Q2 Report 2021 Dream Impact Trust - Dream Unlimited
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Dream Impact Trust Q2 Report 2021
Table of Contents Management’s Discussion and Analysis 1 Condensed Consolidated Financial Statements 30 Notes to the Condensed Consolidated Financial Statements 34
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 dated as of, and reflects all material events up to, August 3, 2021,
the date on which this MD&A was approved by the Board of Trustees.
When we refer to terms such as "we', "us" and "our", we are referring to the Trust, Dream Impact Master LP (formerly
Dream Alternatives Master LP) ("MPCT LP") and its subsidiaries. When we refer to "unitholders" we are referring to holders
of the units of the Trust.
1. OVERVIEW AND OVERALL FINANCIAL PERFORMANCE
1.1 OVERVIEW OF THE TRUST
Dream Impact Trust ("Dream Impact" or the "Trust") is an open-ended trust dedicated to impact investing. Impact investing
is the intention of creating measurable positive, social and environmental change in our communities and for our
stakeholders, while generating attractive market returns. The Trust’s underlying portfolio is comprised of exceptional 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 $10 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 June 30,
2021, Dream has a 27% ownership interest in Dream Impact.
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 growth and stability of the portfolio, increasing cash flow, unitholders’ equity and net asset value ("NAV")(1) over
time;
• Leverage our access to an experienced management team and strong partnerships in order to generate attractive
returns for investors;
• Provide investors with a portfolio of high-quality real estate development opportunities, concentrated in core
geographic markets; and
• Provide predictable cash distributions to unitholders on a tax-efficient basis.
As at June 30, 2021, our operating segments consisted of the following:
• Recurring income — comprised of a portfolio of office and commercial real estate income properties in the Greater
Toronto Area ("GTA") and Ottawa/Gatineau, and interest-paying mortgages and corporate loans; and
• Development — comprised of direct and indirect investments in residential and mixed-use developments, a hospitality
asset, and participating mortgage receivables.
Recurring income is important to our business as it provides stable returns in order to fund our ongoing fixed operating
costs, interest and distribution. As we build out our extensive development pipeline, we intend to hold high-quality assets for
the long term, which will further contribute to our sources of recurring income. Over time, as we retain our best-in-class
developed income properties, we expect approximately 70% of our portfolio to be comprised of this segment.
We believe the Trust’s development segment represents a portfolio of high-quality assets located in core geographic
markets. These assets represent the primary source of growth for the Trust and 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
Dream Impact Trust 2021 Second Quarter | 1realized. However, depending on a variety of factors, including location, market conditions, density and asset class, the value
of these projects may appreciate as we progress through the rezoning and pre-development process. Our development
segment is expected to generate attractive returns and continued NAV(1) accretion over time.
Over 70% of our projects are zoned, with the remaining 30% of Dream Impact's development projects or assets with
redevelopment potential currently in the rezoning process, based on unitholders' equity as at June 30, 2021 and market
(1)
value adjustments as at December 31, 2020. Depending on the specific municipality, this process may take upwards of 2-3
years from the timing of submission. Significant zoning approvals are expected over the next 2 years.
In accordance with the Trust’s mandate to be a pure-play impact investment vehicle, assets in both operating segments will
correspond to our impact verticals. These verticals are aligned with the widely recognized and accepted United Nations
Sustainable Development Goals and are:
• Environmental sustainability and resilience — develop sustainable real estate that optimizes energy use, limits
greenhouse gas ("GHG") emissions, and reduces water use and waste while also creating resiliency against natural
disasters and major climatic events.
• Attainable and affordable housing — invest in mixed-income communities that are transit-oriented, located close to
employment opportunities, and support an overall lower relative cost of living with high quality of life.
• Inclusive communities — intentionally design and program communities that are safe and inclusive for everyone. This
includes creating spaces that encourage mental and physical health, and wellness.
As the owner and developer of our real estate, we are focused on developing and operating our properties to contribute to
the betterment of our communities through managing our resource efficiency to minimize environmental harm to
communities, incorporating attainable and affordable housing, and fostering inclusivity, as we pursue attractive market
returns. We undertake this purpose on behalf of all our stakeholders including our unitholders, customers, suppliers, lenders,
governments and the community at large.
On May 3, 2021, the Trust released its inaugural impact report which outlines the framework and specific pathways on
certain investments. The Trust intends to benchmark its performance, on an annual basis, against specific targets that will
conform to principles set out by reputable third parties. Additionally, the Trust has identified three main features of its
approach to impact management:
• Intentionality — for each of the portfolio properties that qualify as impact assets, the Trust specifies impact pathways
that set out the positive impacts expected to be achieved;
• Measurement — each impact pathway will be scored according to various dimensions. These dimensions will include
who will be affected (an assessment of the number of people, and how well or underserved they are), the extent of the
impact (an assessment of duration and degree), and what the Trust’s contribution is (an assessment of the outcome
delivered by the Trust, relative to what would have happened otherwise). We intend to measure our impact efforts in a
repeatable, systematic way; and
• Verification — our process surrounding our impact goals and impact management system will be verified by a
recognized independent firm at regular intervals.
During the three months ended June 30, 2021, the Dream Impact Management System was verified by an independent third-
party. The verifying firm evaluated the extent to which the Impact Management System and impact investing activities to
date align with the Operating Principles for Impact Management ("Impact Principles"). The results of the verification were in
line with our expectations and industry averages. The Trust intends to incorporate feedback from the verification process to
improve the alignment with each Impact Principle over the next three years.
(1)
As at June 30, 2021, approximately 80% of NAV qualified under the Trust's definition of an impact investment. Over the
next few years, our strategy is to deploy our balance sheet into new impact investment opportunities, wind-down or exit
remaining non-impact investments and redeploy proceeds, and increase our financial flexibility from our build-to-sell assets.
