Dream Impact Trust

Good morning, ladies and gentlemen. Welcome to the Dream Impact Trust first quarter conference call for Tuesday, May the 6th, 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 final long-form perspective. These filings are also available on Dream Impact Trust's website at www.dreamimpact.com. dreamimpacttrust.ca. Your host for today will be Mr. Michael Cooper, Portfolio Manager. Mr. Cooper, please proceed.

Thank you, operator. Good morning, everybody. Today I'm here with Megan Peloso, who will provide comments in a few minutes, and after she speaks, I'd like to get into some specifics on the company. But first, you know, we're operating in an environment that certainly is chaotic and uncertain. The federal government has been re-elected and in some ways that's good for our policies that Impact Trust relies on. So that's good news. What I would say is we keep hearing about a housing crisis and yet all the new purpose-built rentals are leasing up slower than we would have expected and we're trying to figure out how do all these things reconcile. And I think the point is Canada doesn't have enough cheap residences. I'd say that we probably have tremendous demand, let's say in Toronto, for apartments that are between $1,000 and $1,500, but we're leasing them at $2,500 to $2,700 when you build a new market building. So I think that is a real problem. But when we get to new buildings, they're leasing up. They're leasing up a little bit slower. We're making progress on everything. But we're really in quite an odd housing market. Our value-add apartments are performing very well, consistent or better than budget for the first quarter. We're seeing a little bit more turnover, and then we get big step-ups, and that kind of offsets maybe the rental rate increases that we hoped for, but the numbers are pretty good, or better than we anticipated. On the purpose-built rental, you know, we're getting our buildings finished. We got quite a few buildings in lease-up. They're excellent buildings. They're leasing up slower than we had originally budgeted, but we've got great financing on them for the most part. And they're working out pretty good. But what it means is things are tough. It's hard to get things done that we would have thought would be easy. After Megan speaks, I want to talk about some specifics about what we're starting. But overall, the company is doing very poorly in the stock market. It's doing a little bit better in real life. What we're doing is we're planning out the next five years for what the company's going to look like in 2030 and how we're going to get there, for the most part, relying on impact trust-owned resources. I'll give more insight into that, but first, Megan, do you want to speak a little bit about how the quarter went?

Sure. Thank you, Michael. Good morning, everyone. In the first quarter, the trust recognized a net loss of $3.8 million compared to $5.4 million in the prior year. The improvement in earnings was driven by fluctuations in fair value adjustments, earnings from condo occupancies at Brightwater, and income from multifamily assets in the lease-up phase, including Maple House, Alto II, and Vota. Partially offsetting this was the gain on sale of a passive investment last year and reduced NOI from office properties. As it relates to our recurring income segment, we're seeing good growth from our multifamily portfolio. NOI in the period was $2.6 million compared to $1.5 million in the prior year, largely due to ongoing lease-up at residential blocks of Zibby and Canary Landing. As of May 1st, Maple House and Alto II were both approximately 80% leased. Birch House, which began leasing last quarter, is 26% leased to date, and we expect to move Birch House from the development segment to recurring income later this year when construction is substantially complete. Construction is still well underway at Cherry House, and we expect leasing for the first of the three buildings to commence in the summer of this year. With the 855 units at Cherry House and 600 units at Odenack under construction, the Trust will add a further 1,400 units at 100% to our multifamily portfolio by the end of 2027. As it relates to our development segment, the Trust generated income of $2.1 million compared to $0.3 million in the prior year. A lot of the increase in earnings was due to occupancy income at Brightwater, as roughly three-quarters of units at the Mason occupied in the first quarter, with final closings expected later this year. Additionally, the increase in earnings from this segment was from the composition of fair value adjustments year-over-year, partially offset by a gain on a passive asset sale last year. Now, on the liquidity front, as of March 31st, the Trust had total cash on hand of $8.8 million and received gross proceeds of $6.2 million from selling our interest in City Block 204 to DAM subsequent to the quarter. In addition, as part of that sale, $5.4 million of infrastructure debt was repaid at the trust share, which reduces the trust's land loan exposure and further supports our liquidity objectives. In addition to the ACLP financing secured for 49 Ontario in the quarter, we continue to make good progress on our upcoming debt maturities. Subsequent to quarter end, we repaid a $47 million construction loan at share. and replace it with takeout financing. And we currently have another $85 million of infrastructure loans at advanced lender discussions that should be extended in short order. With that, I'll turn the call back over to Michael.

