TORONTO--(BUSINESS WIRE)--Dream Unlimited Corp. (TSX: DRM) (“Dream”, “the Company” or “we”) today announced its financial results for the three and six months ended June 30, 2021 (“second quarter”).
“2021 will become known as a transformational year for Dream as we have created our private asset management business with the launch of the Impact Fund, the acquisition of US$500 million of U.S. apartments with a buy/fix/sell strategy, the US$480 million U.S. industrial fund and the recently contracted 47% interest in a US$250 million U.S. apartment fund,” said Michael Cooper, Chief Responsible Officer. “With its successful launch in 2021, we will now focus on expanding our private asset management business. In addition, we have grown our impact investments with the acquisition of $400 million of Toronto apartments with a very innovative approach to creating affordable housing in existing apartments and reducing carbon emissions, completed and leased a 121-unit apartment building in Saskatoon, expect to complete our 186,000 square foot office building in Ottawa in the fourth quarter, our 162-unit apartment in Gatineau will be completed in early 2022 and our 770-unit apartment at the West Don Lands will have first occupancies in Q3 2022. Together with our industrial expansion into Europe and the return of our western Canadian land and housing business, we are growing our recurring income by increasing assets under management and completing on our pipeline of income properties and our development business is performing as designed.”
While not evident in our financial results for the quarter, Dream has significantly expanded assets under management by $2.3 billion year-to-date through our private funds, Dream Industrial REIT’s acquisitions in Europe and recent impact investments in Toronto. We have another $1.2 billion in assets under contract or in exclusivity for our various platforms that will further contribute to the value of our asset management business. In combination with recent zoning approvals obtained across our development pipeline, we are creating value for our shareholders over the long term that is not fully reflected in our earnings for the quarter.
Subsequent to quarter end, we closed on a private open-ended U.S. industrial fund seeded with 18 of Dream Industrial REIT’s assets with Dream Industrial REIT (TSX: DIR.UN) and a group of institutional investors. A subsidiary of Dream will be the investment manager of the fund and will earn a market management fee. Dream Industrial REIT expects to sell its remaining U.S. assets to the fund in the coming months.
Since the end of Q1 2021, Dream Industrial REIT has closed on 41 high-quality income-producing logistics assets across Canada, the U.S. and Europe totalling $1.5 billion, including the $1.3 billion pan-European logistics portfolio which closed on June 24, 2021. These acquisitions have added over 10.4 million square feet (“sf”) of high quality, well-located and functional logistics space to Dream Industrial REIT’s portfolio. The pipeline for future acquisitions remains strong and Dream Industrial REIT is firm or under contract on approximately $118 million of assets in Canada and Germany.
On August 3, 2021, Dream Impact Trust closed on $30.0 million in impact convertible unsecured subordinated debentures with Fairfax Financial Holdings Limited and/or certain of its controlled affiliates. The debentures mature in 2026, bear interest at 5.5% and are convertible into trust units at a price of $7.755/trust unit. Dream Impact Trust intends to use the proceeds to finance expenditures associated with eligible impact investments.
On a standalone basis, book equity per share is $29.31, a 5% increase over the past 12 months, and we have maintained a conservative leverage position at 28% with $406 million in available liquidity at quarter end. Subsequent to quarter end, we amended our operating line and term facility, extending the maturity dates to May 31, 2024 and generating an additional $12 million in liquidity.
A summary of our consolidated results for the three and six months ended June 30, 2021 is included in the table below.