(1)
Represents a non-IFRS measure. For the Trust's definition of the following non-IFRS measures: market value, NAV, please refer to the Non-IFRS Measures and Other
Disclosures section of this MD&A. Non-IFRS measures do not have standardized meanings prescribed by IFRS ("International Financial Reporting Standards") and may
not be comparable with similar measures presented by other issuers.
Dream Impact Trust 2021 Second Quarter | 21.3 FINANCIAL OVERVIEW - SECOND QUARTER 2021
KEY ACHIEVEMENTS
During the three months ended June 30, 2021, the Trust, along with DAM, acquired the remaining third-party interest in Zibi,
our 34-acre waterfront development in Ottawa, Ontario and Gatineau, Quebec, resulting in the development ownership
being split 50/50 between the Trust and DAM. At the Trust's share, the purchase was settled by a cash payment of $9.1
million and a non-interest bearing promissory note with a discounted value of $5.3 million ($5.5 million face value) maturing
in June 2023. During the three and six months ended June 30, 2021, the Zibi development recognized fair value gains of $0.8
million and $3.5 million, respectively, at the Trust's share, as construction nears completion on certain blocks, which has
been reflected in the Trust's share of net income from Zibi in the period. To date, the Trust has invested $88.3 million,
including transaction costs, in the Zibi development.
During the three months ended June 30, 2021, 15 Rue Jos-Montferrand (Zibi Block 2-3), the first completed commercial block
at the Zibi development, achieved first occupancy with Spaces, an Amsterdam-based creative workspace provider, which
occupies over 80% of the building's gross leasable area ("GLA"). Zibi is on track for first occupancy at the Natural Sciences
Building, which is over 80% leased to a Federal Government tenant and will add a further 186,000 square feet ("sf") to the
recurring income segment. The Trust also expects to complete construction of the District Energy System later this year,
which will provide all blocks at Zibi with net-zero carbon heating and cooling.
On July 2, 2021, CMHC announced a $70.0 million investment at Zibi. The Trust's impact verticals are incorporated and
realized in the development of environmentally sustainable, inclusive and affordable and attainable housing at Zibi as part of
the overall mixed use and income community. Zibi Block 10, the Trust's first affordable purpose built rental at Zibi, is
receiving a $60 million low cost loan, through the Rental Construction Financing Initiative for the construction of a 162-unit,
15-storey building. The project is designed to include barrier free access, achieve a 20% decrease in energy intensity and a
40.4% decrease in greenhouse gas emissions, and will include 95% affordable units, which is above the commitment to
provide a minimum of 27% or 44 affordable units. Zibi received a further $10 million low cost loan through the NHS
Affordable Housing Innovation Fund, to help build 200 affordable units, which will have equitable access to District Energy
System, our net-zero carbon heating-cooling system for the Zibi community. Zibi Block 10 will house the central plant of the
District Energy System.
The Virgin Hotels Las Vegas ("U.S. hotel") celebrated its grand opening in June 2021, including the opening of several
amenities such as the Resort Pool, the 4,500-seat concert hall and The Theater. The Trust has a 10% interest in the
reconceptualized and renovated hotel, and has invested $52.9 million, including transaction costs, to date.
During the second quarter, Brightwater, our 72-acre waterfront development in Port Credit, successfully launched
Brightwater Towns, a 106-unit town home complex, and The Mason, a 162-unit 9-storey condominium building. To date,
100% of the released town homes at Brightwater Towns and 86% of the units at The Mason have sold, which is in addition to
the 311 condominium units fully sold at Brightwater I and II, launched in 2020. 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. To date, the Trust has invested $38.4 million, including transaction costs, for a 23.25% interest in
the development.
Subsequent to the second quarter, the Trust announced the expected acquisition of over 900 multi-family residential units in
the City of Toronto, for approximately $378 million of which $279 million is expected to be funded through debt financing at
the project level. The Trust will have a 33% interest in the units, alongside Dream and its affiliates. Upon closing, these units
will generate immediate returns to the Trust. The Trust will utilize the proceeds from the recently announced $30 million
private placement of impact convertible unsecured subordinated debentures ("Impact Debentures") with Fairfax Financial
Holdings Limited and/or certain of its controlled affiliates, which closed subsequent to June 30, 2021, to fund this acquisition.
The Impact Debentures are intended to be used to finance expenditures associated with eligible impact investments and will
align with our Impact Financing Framework released earlier this year.
The Trust has a growing recurring income portfolio, which as at June 30, 2021, includes over 1 million sf of commercial space
(at 100% project-level). In the latter half of 2021, the Trust expects the recurring income portfolio to grow with the
completion of 186,000 sf of commercial space at Zibi's Natural Sciences Building, as well as the addition of over 900 multi-
family residential units (at 100% project level). The Trust expects to continue to grow this segment by deploying capital to
acquire additional income properties that are in line with its impact strategy, in addition to completing the Trust's build-to-
hold assets from its development pipeline. Refer to Section 2.2, "Recurring Income" of this MD&A for further details on
build-to-hold assets that are expected to contribute to the Trust's recurring income segment over the next five years.
Dream Impact Trust 2021 Second Quarter | 3Refer to Section 1.4, "Summary of Portfolio Assets" in this MD&A for details on our complete development pipeline, and
Section 10.1, "Summary of Impact Investments" for details on certain of our impact investments.
