Dream Impact Trust

Good morning, ladies and gentlemen. Welcome to the Dream Impact Trust fourth quarter conference call for Wednesday, February the 19th, 2025. Please be advised that all participants are currently in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star, then zero. During this call, management of Dream Impact Trust 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 the Trust's control. 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 the Trust's filings with securities regulators, including its long-form prospectus. These filings are also available on Dream Impact Trust's website at www.dreamimpacttrust.ca. Your host for today's call will be Mr. Michael Cooper, Portfolio Manager. Mr. Cooper, please proceed.

Thank you very much, Operator, and welcome everybody to Dream Impact's year-end conference call. I've been trying to figure out how to start this call, and my inner voice has been saying I should probably start it by saying, oh, my God, we've done such a great job. We did everything we said we were going to. And so many things are bad in Canada. We've got so many issues around leadership. We're so poorly positioned with the states. There's so much uncertainty that we're really facing all of us more and more stress and difficulty than we would have expected. So let me explain what I mean. You know, the idea was that there was a housing crisis in Canada. The federal government, even in the 2022 budget, CMHC repeatedly said we need about 3 million new housing units. to house Canadians. And they actually got involved with a lot of policies. We worked closely with them on the policies. And now it turns out that whether or not we have a housing crisis, it's difficult for people to buy homes with the amount of money they make. So the cost of building is pretty high, especially in Toronto where we're focused. On the apartment side, it's actually going pretty good. The rents are a little bit flat now. They've gone up a lot. in the past number of years, so we'll see how that goes. But everything is slow and grinding. So when we look at our business, you know, it's really amazing that of the 1,800 apartment units that we were planning on building in the Canary District, we now have two buildings finished. Part of the third building will be finished this year, and the balance will be finished next year. That's 1,800 units. The trust owns 25%. We are making good progress leasing. It's a little slower than we thought, but we're making good progress. Our value-add apartments, those buildings are full. The rents are pretty strong. It's going pretty close to what we expected. Not a lot of turnover, but otherwise it's going pretty good. We've done a lot of the CapEx, so now those buildings should start to produce cash flow. And then we're making progress on starting new buildings. So a couple of examples is that... Block 206 in Ottawa is going to start in a couple of months. That's a building that the Impact Trust owns half of the land. It is not going to participate in the construction of that building. But when the construction starts, about $6 million of land loans will be paid off, a couple million dollars to the Impact Trust. So it's going to benefit from it. We're just going to start a building in the Gatineau side later this year. It's creatively called block one. It's going to start impact trust is probably not going to participate in that, but it'll pay down more debt. So we're making a lot of progress paying down debt at Zibi. The big news is that 49 Ontario, which is a huge asset, which might have equity as big as the market cap of the company within the site. Um, we made a lot of progress. So in the fall, um, With the City of Toronto, they accepted our application to be exempt or delayed development charges. That works out to be over $2 a share of value. Very, very valuable for us. In addition, we're adjusting the final steps of finalizing a very significant loan to fund the construction of the building. And that hopefully will be done by the end of the month or early in March. We said before that we're looking for partners. We are in very advanced conversations. We hope to have news prior to our first quarter results. And that project produces a lot of value and could produce a lot of cash in the next 12 months for Dream Impact Trust as we lock up all the necessary elements to be able to develop a building that will generate great returns for the owners and crystallize the value that's in the land and stop paying uh, interest on the debt and start the development with the government loans. By the way, the government loans today are probably around 3%. And, uh, the case of 49 Ontario, the loan will probably be for about 10 years. So it's, it's just about ready to go. And we expect to start construction in October, November. So that's very exciting and very positive. The other big project that we're making progress on is Quayside. Uh, we bid on it in 2022 and, uh, There's probably every single thing has changed. But in the meantime, we work very closely with the federal government, the City of Toronto, plus Waterfront Toronto. And I think we're making a lot of progress on having a plan that we'll be able to develop together. In that case, the City of Toronto does the affordable housing. We don't. But that could be a meaningful project. Impact Trust only owns 12.5% of it. So because everything's slower, we're paying more in interest. We're very focused on liquidity. Last year we sold a couple of assets and that worked out pretty good. This year we're hoping to get the proceeds from 2025 either in cash, sorry, from 49 Ontario either in cash or at least have the deal completed. We're looking at selling down some of our commercial assets over time and really focus on residential. And we've got some passive assets that we think we can get some liquidity in. So we feel pretty good. You know, I would say that I never imagined that we'd start construction of a building and wonder if by the time it's finished, Toronto would be in Canada or the United States. So, you know, this type of uncertainty is unprecedented. All the talk about tariffs, the tariffs that the state's charges probably has a neutral effect directly on us, maybe positive because there'll be materials in Canada. it's the counter tariffs that would be a real problem for us directly, indirectly, just the state of the Canadian economy matters. But on that one, we do know that the government has been seeking people in the housing industry to get feedback as to what counter tariffs would hurt home building. And I think that's really important because hopefully the country will make some decisions to manage the relationship with the United States without affecting home building in any significant way. Overall, we continue to have great assets. We're in conversations on much of the business, how to repartner it and do other things. So it's a very, very tough environment. I think the stuff we're doing is coming along very well. We're very pleased with it. The quality assets speak for themselves, and we're able to talk to other people about partnering or trading or other ways to make our company better and better. So I'm going to leave it there, ask Megan to speak about the financial results, and then we'll answer any questions after that. Megan?