|
|
For the three months ended
|
For the six months ended
|
|||||||
(in thousands of Canadian
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|||
Revenue |
|
$ |
79,660 |
$ |
62,044 |
$ |
129,734 |
$ |
238,499 |
|
Net margin |
|
$ |
12,522 |
$ |
6,253 |
$ |
23,730 |
$ |
64,880 |
|
Net margin (%)(1) |
|
|
15.7% |
$ |
10.1% |
|
18.3% |
|
27.2% |
|
Earnings (loss) before income taxes |
|
$ |
1,189 |
$ |
2,662 |
$ |
(3,663) |
$ |
235,441 |
|
Earnings (loss) for the period(2) |
|
$ |
(467) |
$ |
10,776 |
$ |
(4,228) |
$ |
196,606 |
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share(3)(4) |
|
$ |
(0.01) |
$ |
0.23 |
$ |
(0.11) |
$ |
4.07 |
|
Diluted earnings (loss) per share(4) |
|
$ |
(0.01) |
$ |
0.22 |
$ |
(0.11) |
$ |
4.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
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December 31,
|
||
Total assets |
|
|
|
|
|
$ |
2,868,905 |
$ |
2,844,373 |
|
Total liabilities |
|
|
|
|
|
$ |
1,526,466 |
$ |
1,437,761 |
|
Shareholders’ equity (excluding non-controlling interest)(5) |
$ |
1,342,439 |
$ |
1,391,646 |
||||||
Total issued and outstanding shares(4) |
|
|
|
|
|
|
43,895,182 |
|
45,011,928 |
|
(1) |
|
Net margin (%) (see the “Non-IFRS Measures” section of our Management’s Discussion and Analysis (“MD&A”) for the three and six months ended June 30, 2021) represents net margin as a percentage of revenue. |
(2) |
|
Earnings (loss) for the three and six months ended June 30, 2021 includes a loss of $21.5 million and $39.2 million, respectively, on Dream Impact Trust units held by other unitholders (three and six months ended June 30, 2020 – loss of $25.4 million and a gain of $148.8 million, respectively). Refer to the “Additional Information – Consolidated Dream” section of our MD&A for results on a Dream standalone basis. |
(3) |
|
Basic earnings (loss) per share is computed by dividing Dream’s earnings attributable to owners of the parent by the weighted average number of Class A subordinate voting shares (“Subordinate Voting Shares”) and Class B common shares (“Class B Shares”) outstanding during the period. Refer to Management’s discussion below on consolidated results for the three and six months ended June 30, 2021. |
(4) |
|
Shareholders’ equity (excluding non-controlling interest) excludes $15.0 million of non-controlling interest as at December 31, 2020. |
Earnings before income taxes after adjusting for fair value losses taken on Dream Impact Trust units held by other unitholders for the three months ended June 30, 2021 was $22.7 million, a decrease of $5.4 million relative to the prior year. The change is primarily due to the sale of our indirect interest in a renewable power portfolio in the second quarter of 2020 which generated a pre-tax gain of $34.2 million, partially offset by fair value gains on our investment properties portfolio and improved earnings from our asset management platform due to higher transactional activity.
Earnings before income taxes after adjusting for fair value losses taken on Dream Impact Trust units held by other unitholders for the six months ended June 30, 2021 was $35.5 million, down from $86.6 million in the prior year. Prior year pre-tax earnings were primarily driven by the gain on sale of our renewable power portfolio and the sale of 480 acres in Glacier Ridge ($43.9 million). Excluding these transactions, earnings before income taxes after adjusting for fair value losses on Dream Impact Trust units for the six month period improved by $26.7 million, driven by our growing asset management base, fair value gains on investment properties and improved results from Arapahoe Basin.
Highlights: Recurring Income
- In the second quarter, revenue and net operating income derived from recurring income sources was $28.8 million and $12.5 million, respectively, up by $9.0 million and $8.3 million in the prior period. The improved results were driven by a full quarter of operations at Arapahoe Basin, our ski hill in Colorado, and higher asset management fees from Dream Industrial REIT’s transactional activity in the quarter.
- Arapahoe Basin’s ski season ended on June 6, 2021 and our summer operations are now open, including our Aerial Adventure Park and Via Ferrata, North America’s highest elevation iron rung course on the East Wall mountainside, that opened in June. Ski season passes for the upcoming season are 80% sold out, an unprecedented achievement in the hill’s history.
- In addition to Dream Industrial REIT’s recent acquisition activity, Dream Industrial REIT has a robust development pipeline exceeding 3.5 million sf. Dream Industrial REIT has commenced three projects totaling 700,000 sf in Las Vegas, Nevada, Richmond Hill, Ontario and Montréal, Québec, which are expected to be completed in the next 12-18 months. Overall, Dream Industrial REIT expects to have up to 5% of its total assets under active development at any point in time.
- With the exception of the Broadview Hotel and Gladstone House, our boutique hotels in Toronto, our results for the second quarter were minimally impacted by the ongoing COVID-19 pandemic. Inclusive of retail in Western Canada, Dream’s average monthly rent collection in the three months ended June 30, 2021 exceeded 95%.
- Across the Dream group platform, which includes assets held through the Company, Dream Impact Trust, Dream Impact Fund and Dream Office REIT, we have approximately 2,000 units and 6.8 million sf of gross leasable area in stabilized rental, retail and commercial properties, in addition to our recreational properties. As at August 9, 2021, the Company had a 27% interest in Dream Impact Trust and a 32% interest in Dream Office REIT.