FINANCIAL HIGHLIGHTS OF THE TRUST
Three months ended June 30, Six months ended June 30,
For the three months ended March 31, 2021 2020 2021 2020
Consolidated results of operations
Net income (loss) $ (1,451) $ (3,634) $ (7,663) $ 1,518
Net income (loss) per unit⁽¹⁾ (0.02) (0.05) (0.12) 0.02
Distributions declared and paid per unit 0.10 0.10 0.20 0.20
Units outstanding – end of period 64,935,685 68,848,500 64,935,685 68,848,500
Units outstanding – weighted average 64,780,095 69,054,839 64,868,057 69,026,710
(1)
For the Trust's definition of the following non-IFRS measure: net income (loss) per unit, please refer to the Non-IFRS Measures and Other Disclosures section of this
MD&A.
As at June 30, 2021 March 31, 2021 December 31, 2020
Consolidated financial position
Total unitholders' equity $ 519,966 $ 527,588 $ 539,877
Total unitholders' equity per unit⁽¹⁾ 8.01 8.13 8.33
Total debt payable 105,201 105,348 88,392
Total assets 649,003 652,632 648,514
Debt-to-asset value⁽¹⁾ 16.2% 16.1% 13.6%
Cash 70,102 91,858 110,671
(1)
For the Trust's definition of the following non-IFRS measures: total unitholders' equity per unit and debt-to-asset value, please refer to the Non-IFRS Measures and
Other Disclosures section of this MD&A.
During the three months ended June 30, 2021, the Trust reported a net loss of $1.5 million compared to $3.6 million in the
prior year comparative period. The improvement relative to the prior year was driven by fair value adjustments on our
developments and lending portfolio, and foreign exchange fluctuations on our investment in the U.S. hotel, partially offset by
reduced income contribution from scheduled repayments on the Trust's lending portfolio and reduced tax recoveries since
the prior year.
During the six months ended June 30, 2021, the Trust reported a net loss of $7.7 million compared to net income of $1.5
million in the prior year. The decrease year-over-year was primarily related to net fair value adjustments, including $1.8
million of capitalized transaction costs related to the acquisition of 76 Stafford and 68-70 Claremont, foreign exchange
fluctuations on our investment in the U.S. hotel, a fair value loss on our Empire Lakeshore investment, timing of condo unit
occupancies at Zibi, and reduced income contribution from scheduled repayments on the lending portfolio.
As at June 30, 2021, the Trust had $70.1 million of cash-on-hand. The Trust’s debt-to-asset value(1) as at June 30, 2021 was
16.2%, consistent with 16.1% as of March 31, 2021, and higher than 13.6% as of December 31, 2020, driven by financing
obtained on the income properties acquired in the six months ended June 30, 2021. The Trust's debt-to-total asset value,
inclusive of project-level debt(1) and assets within our development segment, including equity accounted investments, was
44.1% as at June 30, 2021, compared to 41.5% as at March 31, 2021, and 38.5% as at December 31, 2020.
(1)
Represents a non-IFRS measure. For the Trust's definition of the following non-IFRS measures: debt-to-asset value and debt-to-total asset value, inclusive of project-
level debt, please refer to the Non-IFRS Measures and Other Disclosures section of this MD&A. Non-IFRS measures do not have standardized meanings prescribed by
IFRS and may not be comparable with similar measures presented by other issuers.
Dream Impact Trust 2021 Second Quarter | 4SEGMENTED RESULTS OF OPERATIONS – THREE MONTHS ENDED JUNE 30, 2021
Recurring
Development income Other⁽¹⁾ Total
INCOME
Fair value adjustments in development and investment holdings $ (726) $ — $ — $ (726)
Lending portfolio interest income and lender fees — 424 — 424
Income properties revenue — 4,394 — 4,394
Share of income from equity accounted investments 151 3 — 154
TOTAL INCOME (LOSS) (575) 4,821 — 4,246
EXPENSES
Income properties, operating — (2,008) — (2,008)
Interest expense — (896) (93) (989)
Provision for lending portfolio losses — (1,078) — (1,078)
General and administrative — — (2,100) (2,100)
TOTAL EXPENSES — (3,982) (2,193) (6,175)
Fair value adjustments to income properties — (228) — (228)
OPERATING INCOME (LOSS) (575) 611 (2,193) (2,157)
Interest and other income — 2 208 210
Transaction costs — (104) — (104)
EARNINGS (LOSS) BEFORE INCOME TAX RECOVERY (575) 509 (1,985) (2,051)
INCOME TAX RECOVERY
Deferred income tax recovery — — 600 600
TOTAL INCOME TAX RECOVERY — — 600 600
NET INCOME (LOSS) $ (575) $ 509 $ (1,385) $ (1,451)
SEGMENTED RESULTS OF OPERATIONS – THREE MONTHS ENDED JUNE 30, 2020
Recurring
Development income Other⁽¹⁾ Total
INCOME
Fair value adjustments in development and investment holdings $ (1,951) $ — $ — $ (1,951)
Lending portfolio interest income and lender fees — 1,300 — 1,300
Income properties revenue — 4,162 — 4,162
Share of loss from equity accounted investments (158) (100) — (258)
TOTAL INCOME (LOSS) (2,109) 5,362 — 3,253
EXPENSES
Income properties, operating — (2,746) — (2,746)
Interest expense — (776) (52) (828)
Provision for lending portfolio losses — (2,882) — (2,882)
General and administrative — — (2,126) (2,126)
TOTAL EXPENSES — (6,404) (2,178) (8,582)
Fair value adjustments to income properties — 132 — 132
OPERATING LOSS (2,109) (910) (2,178) (5,197)
Interest and other income 57 335 (123) 269
Transaction costs — (64) — (64)
LOSS BEFORE INCOME TAX RECOVERY (2,052) (639) (2,301) (4,992)
INCOME TAX RECOVERY
Deferred income tax recovery — — 1,358 1,358
TOTAL INCOME TAX RECOVERY — — 1,358 1,358
NET LOSS $ (2,052) $ (639) $ (943) $ (3,634)
(1)
Includes other Trust amounts not specifically related to the segments.