Thank you, Michael, and good morning, everyone. I'll briefly speak to the Trust's financial results for the quarter and then touch on liquidity. In the fourth quarter, the Trust recognized a net loss of $8.3 million compared to $19.7 million in the prior year. The improvement in earnings was driven by fluctuations in fair value adjustments year over year. In addition, the Trust recognized earnings from Brightwander condo occupancies partially offset by higher interest expense driven by the timing of completed multifamily rentals during the year. Interest will typically be capitalized on buildings when they're under development and then expensed once they're ready for use. The most significant fair value adjustment in the fourth quarter was an $8.4 million fair value loss taken on a commercial block at Zibi, which has recently been completed. The loss was driven by an extended lease-up timeline and higher terminal cap rates supported by a third-party appraisal. Now, more specifically, in the fourth quarter, the recurring income segment generated $1.8 million in same-property NOI from our multifamily rental assets, up slightly from prior year due to turnover. Including properties in the lease-up phase, NOI was $2.5 million, an increase of $1 million from the prior year due to Maple House and ALCO II approaching stabilization. As of February 14th, these two buildings were approximately 80% leased. In the fourth quarter, the Trust transferred block 206 at Zibi, which is a 207-unit multifamily rental building in Ottawa to the recurring income segment. As of December 31st, in place and committed occupancy for this block was 53%. The Trust continues to make headway with its near-term multifamily development pipeline. In the fourth quarter, Birch House, which is a 238-unit purpose-built rental building in downtown Toronto, welcomed its first residents. Construction at Terry House continues to progress, and based on current timelines, we do expect to begin leasing towards the latter part of the year for the first building. In aggregate, once built out, the Canary Landing community will make up just over 1,800 multifamily units, of which the trust owns 25%. As it relates to the development segment, the trust recognized a net loss of $6 million compared to $4.7 million in the prior year. The fluctuation in earnings was really driven by the change in fair value adjustments, partially offset by occupancy income from Brightwater. During the fourth quarter, roughly 300 condo units at Brightwater closed as part of Phase 1, and we commenced occupancy at Brightwater Towns, which is 50% occupied as of December 31st. Subsequent to year end, occupancy also commenced at the Mason. As of December 31st, the trust had total cash on hand of $16 million. Over the course of the year, the trust repaid $100 million of construction debt from closing proceeds at Brightwater and Ivy condos. $11.5 million related to the credit facility, and we refinanced about $170 million of maturing debt. And with that, I'll turn the call back over to you, Michael.