Dream Impact Trust
Annual Report 2024
Dream Impact Trust (TSX: MPCT.UN) is an open- ended trust dedicated to impact investing.
Impact investing is the intention of creating measurable positive social, or environmental change in our communities and for our stakeholders, while generating attractive financial returns. Dream Impact's underlying portfolio is comprised of exceptional real estate assets reported under two operating segments: development and recurring income, 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.
Brightwater
Mississauga, ON
Dream Impact Trust
Letter to Unitholders
Over the last 12 months, we have been making great progress on our developments, our lease-up of newly completed apartments, increasing our net operating income and overall value from our value- add apartments, and selling commercial properties. Notwithstanding our progress, there has been little interest from investors for Canadian securities,
let alone Canadian real estate securities and even less interest in a small company with exposure to development and leverage.
While it seems like our country is making progress reducing inflation and interest rates, we continue to face many other challenges. We had expected that with inflation this low and relatively low interest rates, there would be more activity in the housing sector.
Notwithstanding the housing crisis in Canada, with the federal government saying we need 3.5 million new homes by 2030, we have fewer housing starts. Rental rates for apartments in Toronto are relatively flat and condominium sales are at 30-year lows. Altogether, the value of land has decreased as it has become more difficult to start new developments that achieve appropriate risk adjusted returns for investors.
We launched a new development in Ottawa that will meet our return requirements and benefit the community. We have also made great progress on 49 Ontario, on which we hope to commence construction within the next 12 months. We are also advancing the Quayside development working closely with
the federal government, the City of Toronto and Waterfront Toronto.
These three projects will bring meaningful value increments to the Trust. However, the delay to projects generally has meant that we are holding land longer which costs us more of our liquidity.
We have a plan for the next few years that we are excited about that aims to further improve our assets and generate higher returns. We also have a plan to continually generate capital for our liquidity requirements.
Nevertheless, there are new risks that we never imagined we would face, and we are adapting to manage in these times from a broader macro perspective.
A lot of work has been completed across our multi- family rental portfolio. Construction is progressing well across our active buildings, which include Odenak (previously Dream LeBreton) that broke ground in the Spring and Cherry House which should start leasing in the latter part of 2025. We completed construction on Birch House this past fall and have begun lease-up. Between the fourth quarter of 2024 through 2027 we expect to add 1,700 purpose-built rental units to our portfolio with virtually no further equity needed.
In 2024, we closed on 550 condo units in the GTA and repaid over $100 million of construction debt. The Trust also has been working on extending our near-term debt maturities, aiming to reduce the Trust's overall land loan exposure by about half by the end of 2025. This will help with managing land carry costs until project economics are feasible to build again, which could take time.
During the year, we sold office properties and exited certain passive investments, which resulted in gross proceeds of $32 million. These sales were important contributions to achieving the Trust's liquidity objectives for the year.
So as we reflect on 2024, we are pleased with the progress made but by no means are distracted from what needs to get done in 2025.
As the asset manager and largest unitholder of Dream Impact Trust, Dream Unlimited Corp. is heavily invested in the successes of this vehicle. We acknowledge
the unit price continues to trade poorly, which has adversely impacted the value of Dream's investment as well. Despite this, for the last five years, Dream has taken its management fees in units rather than cash at deep discounts to support the Trust's liquidity.
We thank you for your continued investment in the business and will continue to share updates as we make advancements.
Sincerely,
Michael J. Cooper
Portfolio Manager
February 18, 2025
49 Ontario Street
Toronto, ON
Dream Impact Trust
At a Glance(1)
Dream Impact Trust has a portfolio of high-quality real estate assets concentrated in core geographic markets.