Thanks, Megan. So, our book equity is close to $400 million and our market cap is $50 million. That's a big difference even if you knock off values on the $400 to get to $50 million. pretty tough marking. But I think it's to do with the fact that we've got a lot of development and we have a reasonable amount of leverage. And, you know, things are moving slowly, so when we're paying interest on land before it becomes under development, you know, that interest cost isn't adding to value, it's just being kind of wasted. But having said that, you know, on 49 Ontario, We're very pleased with the loan that we received, the $647 million from the federal government. Those loans, the interest rate is locked in just before you do your first draw. So today, a 10-year loan would be about – well, we just actually did one at Block 204, the land that was sold to Dream. That loan was locked in within the last month, and that was about 3.6% for 10 years. I think that's the same rate that you could get today. So we could borrow $647 million for – 49 Ontario at maybe 3.3%, 3.4%, which is very viable for building the building. We expect to have a significant profit in the building. What we're seeing is that the construction costs are coming in line, and we think there's an opportunity to save quite a bit of money. So, you know, the market cap of the whole company is $50 million. We think that it's probable or possible that on 49 Ontario alone we could save the equivalent of the market cap $50 million on construction costs. We'll see how that plays out. We should know a lot more by the first or second quarter of next year. But we're deeply into it and we expect to start construction October 1st, the day after the tenant moves out. And we're quite excited the pieces are coming together, the two pieces remaining are you know, tendering and locking the debt. After that, we should be pretty comfortable in the knowledge that we have. The other benefit of lower construction costs is it means we can hit the returns that we're trying to get with lower rents. And 49 Ontario is a well-designed building. It's pretty straightforward to build. The market suites are pretty desirable. And we think we'll be able to lease at $200 or $300 less than the surrounding buildings. and get our return. So it's pretty exciting that we got a lot of opportunities there. So I mentioned that just on that one building, the cost savings could equal the market cap. The profit on half could equal the market cap. So hopefully we'll make a lot of progress on that over the next six or nine months. We're pleased that we brought in a 10% partner. We're trying to lock up a few of the remaining details and that we could bring in other partners. We'll see how that goes closer to the end of the year. At Quayside, we're making progress. We have a conditional loan approved from CMHC, and we'll get back to work as soon as CMHC and the Minister of Housing have new mandate letters. But I think we're in good shape to finish that up. We're working very closely with the city and Waterfront Toronto, and we're all working very collaboratively. And we hope that, let's say, by the end of the year, will be in the same position at Quayside as we are now at 49 Ontario, and that could be a start in 2026. So these are very big projects, lots of opportunities to make great development returns. And, you know, Megan mentioned that Block 10 is up to 26%. That actually, I think 27%. It's a small building that's part of the Indigenous hub And that one leased up 9% in the last month alone. So that one is picking up momentum. The large one, Block 8, we're about 80% leased. It's getting leased. We're on schedule to be able to meet the requirements to make that a non-recourse loan, most likely within the next year. So a lot of things are going pretty good. But, you know, the Toronto, specifically the Toronto condo market, is terrible. People are comparing it to 1992. Cranes are coming down off of condos. They're not being used again. Very few buildings are being started. Condos that are finished are flooding the market, and those are competition for the apartments. But the expectation is over the next 18 months, the completed condos are going to be reduced significantly. In the last two years, there's only been about three condo buildings that have been started in Toronto. So there's not going to be a lot of completions on the apartment front. People are trying to be able to start apartments. We're pretty excited that 49 Ontario's timing will be, there's not going to be a lot of competition with trades. There's not going to be a lot of competition for leasing. So I think we're making good timing there. So there's a lot of different factors, but overall we're making progress everywhere. We have been very focused on the liquidity of the company. and what the company's going to be. And 2025, we use five-year plans. We're really focused on 2030 and what assets we're going to have in the business, what they're going to be worth. And it looks good. So the general plan is we're in the process now of selling a few assets. We definitely want to sell more of the commercial assets. We want to realize, like on the condo, like we're doing at Brightwater, we're going to get some cash out of that. So we basically have assets we expect to sell each year over the next few years. And that should fund the business. And then we look at, like, won't it be great to have 49 Ontario, 20, you know, our portion of Quayside, maybe Block 10, maybe the West Donlands, and maybe some of the Zibi assets, but pretty much sell a lot of the rest. And we'll have one of the best department portfolios. And, you know, it should be at a debt level that's quite manageable. And, you know, that's what we're all focused on achieving. And our internal numbers using much more pessimistic values and having lots of margin of safety show that we're generating increases in the NAV over the next five years from a base that's significantly higher than the trading price. So, you know, it's a difficult market to operate. The Canadian stock market is not doing well pretty much in any asset class. Within real estate, I don't think there's been a lot of equity issues in the REITs or a lot of interest in the REITs. And, you know, our micro cap doing development with a fair amount of debt, it's not really working in the stock market, but we're really focused on how do we create real value through the work we're doing. And I think we're getting a lot of positive feedback, although this is a difficult market in development, a very difficult market in condos, so we've really switched away from that. And I think we expect to be able to provide updates to our shareholders. But it's kind of hard to give you meaningful updates every 90 days because the actual business, sometimes not that much happens in 90 days. So we're pretty pleased with some of the debt we've done. I think our value-add apartments are now at 65% debt-to-value. As I said, they're performing better than budget marginally in the first quarter. So we see lots of decent things, but it's going to be a lot of work to get to where we want to be. And we appreciate shareholders sticking with us. Megan and I are happy to answer questions now. And I would also say that Megan and I are always available to answer questions throughout the, in between the quarters. So with that, operator, if there's any questions, we'd be happy to answer them.

