020 and in 2021; anticipated effect of our developments on our NAV, unitholders’ equity, growth and cash flows in future periods; our targeted pre-tax IRR for development projects; expected profits from our development and recurring income projects; and the Trust’s sufficiency of cash on hand to fund normal course debt repayments, cash requirements and ongoing distributions. 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 the Trust’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: adverse changes in general economic and market conditions; the impact of the novel coronavirus (COVID-19) pandemic on the Trust; changes to the regulatory environment; environmental risks; local real estate conditions, including the development of properties in close proximity to the Trust’s properties and changes in real estate values; timely leasing of vacant space and re-leasing of occupied space upon expiration; dependence on tenants’ and borrowers’ financial condition; the uncertainties of acquisition activity; the ability to effectively integrate acquisitions; dependence on our partners in the development, construction and operation of our real estate projects; uncertainty surrounding the development and construction of new projects and delays and cost overruns in the design, development, construction and operation of projects; our ability to execute on our strategic plans and meet financial obligations; interest and mortgage rates and regulations; inflation; availability of equity and debt financing; foreign exchange fluctuations. All forward-looking information in this press release speaks as of November 2, 2020. The Trust 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.sedar.com). These filings are also available at the Trust’s website at www.dreamimpacttrust.ca.