$684.4 million | 426 |
total assets (inclusive of $16.2 million of cash) | purpose-built, multi-family rental units |
completed in 2024 |
~$19 million | ~95% |
NOI from recurring income segment in 2024 | in-place and committed multi-family |
residential rental occupancy2 |
managed by
an experienced asset manager with a successful track record
(1) | As at December 31, 2024. | Odenak |
(2) | Excludes multi-family rentals in the lease up phase. |
Ottawa, ON
Dream Impact Trust
Development Pipeline - Highlights(1)
COMPLETED | COMPLETED |
Maple House | Block 206 | Cherry House | Odenak |
Toronto, ON | Ottawa, ON | Toronto, ON | Ottawa, ON |
2023
Maple House
770 units | 25% ownership
Maple House, at Canary Landing, consists of 770 units and commenced occupancy during the fourth quarter of 2023.
Aalto II
148 units | 50% ownership
Aalto II is the second multi-family rental building
at Zibi located in Gatineau, Quebec.
Brightwater I
76 units | 23.3% ownership
Brightwater I was the first building, comprised of 76 units, to welcome residents to the waterfront community in Port Credit.
2024
Birch House
444 units | 25% ownership(2)
Birch House, at Canary Landing, is expected to include a 238-unit multi-family rental building, a 206-unit condo building, and the first purpose-built Indigenous Hub in any major North American city.
Block 206 (co-living)
188 units | 50% ownership
Block 206 at Zibi is a 207-unit multi-family rental building, which includes co-living space. In 2024, the Trust transferred 19 units to the Multi Faith Housing Initiative at cost, with the remaining 188-units as part of the Trust and Dream's ownership. The building represents the first completed multi-family rental in Ottawa.
Brightwater Towns & Brightwater ll
341 units | 23.3% ownership
Brightwater Towns (106 units) and Brightwater ll (235 units) are part of the 72-acre Brightwater re-development project in Mississauga's Port Credit area.
2025 | 2026 / 2027 |
Cherry House | Odenak |
855 units | 25% ownership | 608 units | 33.3% ownership |
Cherry House, at Canary Landing, is currently under | Odenak, formerly known as Dream LeBreton, |
construction with approximately 855 units expected | |
upon completion in 2025, approximately one third of | will have a total of 608 new housing units, of |
which are designated as affordable. | which approximately 40% will be affordable. The |
affordable units are designated for five target | |
populations Indigenous Peoples; veterans; women | |
The Mason (Brightwater) | and children; immigrants and newcomers; and adults |
with cognitive disabilities. | |
158 units | 23.3% ownership | |
The Mason is a 9-storey condominium building within | |
steps to the waterfront and public transportation. |
- The timeline above illustrates select assets in the Trust's development pipeline.
- This figure includes 238 rental units, in which the Trust is invested, as well as a 206-unit condo building invested in by Dream.
Dream Impact Trust
Purpose-built Rental Incentives
On December 17, 2024, the City of Toronto announced the waiver of development charges on selected projects to support the advancement of purpose-built rentals across the city. We were extremely pleased that two of the Trust's projects - 49 Ontario and Phase 1 of Quayside - were named as part of this development charge waiver for a combined 2,500 units (at 100% asset level). The savings achieved from this initiative are significant as it directly improves the projects' viability and better positions construction start for these developments to be accelerated.
2,500
total units approved for development charges waivers for 49 Ontario Street and Quayside Phase 1
49 Ontario Street
49 Ontario Street is located in the highly desirable east end, close to Dream's Distillery and Canary Districts and adjacent to transit. The site, along with the adjacent land assembly, is slated for redevelopment with rezoning that allows for ~800,000 sf of residential density.