Dream Impact Trust 2021 Second Quarter | 5SEGMENTED RESULTS OF OPERATIONS – SIX MONTHS ENDED JUNE 30, 2021
Recurring
Development income Other⁽¹⁾ Total
INCOME
Fair value adjustments in development and investment holdings $ (7,613) $ — $ — $ (7,613)
Lending portfolio interest income and lender fees — 868 — 868
Income properties revenue — 8,795 — 8,795
Share of income (loss) from equity accounted investments 2,331 (34) — 2,297
TOTAL INCOME (LOSS) (5,282) 9,629 — 4,347
EXPENSES
Income properties, operating — (4,265) — (4,265)
Interest expense — (1,702) (145) (1,847)
Provision for lending portfolio losses — (1,078) — (1,078)
General and administrative — — (5,990) (5,990)
TOTAL EXPENSES — (7,045) (6,135) (13,180)
Fair value adjustments to income properties — (2,187) — (2,187)
OPERATING INCOME (LOSS) (5,282) 397 (6,135) (11,020)
Interest and other income — 82 336 418
Transaction costs — (207) — (207)
EARNINGS (LOSS) BEFORE INCOME TAX RECOVERY (5,282) 272 (5,799) (10,809)
INCOME TAX RECOVERY
Current income tax recovery — — 7 7
Deferred income tax recovery — — 3,139 3,139
TOTAL INCOME TAX RECOVERY — — 3,146 3,146
NET INCOME (LOSS) $ (5,282) $ 272 $ (2,653) $ (7,663)
SEGMENTED RESULTS OF OPERATIONS – SIX MONTHS ENDED JUNE 30, 2020
Recurring
Development income Other⁽¹⁾ Total
INCOME
Fair value adjustments in development and investment holdings $ 2,470 $ — $ — $ 2,470
Lending portfolio interest income and lender fees — 2,786 — 2,786
Income properties revenue — 8,565 — 8,565
Share of loss from equity accounted investments (888) (281) — (1,169)
TOTAL INCOME 1,582 11,070 — 12,652
EXPENSES
Income properties, operating — (4,896) — (4,896)
Interest expense — (1,558) (61) (1,619)
Provision for lending portfolio losses — (2,882) — (2,882)
General and administrative — — (2,948) (2,948)
TOTAL EXPENSES — (9,336) (3,009) (12,345)
Fair value adjustments to income properties — 132 — 132
OPERATING INCOME (LOSS) 1,582 1,866 (3,009) 439
Interest and other income 425 341 308 1,074
Transaction costs — (109) (13) (122)
EARNINGS (LOSS) BEFORE INCOME TAX RECOVERY 2,007 2,098 (2,714) 1,391
INCOME TAX RECOVERY
Deferred income tax recovery — — 127 127
TOTAL INCOME TAX RECOVERY — — 127 127
NET INCOME (LOSS) $ 2,007 $ 2,098 $ (2,587) $ 1,518
(1)
Includes other Trust amounts not specifically related to the segments.
Dream Impact Trust 2021 Second Quarter | 61.4 SUMMARY OF PORTFOLIO ASSETS
The following table includes supplementary information on certain assets in our portfolio as at June 30, 2021. Please refer to
Section 10.1, "Summary of Impact Investments" of this MD&A for additional information on certain of these investments in
our development and recurring income segments.
RECURRING INCOME SEGMENT
Total
commercial In-place/
Dream Residential and retail committed
(2) (2)
Property Impact Impact GFA GLA commercial
Project/property type ownership Status/type status(1) (at 100%) (at 100%) occupancy
Downtown Toronto & Greater Toronto Area ("GTA")
Sussex Centre Office/retail 50.1% Income property I, E — 655,000 85.7 %
49 Ontario(3) Office 100.0% Redevelopment TBD TBD 88,000 91.5 %
10 Lower Spadina Office/retail 100.0% Income property I, E — 61,000 100.0 %
349 Carlaw Office 100.0% Income property I, E — 34,000 85.9 %
68-70 Claremont Street Office 100.0% Income property I, E — 30,000 39.7 %
76 Stafford Street Office/retail 100.0% Income property I, E — 25,000 100.0 %
100 Steeles Avenue West⁽3⁾ Retail 37.5% Redevelopment TBD TBD 59,000 97.1 %
Plaza Imperial Office/retail 40.0% Income property n/a — 35,000 100.0 %
Plaza Bathurst Office/retail 40.0% Income property n/a — 24,000 100.0 %
Queen & Mutual Office/retail 9.0% Income property n/a — 24,000 69.0 %
Total Downtown Toronto & GTA 1,035,000 87.1 %
Zibi (Ottawa/Gatineau):
Commercial:
15 Rue Jos-Montferrand (Block 2-3) Office/retail 50.0% Income property I, E — 53,000 81.2 %
Total Zibi (Ottawa/Gatineau) 53,000 81.2 %
Total projects in the recurring income segment 1,088,000 86.8 %
(1)
Investments will align with the following impact verticals as outlined in Section 1.2, "Our Strategy and Operating Segments": A - Attainable and affordable housing; I - Inclusive
communities; E - Environmental sustainability and resilience.
(2)
Total commercial and retail GLA, and residential gross floor area ("GFA"), includes planned GLA and GFA which are subject to change pending various development approvals.
(3)
Represents projects that have been identified with redevelopment potential in the long term and have tenants currently occupying and paying rental income.