Highlights: Development
- In the second quarter, our development segment generated revenue and net margin of $50.8 million and $1.7 million, respectively, compared to revenue of $42.3 million and net margin of $3.4 million in the prior period. The comparative results included condominium occupancies at Riverside Square and BT Towns, while current period results include the sale of a multi-level auto-plex at Riverside Square.
- We achieved 169 lot sales and 58 housing occupancies year-to-date, up from 70 lot sales and 44 housing occupancies in the comparative period. As of August 9, 2021, we have secured commitments for an additional 713 lots, 11 acres and 59 houses across our communities in Saskatchewan and Alberta that we expect to contribute to earnings in the second half of 2021, our most significant results since 2017.
- We commenced construction on Brighton Village Centre Rental II in the second quarter, a 141-unit apartment/townhome development in our master-planned community of Holmwood in Saskatoon. We previously completed Brighton Village Centre Rental I in 2020 and the 121-unit building is 99% leased as of August 9, 2021.
- Subsequent to quarter end, Brightwater, our master-planned 72-acre waterfront community in Mississauga’s Port Credit area, successfully launched The Mason, a 162-unit, nine-storey boutique condominium building expected to occupy in 2024. To date, 99% of the released Brightwater units have sold or are in rescission. Once completed, Brightwater will have over 350,000 sf of retail and commercial space, approximately 3,000 residential units, 18 acres of new parks and green space, an elementary school, and a YMCA and will be an environmentally friendly community with electric vehicle charging stations, bike lanes and bike parking.
- Subsequent to June 30, 2021, CMHC announced a $70.0 million investment to help construct a new residential rental building at Zibi Block 10. Through the Rental Construction Financing Initiative, Zibi Block 10 will receive a $60 million low cost loan for the construction of the 15-storey building that will create 162 rental units with first occupancies expected in late 2021. Additionally, Zibi received $10 million through the NHS Affordable Housing Innovation Fund, to help provide 200 affordable units access to the District Energy System, our net zero carbon heating-cooling system for the Zibi community.
- Across the Dream group platform, we have approximately 4.8 million sf of GLA in retail or commercial properties and nearly 22,000 condominium or purpose-built rental units (at the project level) in our development pipeline. For further details on our development pipeline, refer to the “Summary of Dream’s Assets & Holdings” section of our MD&A.
Share Capital & Return to Shareholders
- In the six months ended June 30, 2021, 1.2 million Subordinate Voting Shares were purchased for cancellation by the Company at an average price of $21.41 under a normal course issuer bid ("NCIB") for total proceeds of $26.6 million (year ended December 31, 2020 - 7.7 million Subordinate Voting Shares at an average price of $22.07, inclusive of 5.0 million Subordinate Voting Shares purchased for cancellation under a substantial issuer bid). Subsequent to quarter end, 0.4 million Subordinate Voting Shares were purchased for cancellation by the Company under the NCIB at an average price of $26.36.
- Dividends of $3.1 million and $6.1 million were declared and paid on its Subordinate Voting Shares and Class B Shares in the three and six months ended June 30, 2021, respectively (three and six months ended June 30, 2020 - $2.8 million and $5.7 million).
Select financial operating metrics for Dream’s segments for the three and six months ended June 30, 2021 are summarized in the table below.