100% | 800k sf |
ownership interest | residential density |
Quayside
Toronto, ON
49 Ontario Street
Toronto, ON
Dream Impact Trust
2024 Highlights
Brightwater
Mississauga, ON
2,500 units | >$30 million |
received development fee waivers as part of | of cash generated from the sale of two office |
the City of Toronto's Purpose-Built Rental Housing | properties |
Incentives program |
426
residential rental units were completed in 2024 including Birch House at Canary Landing (238 units), and Block 206 our first multi-familybuilding in Ottawa at Zibi (188 units)
$100.3 million
of short-term construction and variable rate debt was repaid related to Brightwater and Ivy
>550
residential units completed in 2024 at Brightwater I, Brightwater II, (311 units) and Ivy (256 units)
>100,000 sf
of retail completed at Brightwater
First
commercial occupancy occurred at Brightwater. Anchor tenants include: FarmBoy, LCBO, Rexall and BMO (65% in place and committed occupancy)
49 Ontario Street
Toronto, ON
Table of Contents
Management's Discussion | 1 |
and Analysis | |
Independent Auditor's Report 42 | |
Consolidated Financial | 47 |
Statements | |
Notes to the Consolidated | 51 |
Financial Statements | |
Trustees/Directors | IBC |
Management Team | IBC |
Corporate Information | IBC |
Maple House
Toronto, ON
MANAGEMENT'S DISCUSSION AND ANALYSIS
(All dollar amounts in our tables are presented in thousands of Canadian dollars, except unit and per unit amounts, unless otherwise stated)
This Management's Discussion and Analysis ("MD&A") is intended to assist readers in understanding Dream Impact Trust ("Dream Impact" or the "Trust") and its business environment, strategies, performance and risk factors. This MD&A should be read in conjunction with the audited consolidated financial statements and the accompanying notes for the years ended December 31, 2024 and December 31, 2023, which can be found under the Trust's profile on the System for Electronic Document Analysis and Retrieval+ ("SEDAR+") (www.sedarplus.ca). The financial statements underlying this MD&A, including 2023 comparative information, have been prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board ("IFRS Accounting Standards"). Certain disclosures herein are specified financial measures including non-GAAP measures and supplementary or other specified financial measures. Refer to the "Specified Financial Measures and Other Disclosures" section of this MD&A for further details.
All dollar amounts in our tables are presented in thousands of Canadian dollars, except unit and per unit amounts, unless otherwise stated. This MD&A is dated as of, and reflects all material events up to, February 18, 2025, the date on which this MD&A was approved by the Board of Trustees of the Trust ("Board of Trustees").
Certain comparative results have been reclassified to conform to the presentation adopted in the current period. Refer to Note 5 - "Adoption of Accounting Standards" in the consolidated financial statements for further details.
Effective June 16, 2023, the Trust completed a unit consolidation of all the issued and outstanding units of the Trust on the basis of one post-consolidation unit for every four pre-consolidation units (the "Unit Consolidation"). Upon completion of the Unit Consolidation, the number of units as of June 16, 2023 was consolidated from 68,538,274 to 17,134,554. All unit, per unit and unit-related amounts disclosed herein reflect the post-Unit Consolidation units for all periods presented, unless otherwise noted.
When we refer to terms such as "we", "us" and "our", we are referring to Dream Impact Trust (the "Trust"), Dream Impact Master LP ("MPCT LP") and its subsidiaries. When we refer to the term "units" we are referring to the units of the Trust. When we refer to "unitholders" we are referring to holders of the units of the Trust.
The "Forward-Looking Information" section of this MD&A includes important information concerning certain information found in this MD&A that contains or incorporates statements that constitute forward-looking information within the meaning of applicable securities laws. Readers are encouraged to read the "Forward-Looking Information" and "Risks and Risk Management" sections of this MD&A for a discussion of the risks and uncertainties regarding this forward-looking information as there are a number of factors that could cause actual results to differ materially from those disclosed or implied by such forward-looking information.
1. OVERVIEW AND OVERALL FINANCIAL PERFORMANCE
1.1 OVERVIEW OF THE TRUST
Dream Impact Trust is an open-ended trust dedicated to impact investing. Impact investing is the intention of creating measurable positive, social, or environmental change in our communities and for our stakeholders, while generating attractive financial returns. The Trust's underlying portfolio is comprised of real estate assets reported under two operating segments: development and recurring income. The units of the Trust are listed on the Toronto Stock Exchange ("TSX") under the symbol "MPCT.UN".