Dream Impact Trust 2021 Second Quarter | 7DEVELOPMENT SEGMENT
Total
residential Total
units/hotel commercial In-place/
Dream rooms at Residential and retail committed Occupancy/
(3) (3)
Property Impact Impact completion GFA GLA commercial stabilization
Project/property type ownership Status/type status(1) (at 100%) (2) (at 100%) (at 100%) occupancy date
Downtown Toronto & GTA
Under
WDL Block 8 Build to hold 25.0% construction A, I, E 770 623,000 4,000 2023
Under
Brightwater I and II Build to sell 23.3% construction I, E 311 216,000 110,000 33.0 % 2023
Brightwater Towns Build to sell 23.3% Planning I, E 106 231,000 — 2023
The Mason (Brightwater) Build to sell 23.3% Planning I, E 162 117,000 6,000 2024
Under
Canary Block 10 Various 25.0% construction I, E 444(4) 319,000 26,000 2024
Under
Ivy Build to sell 75.0% construction n/a 256 193,000 — 2024
Under
WDL Block 3/4/7 Build to hold 25.0% construction A, I, E 855 811,000 37,000 2025
Brightwater future blocks Build to sell 23.3% Planning I, E 2,416 2,549,000 244,000 2025-2032
WDL Block 20 Build to hold 25.0% Planning A, I, E 654 571,000 260,000 TBD
Lakeshore East TBD 37.5% Planning TBD 1,500 1,200,000 32,000 TBD
Frank Gehry Build to sell 25.0% Planning TBD 1,500 1,652,000 260,000 TBD
Scarborough Junction Build to sell 45.0%(5) Planning n/a 6,619 5,270,000 165,000 TBD
Seaton Build to sell 7.0% Planning n/a TBD TBD TBD TBD
Total Downtown Toronto & GTA 15,593 13,752,000 1,144,000 n/a
Zibi (Ottawa/Gatineau):
Natural Sciences Building Under
(Block 211) Build to hold 50.0% construction I, E — — 186,000 86.0 % Q4 2021
Under
Block 208 Build to hold 50.0% construction I, E — — 33,000 79.8 % 2022
Under
Block 10 Build to hold 50.0% construction A, I, E 162 135,000 1,000 2022
Under
Block 206 Build to hold 50.0% construction A, I, E 207 196,000 11,000 2023
Under
Block 207 Build to hold 50.0% construction I, E — — 76,000 2023
Block 11 Build to hold 50.0% Planning A, I, E 146 127,000 4,000 2023
Future blocks Various 50.0% Planning A, I, E 1,255 1,292,000 1,891,000 TBD
Total Ottawa/Gatineau 1,770 1,750,000 2,202,000 85.1 %
U.S.
Virgin Hotels Las Vegas Build to sell 10.0% Hospitality n/a 1,502 — — 2023
Total U.S. 1,502 — —
Total projects in the development segment 18,865 15,502,000 3,346,000
(1)
Investments will align with the following impact verticals as outlined in Section 1.2, "Our Strategy and Operating Segments": A - Attainable and affordable housing; I - Inclusive
communities; E - Environmental sustainability and resilience.
(2)
Residential units and GLA are at 100% project level and include planned units and GLA which are subject to change pending various development approvals. Planned residential
units may be developed as condominium units or purpose-built rentals as supported by market demand, targeted studies and return objectives. For projects currently in
occupancy, residential units reflect remaining units in inventory to be occupied in future periods.
(3)
Total commercial and retail GLA, and GFA, includes planned GLA and GFA which are subject to change pending various development approvals.
(4)
This figure includes 238 rental units in which the Trust is considered build to hold, as well as a 206-unit condo building invested by Dream.
(5)
The Trust's equity ownership interest in Scarborough Junction is 45%, and the Trust's effective economic interest is expected to be approximately 23%.
Dream Impact Trust 2021 Second Quarter | 82. REPORTABLE OPERATING SEGMENTS RESULTS OF OPERATIONS
2.1 DEVELOPMENT
Our development segment includes development and investment holdings, and partnerships, included in equity accounted
investments, formed for the purpose of developing residential and mixed-use projects.
Development holdings relate to the Trust's participating loans secured by Empire-related development projects (referred to
as Empire Lakeshore and Empire Brampton). Investment holdings relate to the Trust's 10% investment in the U.S. hotel.
Certain of the Trust’s partnerships, including development assets, which are primarily located in the GTA and Ottawa, are in
various planning and construction phases and classified as equity accounted investments. These equity accounted
investments are typically held at cost and are expected to contribute meaningfully to the Trust’s earnings in future periods as
properties are developed and completed. Fair value adjustments may be recorded on an individual investment level as a
result of certain factors, such as terms of a construction contract, stage of completion, location, type and quality of the
property, current market rents for similar properties, reliability of cash inflows after completion, development risks specific
to the property, past experience with similar constructions, status of approvals and/or permits, estimated costs to complete
and market conditions.
Development projects are expected to be key drivers of future growth for the Trust to generate attractive returns and future
cash flows as milestones are achieved. Our developments are expected to provide attractive profits upon their respective
completion dates and are expected to contribute to increased value for unitholders over the longer term. The Trust has
historically targeted a pre-tax internal rate of return ("IRR")(1) of at least 15%-20% on equity investments in residential and
mixed-use development projects. Our development projects are also investments that provide significant opportunity to
create impact in our communities, in line with our three impact verticals.
