DREAM Unlimited Corp.

Welcome to the Dream Unlimited Corp second quarter conference call for Wednesday, August the 14th, 2024. During this call, management of Dream Unlimited Corp may make statements containing forward-looking information within the meaning of applicable securities legislation. 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 Unlimited Corp's control and that could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking information. Additional information about these assumptions and risks and uncertainties is contained in Dream Unlimited Corps filings with the securities regulators, including its latest annual information form and MD&A. These filings are also available on Dream Unlimited Corps' website, at www.dream.ca. Later in the presentation, we'll have a question and answer session. To join the question queue, you may press star then one on your telephone keypad. Your host for today will be Mr. Michael Cooper, CRO of Dream Unlimited Corp. Mr. Cooper, please proceed.

Thank you, operator, and good morning, everybody. Thank you for spending some time with us. We're here with Megan, and Megan will provide an update on the quarter. I just thought I'd start with a couple of macro thoughts in terms of how we're looking at our whole business. And I think it might help explain our point of view. The results are quite good, and it's consistent with our thoughts. So, firstly, this morning some numbers came out of the U.S. Yesterday some numbers came out of the U.S., You know, I think about what happened with COVID when there was so much appropriate fear about the economy and people's well-being at the beginning of 2020, which is like a long time ago now. And when I think about what my hopes and expectations were in March of 2020, we're all doing so much better than that. And I think it gets so lost when people look at things differently. I think the government spent way too much money and locked us down too long. But, of course, at the beginning that made sense. And we got through it. It probably overheated the economy in some areas. But, you know, now we started to see in 2022 inflation took off. Even though the Bank of Canada and the U.S. Fed said they were going to keep rates low, they started to raise them. A lot of discussion about whether this would be a hard landing or a soft landing. This is now 27 months ago, maybe longer. And what we're seeing in the numbers this morning is that things are getting more under control. So I think it's pretty amazing all the things that have been handled. And, you know, we're approaching, a year ago, we were approaching the highs in interest rates of about 5% of the states and 4.2 for 10 years in Canada. And today it's around 3 in Canada and 3.85 in the U.S. That's a massive change. Canada, we've had two rate cuts we're going to have. I think there'll be rate cuts this fall, starting in September, in the Fed. And all of this is actually great progress. We're seeing a little bit of a rise in unemployment in the U.S. In Canada, we're seeing a little bit of a rise, too, more than a little bit, although it's so difficult to understand how much of it is immigration as opposed to job losses. But overall, I think it's going pretty good. I'm astounded by how negative people are in Canada. You know, we deal with institutional investors, whether they're private equity funds or sovereign wealth funds, very, very sophisticated investors who invest all over the globe. And they all think Canada screens very, very well. So I think that there's a real negative slant, despite the fact that if we're all talking March of 2020, and I told you this is the situation I thought we'd be in in four or five years, we'd all say, hey, that's not so bad. So, you know, I think that... With a longer-term view, we think things are setting up pretty well overall. I've been speaking over the last while about the company and really focusing on our Western Canadian business, our asset management business, and our income properties. And each of them have gone through major changes over the last five or six years. Western Canada, we built our business based on the profits that we made out of Western Canada between 1994 and probably 2013. For 2014, for a few years, it got very weak. And it's coming back. It's coming back for a lot of reasons. Our numbers are good this quarter. But I think what's more important than numbers this quarter is all of the things that are leading to good numbers this year in Western Canada, we're doing so much that shows that this is going to continue and maybe pick up steam. So Western Canada is doing very, very well for us. On asset management, We've grown a lot over the years. Our current business is making quite a bit of money, and we're excited about that. This year we got a promote because it's been three years since we launched the U.S. Industrial Fund, and there's a promote after every three years, and it has done quite well. So, you know, we're not going to have that every year. But having said that, we're working on a lot of opportunities to invest, to grow our asset management business. And I think we'll hit one or two over the next year or 18 months. So I see asset management growing internally as well as with new areas to grow. Very exciting. And on the income property side, we've really shifted our business to do more building to hold. And we're at about $800 million. We have five buildings that were $800 million directly on our balance sheet. Not any of the indirect interest in a lot of real estate, but just directly on our balance sheet. And that part's going quite well. As I said, five buildings in the organization are under lease up. I mean, it's amazing every time we look at it. It's like the buildings that we're finishing in Western Canada are full at completion. And in Ottawa, Gatineau, they're leasing up quite well. And in Toronto, we had a slow start, but I think we're making a lot of progress. So, you know, that's turning land into income properties. These income properties will be very good for us for many, many years, and we're adding to our income properties rapidly. So, Those three areas are a massive part of our business, over 90%. And then, you know, not everything's going well. As everybody knows, office is a difficult asset class. Since 2016, we've been reshaping Dream Office. We've made it into a great company, and office isn't in favor now. And the team's doing a great job. And we're going to have to sort of muddle through these times. But I'm pretty excited about what we own and the future of it after we get through this. Again, you know, I'm not sure what's happening from work from home, but it seems to be less and less of an issue. Now we have sort of typical recession thinking where companies are trying to save some costs. But we're grinding through all of it. And then with the impact trust, it has a lot of income properties, a lot of apartments. They're going great. But especially trying to turn land into either condos or income properties in Toronto is increasingly challenging. And that's an area that we have to continue to work on. Our stake in that company isn't very high. The projects and assets are great. And we monitor it on a day-by-day basis. And, you know, with our relationships with the various governments and lenders, we've had great success. CMHC... Seeing us as a trusted building partner is very valuable to get projects through the system quicker, and they are really showing up as a great partner. I think the federal government has been doing a lot with the waiver of HST. CMHC has a lot of money to promote apartments. We are working very closely with the City of Toronto, who I think is doing an excellent job trying to understand the issues and create obstacles to development. The province waived their portion of provincial sales tax. And I think they're setting up pretty well, too, to support. So we're working very closely with three levels of government. And while I hear everybody complain about every single thing the government does, we've never had more support by every level of government in areas that we needed the most to get these apartments and rental properties built. So overall, I think we're doing well. I think we're producing a lot of money. I think our business is growing. We have challenges in parts of our business, but the benefits of being a diversified company is really coming through. I'll turn it over to Megan to provide details, and Megan and I would be happy to answer questions afterwards.