Certainly. We'll now begin the question and answer session. To join the question queue, you may press star then 1 on your telephone keypad. You'll hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. The first question is from David Crystal with Ventum Capital Markets. Please go ahead.

Thanks. Good morning, guys. Good morning. On the 49 Ontario disposition, can you provide any additional color on the terms, including gross proceeds? And then as far as the 10% stake, is it simple ownership or is there any managing interest or fees earned by your partner?

The purchase price is $145 million for the land. uh the the the partner i think will be adding a lot of value and they will be our partner in uh portions of the development um but i can't provide further details at this time does that make sense yeah yeah that uh that is helpful and then as far as the balance of 49 ontario are you in any advanced discussions with other partners uh to be blunt we really want to uh um I think we want to get the interest rate fixed because that's a pretty major issue in terms of attracting other partners. The type of financing that we deal with the federal government on is pretty complicated. And for many investors, it's hard to understand it. So I think that by locking in that rate, it will make it much easier to see the returns. So I think our view is We got a lot of work to do. If we can get the kind of savings we expect, the numbers will look significantly better. If we can lock the debt in at 3.3%, it's going to look like a great investment. So our view is let's go see. And I can tell you that internally, we go back and forth on, well, if we do all that work, how much of it should we sell? Maybe we should sell an old apartment building and keep more of this. So we'll play it by ear as we get more information.

Okay. And then as far as your target to sell, ultimately, it sounds like from your prepared remarks, it might be 50% and retain the other 50. Is that fair to say?

I think it's unlikely we would sell more than 50%.

Okay. And then you mentioned some cost savings. Do you have a rough estimate of total cost, and again, reading between the lines, it sounds like it could be $50 million off your original projections, but can you kind of narrow that range for us?

I'm not going to give you precise numbers, but generally what I would say is if total costs are $400 million, we think the savings could be 10% to 15%, which would get us to $50 million in the midpoint.

And the $400 million, that's total additional costs on top of the land?

No, that's just construction.

Just construction.

That's not cost. That's not interest. It's not architecture. It's just the cost that I think we get the savings on.

Okay. So do you have a rough estimate of the all-in cost, excluding land? So I guess put another way, the incremental spend required?

Oh, well, I'll give you a hint. The loan is $647 million, and it's about a 90% debt to value.

Okay. That's perfect.