The table below provides a continuity of the Trust's development and investment holdings, including development assets
within equity accounted investments, for the periods indicated:
Equity
Development Investment accounted
For the three months ended June 30, 2021 holdings holdings investments Total
Balance as at March 31, 2021 $ 13,511 $ 51,024 $ 208,768 $ 273,303
Advances/investments/share of income — 91 17,153 17,244
Transfer to recurring income segment — — (4,261) (4,261)
Foreign exchange loss — (726) — (726)
Balance as at June 30, 2021 $ 13,511 $ 50,389 $ 221,660 $ 285,560
Less: current portion $ 3,016 $ — $ — $ 3,016
Non-current portion of total development and investment holdings $ 10,495 $ 50,389 $ 221,660 $ 282,544
Equity
Development Investment accounted
For the six months ended June 30, 2021 holdings holdings investments Total
Balance as at December 31, 2020 $ 22,084 $ 51,578 $ 202,988 $ 276,650
Advances/investments/share of income — 166 22,933 23,099
Distributions/capital repayment (2,315) — — (2,315)
Transfer to recurring income segment — — (4,261) (4,261)
Fair value loss (6,258) — — (6,258)
Foreign exchange loss — (1,355) — (1,355)
Balance as at June 30, 2021 $ 13,511 $ 50,389 $ 221,660 $ 285,560
Less: current portion $ 3,016 $ — $ — $ 3,016
Non-current portion of total development and investment holdings $ 10,495 $ 50,389 $ 221,660 $ 282,544
During the three months ended June 30, 2021, the Trust, along with DAM, increased its interest in Zibi, our 34-acre
waterfront development in Ottawa, Ontario and Gatineau, Quebec, from 44.6% to 50%. The Trust acquired the remaining
third-party interest in the Zibi development through a combination of a cash payment of $9.1 million and a non-interest
bearing promissory note with a discounted value of $5.3 million ($5.5 million face value) maturing in June 2023, which has
been recorded in amounts payable and other liabilities.
(1)
For the Trust's definition of the following non-IFRS measure: IRR, please refer to the Non-IFRS Measures and Other Disclosures section of this MD&A.
Dream Impact Trust 2021 Second Quarter | 9During the three months ended June 30, 2021, 15 Rue Jos-Montferrand at Zibi achieved first commercial tenant occupancy
of 43,000 sf with Spaces, an Amsterdam-based creative workspace provider. The achievement of first tenant occupancy,
which comprised of over 80% of the GLA at the building, resulted in the transfer of $4.3 million from the development
segment to the recurring income segment in the period.
During the three and six months ended June 30, 2021, the Trust recorded a foreign exchange loss of $0.7 million and $1.4
million, respectively, driven by the fluctuation of the U.S. dollar, related to our investment in the U.S. hotel. The U.S. hotel is
not considered part of the Trust's long-term impact strategy.
Empire Lakeshore, a non-core legacy investment for the Trust, is a high-rise condominium development that includes two
towers, the Water Tower and Sky Tower, at 49 and 66 storeys, respectively, for an aggregate of 1,280 residential units, which
are 99% closed, and 55,000 sf of retail and commercial GLA. During the six months ended June 30, 2021, the Trust received a
repayment of $2.3 million from Empire Lakeshore, representing profit return on the investment. During the six months
ended June 30, 2021, the Trust recorded a fair value write-down of $6.3 million as a result of changes in profit assumptions
on unsold inventory. As at June 30, 2021, the Trust has received total cash distributions of $45.5 million from the investment.
The Trust anticipates the timing for the remaining profit distributions to be over the next 15 months. Subsequent to June 30,
2021, the Trust received an additional $2.4 million representing profit return on the investment to the Trust, with $10.0
million remaining on the investment.
During the three and six months ended June 30, 2021, contributions of $3.2 million and $6.8 million, respectively, including
transaction costs, were made by the Trust to its development assets held as equity accounted investments, primarily related
to West Don Lands and Zibi, which includes District Energy System, our net-zero carbon heating-cooling system for the Zibi
community. We anticipate making further capital investments in the range of $75 million to $85 million for our development
projects over the next two years. These contributions exclude the aforementioned acquisition of the third-party interest in
Zibi during the three and six months ended June 30, 2021.
A summary of the development segment results, including development assets within equity accounted investments, is
below:
Three months ended June 30, Six months ended June 30,
2021 2020 2021 2020
Net income (loss) - development and investment holdings $ (726) $ (1,894) $ (7,613) $ 2,895
Share of net income (loss) - equity accounted investments 151 (158) 2,331 (888)
Total net income (loss) - development segment $ (575) $ (2,052) $ (5,282) $ 2,007
During the three months ended June 30, 2021, the development segment generated a net loss of $0.6 million, compared to a
net loss of $2.1 million in the three months ended June 30, 2020. The improvement in results of $1.5 million was driven by
lower foreign exchange losses related to the appreciation of the U.S. dollar in the current period compared to the prior year.
The Trust expects the impact of foreign exchange on our investment in the U.S. hotel to fluctuate each period.
During the six months ended June 30, 2021, the development segment generated a net loss of $5.3 million relative to net
income of $2.0 million in the six months ended June 30, 2020. The decrease was primarily driven by changes in profit
assumptions on unsold inventory as it relates to the Empire Lakeshore investment, timing of unit occupancies at Zibi, and
foreign exchange losses related to our investment in the U.S. hotel. Partially offsetting the above were fair value gains within
our investment in Zibi, as a result of project milestones as certain blocks near completion.
Dream Impact Trust 2021 Second Quarter | 10DEVELOPMENT PIPELINE
Based on current development timelines, over the next five-year period, an additional 3,400 residential units and 0.5 million
sf of retail and commercial product are expected to be completed (at the 100% project level). This includes both build-to-
hold and build-to-sell assets. Build-to-hold assets, such as the West Don Lands development and future blocks at Zibi, are
part of the Trust's long-term impact investing strategy. Certain investments are highlighted below.