Thank you, Michael, and good morning, everyone. Our second quarter results were extremely strong as we recognized earnings on a standalone basis of $55.5 million, up from a loss of $100.8 million in the comparative period. This is largely driven by the two parcel sales in Edmonton and revenue of $15.7 million in carried interest related to the Dream U.S. Industrial Fund. The comparative period included an accounting loss of $88.2 million on the sales of 7 million Dream office units in addition to our share of the rates of losses in that period. On a segmented basis, in Q2, our recurring income properties, again, all on a standalone basis, including a basin, which is under contract, generated a revenue of $28.2 million and an NOI of $11.6 million, up by $3.3 million and $3.6 million from prior year. This was largely driven by strong performance of the distillery district and improved yields at a basin. We continue to build out the segment as we develop our apartment pipeline and anticipate adding a further 700 units of share between now and 2026 based on what is currently under construction or in the pre-dev phase. Our asset management business generated a revenue of $28.6 million, a margin of $20.5 million, which includes the aforementioned Dreamy West Industrial Fund promote fee of just under $16 million. Excluding the promote, margin from our asset management division was down relative to prior year driven by reduced transactional and development activity, which will fluctuate period to period. Now, as it relates to the development segment, revenue and net margin of $65.9 million and $30.9 million was generated from our Western Canada Development Group, up significantly from $11.2 million and a loss of $0.5 million in the prior year, which is really being driven by the two Edmonton parcel sales discussed in the prior quarter. Margin for these two transactions was $28.1 million. Lot sales on a quarter-to-day and year-to-day basis were $80 and $103, respectively. As of today, we have commitments for an additional 515 lots and 115 acres through 2025, representing $185 million in revenue. $134 million of that will be recognized over the second half of 2024. This is a significant level of pre-sale volume reflecting some of the strongest performance in Western Canada in our history. Now aggregating our Western Canada development, asset management, and income property operations, again on a standalone basis, our total margin in the first half of the year was $66 million, up from $20 million in prior year, which is pretty significant. We continue to maintain very strong liquidity ending the quarter with $280 million in total liquidity and a conservative leverage position of 39% on a standalone basis. This includes certain assets held at costs which can be lower than market value. With that, I'll turn the call back over to Michael.