Although everything changes with the cost savings, so... I wish I could say, hey, here's a really simple way to think about it. The problem is it's not that simple. So we may be in a position where we don't need as much of the loan as is available, which would make it pretty interesting if we get the same NOI and have less debt.

Okay, that's helpful. I'll turn it back.

The next question is from Linda Wang with TD Securities. Please go ahead.

Hi, everyone. This is for Sam Damiani. Just had a question. We understand that there's at least one other property that's listed for sale. We're wondering if you can provide an outlook for disposition activity in 2025 and also timing.

Oh, I would suggest that if anybody gives you guidance on timing for dispositions in 2025, they don't know what they're talking about. So I don't really... In Dream Office, we sold 438 University. We put up for sale at the beginning of 2024. We spoke to analysts every second minute about the progress and we closed it in January 2025. And that went according to schedule. It's just hard to get things done now. I'm not sure which property you're referring to because we have action on a number of properties. I think this year we're probably looking at maybe $30 million of sales and some of that would be commercial and some of it may be residential.

Okay, thank you.

The next question is from Roger LaFontaine with Nugget Capital. Please go ahead.

Good evening, everybody. Thanks for taking my call. Congratulations on the results. And just to follow up on Linda's question there, was there any update you could provide on the Capital View lens? I know you were talking about that in prior calls and some buyers had expressed I was wondering if there's any update there.

Thank you. It's a great question. It's a perfect example of what I was just saying. We have a net zero community called Zibi. We have a utility that we own with Ottawa Hydro. The use of the land needs to use the net zero as part of our obligations to the city. We are talking to people. And it's complicated. We'll see how we do. In Ontario, we're getting through a lot of land. And, you know, at Zimmy, we've got an Ontario loan for infrastructure and a Quebec loan for infrastructure. In Ontario, I think we have five sites left. And I think we only have like $20 million of debt. So it's very low for the sites. It's very much in order. On the Quebec side, we have a lot of land in Gatineau. And we keep thinking that we're going to be able to use some of that land for different public purposes, whether it's a museum or a conference center. It's been really slow, so we thought maybe we'd try to sell the land. And we're working with people. We've got, you know, we definitely have inquiries. We're way beyond that. But there's a lot of design that has to go in for somebody to be prepared to finalize a purchase, and we'll see whether it's worth it or not. So we don't have an update like this is the amount of money and the timing. But we are in discussions with different purchasers, very specific and granular discussions, and we'll see if we can make it work.

The next question is from Saran Srinivas with Cormark Securities. Please go ahead.

Thank you, Avrita. Congrats, Michael, over a good quarter. Michael, this may be early days, but just probably looking at, you know, the Liberal government and Ottawa now, are you seeing any green shoots in terms of initiatives that could be opportunities for you guys?

You know, it's a really great question because, I probably shouldn't say this, but we're using a different contractor for the latest development block. And we have Head Street Square, which is where all the activity in Ontario has been. And Block 204 is the last building to sort of make that into a community. And the builder has been doing a great job at building the construction and keeping it very clean and simple. So I think what we're seeing is a lot more people on the site as they move into Block 206 and the other sites that – and the other buildings that are there. So there's a lot more people. We're getting more interest from retail tenants. And I hope within the next quarter we'll have those – some of those deals completed. Block 204 is progressing very well, so I think we've got a lot of good stuff happening. The commercial has been very tough, and I don't think we're going to do the minimum amount of commercial. In fact, we're talking to the various government authorities about no longer having to do commercial on residential buildings because I think we have enough commercial on the site already. But the amount of people and the condition of the site looks really good. Block 10 is the building that we finished last year. It's approaching 80% leased, and it's doing very well. We've got to get it and Block 10, the original one, it's just over 90% leased because it's actually competing with Block 11, so hopefully we'll get some more leasing. The leasing in the winter is very tough, so we're hoping the spring shows some great results in Ottawa and also in downtown Toronto. But we are seeing some green shoots in Ottawa. The traditional apartments are leasing up very well. And with the retail, we think that's great. The sales of land, that's going to be more complicated. But the base business, everybody who's working on it is very proud of the work we're doing and the adoption of, you know, how Zibi is really becoming a community.