Estimated value
Ownership Equity invested to Forecasted equity to upon Capitalization Development
Property interest date invest(1) completion(1)(2) rate yield(1)(2)
West Don Lands 25.0 % $ 6,573 $19,000-$21,000 $ 405,000
Brightwater 23.3 % 37,279 $8,000-$10,000 710,000
Canary Block 10 25.0 % 1,364 $7,000-$8,000 39,000
Zibi 50.0 % 86,442 $40,000-$45,000 855,000
Total $ 131,658 $ 2,009,000 4.4%(3) 5.1%(3)
(1)
As at June 30, 2021, these values are estimates only, are subject to change and are at the Trust's ownership interest. Refer to Section 10.4, "Forward-looking
information".
(2)
For the Trust's definition of the following non-IFRS measures: estimated value upon completion and development yield, please refer to the Non-IFRS Measures and
Other Disclosures section of this MD&A.
(3)
The weighted average capitalization rate and development yield excludes Brightwater.
Due to the long-term nature of projects in the development segment, results will fluctuate between periods due to the
various construction timelines and availability of completed inventory. As our development projects progress towards
completion and achieve various milestones, the Trust expects an increase in income and cash flows from this segment over
time. For additional details, refer to Section 1.4, "Summary of Portfolio Assets".
SUMMARY OF DEVELOPMENT AND INVESTMENT HOLDINGS PARTNERS
We continue to leverage our relationships and expertise to attract world-class partners and investment opportunities. As a
result of our partners and relationships, the Trust has access to unparalleled investment opportunities across North America.
The table below provides an overview of some of the Trust's key partners within its development/redevelopment
investments:
Partner
Project Partners since
Empire Lakeshore and Brampton Empire Communities 2014
Lakeshore East Dream Unlimited, Great Gulf Residential 2016
Brightwater Dream Unlimited, Kilmer Van Nostrand Co. Ltd., Diamond Corp., FRAM + Slokker 2017
Zibi(1) Dream Unlimited 2017
Frank Gehry Dream Unlimited, Great Gulf Residential, Westdale Construction Co. Ltd. 2017
Seaton Fieldgate Homes, Mattamy Homes, Paradise Developments, TACC Construction Ltd. 2018
Virgin Hotels Las Vegas Juniper Capital Partners, Fengate Real Asset Investments, Virgin Hotels 2018
100 Steeles Dream Unlimited, Westdale Construction Co. Ltd. 2018
West Don Lands(1) Dream Unlimited, Kilmer van Nostrand Co. Ltd., Tricon Capital Group 2018
Canary Block 10(1) Dream Unlimited, Kilmer van Nostrand Co. Ltd., Tricon Capital Group 2019
Scarborough Junction Harlo Capital, Republic Developments 2020
(1)
In the six months ended June 30, 2021, Dream Unlimited's share of the Natural Sciences Building at Zibi, Canary Block 10 and West Don Lands Block 8 developments was
acquired by Dream Impact Fund. Dream Unlimited has a 40.53% interest in Dream Impact Fund as at June 30, 2021, with the residual interests held by third parties.
2.2 RECURRING INCOME
The Trust's recurring income segment includes its income properties and lending portfolio.
The Trust’s income properties consist of wholly owned and co-owned office properties as well as certain equity accounted
investments that are income-producing, with future redevelopment potential. Revenue from these income properties
includes base rents, recoverable operating expenses and property tax recoveries, lease termination fees, parking income and
ancillary income.
The Trust's lending portfolio includes investments in mortgages and loans secured by different types of residential and
commercial real estate property that represent an acceptable underwriting risk.
A summary of the recurring income segment results is as follows:
Dream Impact Trust 2021 Second Quarter | 11Three months ended June 30, Six months ended June 30,
2021 2020 2021 2020
Income properties revenue $ 4,394 $ 4,162 $ 8,795 $ 8,565
NOI(1) 2,386 1,416 4,530 3,669
Net income - income properties 1,264 1,107 723 2,570
Share of net income (loss) - income properties included in equity accounted
investments 3 (100) (34) (281)
Net loss - lending portfolio (758) (1,646) (417) (191)
Net income (loss) - recurring income $ 509 $ (639) $ 272 $ 2,098
(1)
For the Trust's definition of the following non-IFRS measure: NOI, please refer to the Non-IFRS Measures and Other Disclosures section of this MD&A.
During the three months ended June 30, 2021, the Trust's recurring income segment generated net income of $0.5 million
relative to a net loss of $0.6 million in the three months ended June 30, 2020. The increase of $1.1 million was primarily due
to the income generated from the first commercial tenant occupancy at Zibi's 15 Rue Jos-Montferrand and a lower loan
provision, partially offset by reduced income contribution from the lending portfolio as a result of repayments in the prior
year.
During the six months ended June 30, 2021, the Trust's recurring income segment generated net income of $0.3 million,
compared to $2.1 million in the six months ended June 30, 2020. The decrease was primarily due to transaction costs on the
two income properties acquired earlier in the year and reduced income contribution from the lending portfolio as a result of
principal repayments in the prior year, partially offset by the aforementioned lower loan provision.
INCOME PROPERTIES
During the six months ended June 30, 2021, the Trust acquired a 100% interest in two income properties, 76 Stafford and
68-70 Claremont, located in downtown Toronto, for a total consideration of $33.6 million, including transaction costs. The
income properties were funded through a combination of mortgages payable of $27.5 million and cash-on-hand. The
mortgages payable have a five-year term and have a weighted average fixed interest rate of 2.76%. As at June 30, 2021, $3.8
million of proceeds from the mortgages payable were included in other non current assets as restricted cash, available for
use on certain capital expenditures on one of the income properties. In aggregate, the properties have added 55,000 sf of
GLA to our recurring income portfolio, which as at June 30, 2021, includes over 1.0 million sf of GLA (at 100% project level).
The Trust continues to monitor the impact of COVID-19 on the ability of our tenants to continue paying rent, including the
availability of certain government programs such as the Canada Emergency Rent Subsidy. During the six months ended
June 30, 2021, the Trust's monthly rent collection has been between 95% and 99%.