|
|
|
|
Three months ended June 30, 2021 |
||||
(in thousands of dollars except
|
Recurring
|
Development |
Corporate and
|
Total |
||||
Revenue |
$ |
28,818 |
$ |
50,842 |
$ |
— |
$ |
79,660 |
% of total revenue |
|
36.2% |
|
63.8% |
|
—% |
|
100.0% |
Net margin |
$ |
10,860 |
$ |
1,662 |
$ |
— |
$ |
12,522 |
Net margin (%)(1) |
|
37.7% |
|
3.3% |
|
n/a |
|
15.7% |
|
|
|
|
Six months ended June 30, 2021 |
||||
(in thousands of dollars except
|
Recurring
|
Development |
Corporate and
|
Total |
||||
Revenue |
$ |
59,707 |
$ |
70,027 |
$ |
— |
$ |
129,734 |
% of total revenue |
|
46.0% |
|
54.0% |
|
—% |
|
100.0% |
Net margin |
$ |
23,376 |
$ |
354 |
$ |
— |
$ |
23,730 |
Net margin (%)(1) |
|
39.2% |
|
0.5% |
|
n/a |
|
18.3% |
|
|
|
As at June 30, 2021 |
|||||
Segment assets |
$ |
1,195,002 |
$ |
1,544,498 |
$ |
129,405 |
$ |
2,868,905 |
Segment liabilities |
$ |
347,683 |
$ |
460,778 |
$ |
718,005 |
$ |
1,526,466 |
Segment shareholders’ equity |
$ |
847,319 |
$ |
1,083,720 |
$ |
(588,600) |
$ |
1,342,439 |
Shareholders’ equity per share(2) |
$ |
19.30 |
$ |
24.69 |
$ |
(13.41) |
$ |
30.58 |
|
|
|
|
Three months ended June 31, 2020 |
||||
(in thousands of dollars except
|
Recurring
|
Development |
Corporate and
|
Total |
||||
Revenue |
$ |
19,789 |
$ |
42,255 |
$ |
— |
$ |
62,044 |
% of total revenue |
|
31.9% |
|
68.1% |
|
—% |
|
100.0% |
Net margin |
$ |
2,809 |
$ |
3,444 |
$ |
— |
$ |
6,253 |
Net margin (%)(1) |
|
14.2% |
|
8.2% |
|
n/a |
|
10.1% |
|
|
|
|
Six months ended June 31, 2020 |
||||
(in thousands of dollars except
|
Recurring
|
Development |
Corporate and
|
Total |
||||
Revenue |
$ |
56,240 |
$ |
182,259 |
$ |
— |
$ |
238,499 |
% of total revenue |
|
23.6% |
|
76.4% |
|
—% |
|
100.0% |
Net margin |
$ |
17,305 |
$ |
47,575 |
$ |
— |
$ |
64,880 |
Net margin (%)(1) |
|
30.8% |
|
26.1% |
|
n/a |
|
27.2% |
|
|
|
As at December 31, 2020 |
|||||
Segment assets |
$ |
1,118,871 |
$ |
1,560,924 |
$ |
164,578 |
$ |
2,844,373 |
Segment liabilities |
$ |
313,274 |
$ |
452,100 |
$ |
672,387 |
$ |
1,437,761 |
Segment shareholders’ equity |
$ |
805,597 |
$ |
1,093,858 |
$ |
(507,809) |
$ |
1,391,646 |
Shareholders’ equity per share(2) |
$ |
17.90 |
$ |
24.30 |
$ |
(11.28) |
$ |
30.92 |
(1) |
|
Net margin (%) is a non-IFRS measures. Refer to the "Non-IFRS Measures" section of our MD&A for further details. |
(2) |
|
Shareholders’ equity per share represents shareholders’ equity divided by total number of share outstanding at period end. |
Other Information
Information appearing in this press release is a select summary of results. The financial statements and MD&A for the Company are available at www.dream.ca and on www.sedar.com.
Conference Call
Senior management will host a conference call on August 11, 2021 at 9:00 am (ET). To access the call, please dial 1-888-465-5079 in Canada and the United States or 416-216-4169 elsewhere and use passcode 9516 947#. To access the conference call via webcast, please go to Dream’s website at www.dream.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 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 $12 billion of assets under management across three Toronto Stock Exchange ("TSX") listed trusts, our private asset management business and numerous partnerships. We also develop land and residential 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.
Non-IFRS Measures
Dream’s 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, Dream discloses and discusses certain non-IFRS financial measures, including: net margin %, assets under management, net operating income and debt to total assets ratio, 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. Dream 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 comparable metrics determined in accordance with IFRS as indicators of Dream’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” section in Dream’s MD&A for the three and six months ended June 30, 2021.
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 the COVID-19 pandemic and resulting disruptions; the expansion of our private asset management business; our ability to grow our recurring income by increasing assets under management and completing on our pipeline of income properties and developments; our development plans and proposals for current and future projects, including projected sizes, density, timelines, uses and tenants; expectations of future earnings contributions from our Western Canada development division; our acquisition and development pipeline; Dream Industrial REIT’s development pipeline, the percentage of Dream Industrial REIT’s portfolio under active development in future periods; the sustainability rating of Zibi upon completion and Zibi becoming the first One Planet community in Canada; the District Energy System providing net-zero heating and cooling for all tenants, residents and visitors at Zibi; and our overall financial performance, profitability and liquidity for future periods and years. 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, 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 the COVID-19 pandemic on the Company and uncertainties surrounding the COVID-19 pandemic, including government measures to contain the COVID-19 pandemic employment levels, regulatory risks, mortgage rates and regulations, 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 August 10, 2021. 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.sedar.com).