That's a great comment, Michael. And maybe just looking at, you know, prefabricated housing being one of the biggest topics during the elections over here, is that something that you guys should probably look at in terms of, you know, supplementing building materials with and maybe helping decrease the time range on building houses? Oh my gosh.

It's extremely important to us and fascinating. The Liberals had a policy and the problem is that the policy, the problem for us is the policies lack the specificity that would help us understand what's happening. So as an example, the type of lending we do with CMHC is new policies the Liberal government put in place to spur on new apartment building with affordable housing. They decided to do it through CMHC, which is an OSFI regulated insurance company. So there's issues, because that means that OSFI is overlooking everything they do, and they have to comply with it. So when they do the underwriting, they're kind of like a regulated insurance company. So they're saying that maybe that wasn't the most effective, Let's move all of those kinds of policy initiatives into something called Canada Built. And I think you're saying it's Canada Built Housing for Housing. But we have no insight into what would that look like. We think this government is going to want to continue and grow what we've been working on a lot. And that is indeed very exciting. But we don't have anywhere near enough information to understand what that's going to mean for the underwriting of the kind of loans that we're doing at Quayside, which may be affected by it. So this year we've actually, it's amazing, we've got Quayside conditionally approved. 49 Ontario is done. We locked up block 204 and it is, we fixed the rate there. The Dream Organization, Dream Office has been working with CMHC. We've got approved for a loan for a conversion on office building. We've got Block 1 and Gatineau approved. So I think that's five deals that are done or very advanced. And we'll see what the new rules are because there's lots of opportunities to do more throughout our organization to use up more land than we would otherwise have scheduled to be developed in the near term. But we just don't know. And we ask about the speeding up of building and a modular... Literally, they want to put $25 billion into that. I'm not sure how... Literally, I don't know how they would spend it. They've said that they would use some of that money to fund building at a large scale. But I don't know what that means, right? What are they going to build at a large scale? How are they actually going to use their money to provide, I guess, orders to factories, but you've got to have customers who are going to use it. So, you know, maybe they can fund orders or something like that where there's developers that are using it, but it doesn't feel like it's really that actionable in the near term. So we're going to learn a lot about it, but if there's anybody who knows anything about how this modular housing is going to become relevant in a short period of time, please call me. I'd love to hear about it. Otherwise, they're talking about doubling the number of housing starts. That is not going to happen, in my opinion. And as I said before, if they can help with housing starts in, let's say, Toronto at $1,000 to $1,500 a month, that's valuable. If they can help with more one-bedroom condos at 3,000 units, that's not going to do a service to anybody. It's not going to help any housing crisis. In Ottawa, the apartment market is better than in Toronto, it seems to be. Rents are... increasing slowly and there's absorption um but i don't know where these 250 000 units could fit into what we're seeing in the marketplace today so there's a lot still to learn about what their plans are so i think basically we're optimistic that this government's going to do things in housing that will be good for us but we're nowhere near like these broad policy statements don't really help us at all in understanding what it will do for us in our business Is that a complete answer?

Yes, it is, Michael. Thank you for that, and I'll be right back.

Thank you.

The next question is from Alex Leon with Desjardins. Please go ahead.

Hey, good morning, everyone. My first question may be for Megan. I'm just wondering if you could let us know what the amount of occupancy income that was recognized in the corridor from Brightwater.

Oh, there was, in the quarter at Brightwater specifically, I think it was probably about $5 million, but then you also would have had sales commissions that would be a drag against that. So there was net net, I'd say, just over $3 million.

Okay, that's great. My next question may be for Michael. You're talking about the $50 million about construction savings at 49 Ontario. I'm just wondering if you can maybe give us some color on how you're expecting to get these savings, like whether if that's based on an expectation for costs coming down or maybe just contractors getting a little bit more aggressive on bidding.