The Trust is managed by Dream Asset Management Corporation ("DAM" or the "Asset Manager"), a subsidiary of Dream Unlimited Corp. ("Dream Unlimited" or "Dream") (TSX: DRM), which is one of Canada's leading real estate companies, with approximately $27 billion of assets under management in North America and Europe. On January 1, 2018, Dream acquired control of the Trust, for accounting purposes, based on Dream's increased exposure to variable returns resulting from increased ownership through units held in the Trust and from new real estate joint venture agreements. The ultimate controlling party of the Trust is Michael Cooper, President and Chief Responsible Officer of DAM and Dream. As of December 31, 2024, Dream has a 36.8% ownership interest in the Trust.
Dream Impact Trust 2024 Annual Report | 1
1.2 OUR STRATEGY AND OPERATING SEGMENTS
Our fundamental objectives are to:
- Create positive and lasting impacts for our stakeholders through our three impact verticals: environmental sustainability and resilience, attainable and affordable housing, and inclusive communities.
- Balance the growth and stability of the portfolio, increasing cash flow and unitholders' equity over time.
- Provide investors with a portfolio of high-quality real estate assets, concentrated in core geographic markets, leveraging an experienced management team.
We work towards these objectives by operating our business under two distinct segments:
- Recurring income - comprised of a portfolio of commercial real estate income properties and multi-family rental assets in the Greater Toronto Area ("GTA") and Ottawa/Gatineau, and a utility asset.(1)
- Development - comprised of direct and indirect investments in residential and mixed-use developments.
- Relates to Zibi Community Utility. For further details, refer to Section 10.1, "Summary of Impact Investments" of this MD&A.
Recurring income is important to our business as it provides stable returns in order to fund our ongoing fixed operating costs and interest costs. Over time, we expect this segment to grow, as we build out our extensive development pipeline and further invest in best-in-class income properties.
We believe the Trust's development segment represents a portfolio of high-quality assets located in core geographic markets that would not otherwise be accessible in a public vehicle. These assets represent a significant source of growth for the Trust, which we expect will generate future income and cash flows over time as the projects are developed. Assets may be built for sale or built to hold for the long term.
Due to the nature of development, the Trust expects fluctuations in earnings from period to period from this segment. Typically, assets may be acquired and held for a number of years before development commences or contribution to net income is realized. However, depending on a variety of factors, including location, market conditions, density, and asset class, the value of these projects may fluctuate in value as we progress through the rezoning and pre-development process. Our development segment is expected to generate attractive returns and value creation over time.
In line with our overarching strategy to be a dedicated impact investment vehicle, we utilize assets in our segments to generate positive impact across our verticals. These verticals are aligned with the widely recognized and accepted United Nations Sustainable Development Goals ("UN SDG") and are:
- Environmental sustainability and resilience - develop real estate that optimizes energy use (UN SDG 7 - Affordable and Clean Energy, and UN SDG 11 - Sustainable Cities and Communities), limits greenhouse gas ("GHG") emissions (UN SDG 13 - Climate Action), and reduces water and waste usage (UN SDG 12 - Responsible Consumption and Production) while also creating resiliency against natural disasters and major climatic events, with objectives and targets aligned with internationally recognized methodologies.
- Attainable and affordable housing - invest in and develop mixed-income communities that are transit-oriented, located close to employment opportunities, and support an overall lower relative cost of living with a high quality of life.
- Inclusive communities - intentionally design and build communities that are inclusive for everyone. This includes creating spaces that encourage mental and physical well-being, foster social connections, and support economic growth.
As of December 31, 2024, substantially all of our portfolio qualified under the Trust's definition of an impact investment or in the impact planning stage. We intend to wind down or exit non-core investments over time.
1.3 BUSINESS UPDATE - FOURTH QUARTER AND YEAR ENDED 2024
On December 17, 2024, the City of Toronto announced the waiver of development charges on selected projects to support the advancement of purpose-built rentals across the city. We were extremely pleased that two of the Trust's projects - 49 Ontario and Phase 1 of Quayside - were named as part of this development charge waiver for a combined 2,500 units (at 100% asset level). The savings achieved from this initiative are significant as it directly improves the projects' viability and better positions construction start for these developments to be accelerated. We are continuing to make progress with securing construction financing for the development of 49 Ontario and pursuing various partnership opportunities for the site.
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