Okay. It's a great question, and I'm repeating what I'm told. I'm not really an engineer or a construction guy, but I think like in excavation and forming in a lot of those areas, a lot of areas with labor, as I mentioned, the condos are being completed and nobody's starting anything. So we're hearing and seeing evidence that the trades are being more aggressive on the pricing. And I think like on forming, like the cost just blew out. between 2016 and 2019, and they blew out again after 2021. I think they've been up 60% or 70% from 2016. So they are coming in. Now, I didn't mention tariffs, which I suspect is a sin on a first quarter conference call not to mention tariffs. But we don't know how that may affect HVAC equipment and stuff like that. So there could be some pressure the other way. But we would have had... let's say 3% growth in our costs into our initial budgets. And if it's, you know, if we had two years of 3%, it turns out to be down 10%, that's about a 16% savings. So it's a bit of everything. And some of the areas, there might be 25% savings. Other areas, they actually might be going up, like some of the HVAC equipment and those things. And to be clear to everybody, I said possible to probable 50 million. It was really like a ballpark to try to actually say how our market cap is, our entire market cap is equal to the savings potentially of that building or equal to the value of equity in just our, you know, value-add apartments and stuff like that. It was really to say like, hey, maybe our market cap is too small.

No, for sure. That was clear. And I appreciate the color. I'll turn it back.

Thank you.

Once again, if you have a question, please press star then one. Our next question is from Ian Gillespie, who is a private investor. Please go ahead.

Yes, good morning. What is the total value of the lands that you consider surplus at this point and potentially available for disposition over the course of the next one, two, three years?

That's a great question because from memory, I don't think we have any sale of lands in any of our cash flows. Part of that is we have really good lands, but everybody has excess land and I don't think there's much of a market right now. I guess, Keyside, we have a plan for it. We hope to start next year. Gary West, we own that with two other partners. And it's not within our own control. It's really one of the best sites in the city, but it's got too much density, I think, in this market. We've got Victory Silos, which is coming along as adjacent to Quayside. And that one's interesting because about 1.2 million square feet of market density in three buildings. So that's nice because they're not too big. And that one I think we have a plan for. So I wouldn't have thought of any of our land as excess. Having said that, if there's an opportunity to realize cash, You know, we're pretty open-minded about where we would realize it, but we don't really think of any of our land as excess or really marketable at a reasonable price when everybody has too much land and there's very few new starts.

And what about the inventory of other properties, developed properties that you now consider surplus? What's sort of the quantum of those properties in aggregate?

Yeah, I don't know what surplus means or if it has an accounting significance. I think our view is, you know, we could sell $40 million of – we could realize $40 million of equity a year or something like that, that magnitude. I think we're happy to get it out of the commercial assets where we can. And, you know, to the extent that we can sort of go from, let's say, some value-add apartments or maybe apartments on leased land to freehold apartments where we're creating a lot of value, we could sell some apartments too as time goes by. That's why I was saying we're really focused on, let's say, in 2030, what assets do we have, what's the value of it, and what's the quality of our business.

And for those properties that you intend to sell or might be able to sell, would you fully expect to be able to get your equity out of those lands on balance?

Yeah, so... Sorry, go ahead.

Well, just that you... you may not have to take a haircut to move them to boost your liquidity.

Well, if we use the $50 million market cap, we should exceed it by a lot. On the 400, in some cases we will, in some cases we won't. But we kind of focus on what's the outcome of keeping an asset or selling it, what's the return we get over the time, and how does it compare to returns we're getting from other things. So I'm not going to say what we can sell assets for. This market's okay for apartments. It's very difficult for land, very difficult for office. But we've had good sales in the past. We're very pleased with the sales we had in 2024. We're pleased with the deal we did to get some cash out of 204. And we've got a couple of deals we'll work on now that should be reasonable for us compared to what we think the value is. So we keep making progress. So I know I'm not answering your question specifically, but this is When you go to brokers, they ask them, what can I get for this? And you get 20 different answers from the same guy.

Sure. Okay. One final question. I do detect you see kind of a line of sight to better days looking out to 2030 at this point, given some of the things that are starting to happen. But with regard to 49 Ontario, I think in your press release, described it as extremely attractive project economics. After you maybe subsidize, is the wrong word, of rents to the tune of $200 to $300 a month, are the project economics still extremely attractive? And if so, would they be considered in the first quartile of other projects that you normally see?

I'm going to try to answer the question in a way that I can. So depending on the savings and depending on the rents, our base case is that on the land value, it should easily be about a 15% compounded return on the full land value. to stabilization, maybe more. I mean, that's, I'm leaving a cushion there. It should be pretty good.

Okay. Okay, thank you. Thank you.

The next question is from Anaruk Dugal with 1729 Global. Please go ahead.

Hey guys, how are you? Good, how are you? Good, thanks. Been a shareholder for a while. Just a couple quick questions. Post the 49 Ontario, could you just give an update on the carrying cost of the land loans, like the interest cost, and just maybe, you know, any updates on some of the major land loans since the last time you had a call? And then just second, you know, if you sort of ballpark add up the interest cost on the land loans and then, you know, sort of the cash burn at the corporate level, which is just, you know, NOI, less corporate interest, less GNA that's not equity accounted for. There's still a pretty high cash burn on a one-rate basis. Just timing, if you look over the next two, three years, when do you expect that to come down to, let's say, a more manageable, down to the single-digit million level?

I'm not sure I answered your question, but what I would say is we're hoping to turn the $80 million land loan at 49 Ontario into income property. That would be funded from the loan, so that would come out of land loans. We don't have that much. We probably have $10 million at Quayside, so that's $90 million. We just paid down $6 million of land loans at Zibi, and we hope to continue with Block 1. So let's say we get another $20 there. I think that's $110. Hopefully, we will not be an owner of Scarborough Junction, which will get us off of another 45 so i think i've said i'm hoping that by the end of next year or the so the end of this year or by the middle of well by the middle of 2026 to the end of 2026 we should be down to 150 million dollars of land loans down from well over 300 and that would be uh you know right now the interest isn't bad if you're paying you know 2.75 over cora you're in about five and a half so 150 at 5.5 is under 10 million, if that's what your question was.

Got it. Okay. So, let's say about 10 million there, and then, you know, if you look at the cash burn, just, you know, NOI, less corporate interest, less G&A, it's probably, you know, cash G&A is about 10 million, so it's about a 20 million run rate cost. I guess, how do you think about that, you know, sort of cash burn looking at, let's say, two, three years? Like, where do you think that's Can you sort of walk us through a bit of, you know, the speed at which that cash point comes down for the business?

Yeah, well, every time we lease up a unit, we get more income, and we've got a lot of units to lease up on existing buildings that are finished. We've got some new buildings coming on that will contribute to it. So I think we expect the NOI to grow that way. We will be selling assets, so it's, you know, we're going to get rid of debt from selling assets. Okay. But I think what I've been saying from the beginning of the call is, you know, this is a market where you're stuck with a lot of different things. You can't build condos. You know, it's hard to sell land. And I think we're making great progress to turn the land into development projects. And we're going to be selling some assets to focus on the best assets. And part of the reason to sell the assets is to cover that cash shortfall. But that's what happens when you do a lot of development. We're not an income property business.

Okay. Thank you.

We have a follow-up call from Linda Wang with TD Securities. Please go ahead.

Hi. Just going back to 49 Ontario, I was wondering if you guys had a target ownership level and when you hope to achieve it. And then also, secondly, if you can talk briefly about the pro forma liquidity with the 10% sale.

Okay, so I sort of mentioned before that we are thinking about 50% as a minimum level of equity. And I think as we eliminate risk, we'll look at bringing in more money, but there'll be other people here saying, why don't we keep it? It's an asset we know very well. We've had that with the board as well. So, you know, we'll play it by ear. But, you know, we stated for a long time owning 50% would be a good idea. What was your other question?

Linda, I think you asked about pro forma liquidity. Sorry, do you mind just clarifying the second part of your question?

Yes, the pro forma liquidity on the 10% sale.

So the minority interest came in at... or was committed to come in at the IFRS value for the asset, which we carry at roughly $145, that would be net of any debt on the in-place land loan.

Okay, thank you.

Thanks, Linda.

This concludes the question and answer session. I'd like to turn the conference back over to Mr. Cooper for any closing remarks.

I don't have a lot of closing remarks. I feel like we talked about the whole world, but I would say thank you all for your continued interest in the company, and we're always here to answer your questions. Thank you.