Operating statistics for the income properties portfolio are as follows:
As at June 30, 2021 December 31, 2020
Total income properties portfolio
Number of properties 6 4
Owned GLA (in millions of sf) 0.6 0.5
Occupancy rate (period-end) — including committed 86.4% 89.2%
Occupancy rate (period-end) — in-place 85.8% 88.7%
Average tenant size (in sf) 9,235 8,776
Average in-place and committed base rent per sf (period-end) 19.67 19.32
Weighted average remaining lease term (years) 5.4 5.1
As at June 30, 2021, the committed and in-place occupancy rates for income properties were 86.4% and 85.8%, respectively,
compared to 89.2% and 88.7% at December 31, 2020, respectively. The decrease in occupancy rates was primarily driven by
the newly acquired income properties, timing of lease renewals and early lease terminations since the prior year. The
weighted average remaining lease term increased to 5.4 years at June 30, 2021, compared to 5.1 years at December 31,
2020, primarily due to the lease agreements on the two income properties acquired during the six months ended June 30,
2021.
FIVE-YEAR DEVELOPMENT PIPELINE
Over the next five years, as the Trust's development pipeline is built out, an additional 2,378 residential rental units and
352,000 sf of commercial and retail GLA are expected to be added to our recurring income segment (at 100% project level).
Details regarding the projects which we expect to complete during this time period are as follows:
Dream Impact Trust 2021 Second Quarter | 12Total rental In-place/
Dream residential units Residential Total commercial committed
Impact at completion GFA(2) and retail GLA(2) commercial Occupancy/
Project/property ownership (at 100%) (1) (at 100%) (at 100%) occupancy stabilization date
WDL Block 8 25.0% 770 623,000 4,000 2023
Canary Block 10 25.0% 238 173,000 — 2024
WDL Block 3/4/7 25.0% 855 811,000 37,000 2025
Zibi
Natural Sciences Building (Block 211) 50.0% — — 186,000 86.0 % 2021
Block 208 50.0% — — 33,000 79.8 % 2022
Block 10 50.0% 162 135,000 1,000 2022
Block 206 50.0% 207 196,000 11,000 2023
Block 207 50.0% — — 76,000 2023
Block 11 50.0% 146 127,000 4,000 2023
Recurring income - pipeline 2,378 2,065,000 352,000 52.9 %
(1)
Residential units and GLA are at 100% project level and include planned units and GLA which are subject to change pending various development approvals. Planned residential
units include purpose-built rental units that are expected to be part of the Trust's recurring income segment within the next five years.
(2)
Residential GFA and total commercial and retail GLA are subject to change pending various development approvals.
LENDING PORTFOLIO
During the three and six months ended June 30, 2021, the Trust recognized a loan provision of $1.1 million related to one
loan, the value of which was determined based on the net realizable value of the underlying real estate properties and
estimated transaction costs (three and six months ended June 30, 2020 - $2.9 million).
2.3 CONSOLIDATED TRUST REVIEW OF TOTAL COMPREHENSIVE INCOME (LOSS)
TOTAL INCOME
Total income for the three months ended June 30, 2021 was $4.2 million, an increase of $1.0 million relative to the prior year
comparative period. The increase was primarily a result of favourable foreign currency fluctuations on the Trust's investment
in the U.S. hotel.
Total income for the six months ended June 30, 2021 was $4.3 million, a decrease of $8.3 million relative to the prior year
comparative period primarily due to a fair value adjustment on a legacy investment, foreign exchange fluctuations related to
the Trust's investment in the U.S. hotel and reduced income contribution from the Trust's loan portfolio. This was partially
offset by fair value gains within our Zibi development as construction nears completion on certain blocks.
TOTAL EXPENSES
Total expenses for the three months ended June 30, 2021 was $6.2 million, a decrease of $2.4 million from the prior year
period primarily as a result of the aforementioned lower loan provision in the current period.
Total expenses for the six months ended June 30, 2021 was $13.2 million compared to $12.3 million in the prior year period.
The increase in total expenses was primarily due to fluctuations in deferred compensation expense and asset management
fees related to changes in the Trust's unit price in each period, partially offset by the aforementioned lower loan provision. In
the three months ended June 30, 2021, the Trust renewed its arrangement with DAM to satisfy the management fees
payable in units, converted at the most recent year-end NAV per unit(1) as determined and reported by the Trust ($8.99 as at
December 31, 2020), and recorded for accounting purposes based on the trading price on date of settlement. The agreement
is effective as of January 1, 2021 and expires on December 31, 2023. During the three and six months ended June 30, 2021,
the Trust recorded asset management fees of $0.7 million and $2.8 million, respectively, where the trading price discount for
the three months ended March 31, 2021 was recognized in the three months ended June 30, 2021, as the extension received
unitholder approval in the second quarter of 2021.
INCOME TAX EXPENSE (RECOVERY)
For the three and six months ended June 30, 2021, the Trust recorded an income tax recovery of $0.6 million and $3.1
million, respectively, compared to an income tax recovery of $1.4 million and $0.1 million, respectively, in the prior year's
comparative periods. The fluctuation from period to period was driven by the composition of income, primarily related to
fair value adjustments, including those held as equity accounted investments.
Due to the Trust’s diversified asset mix and active asset management strategy, we expect some degree of variability in
current and deferred income tax expense recognized each period through the condensed consolidated statements of
Dream Impact Trust 2021 Second Quarter | 13comprehensive income (loss) resulting in an income tax expense (recovery) position. The Trust intends to actively manage
the portfolio in a tax-efficient manner.
We are subject to income taxes both federally and provincially in Canada and the United States. Judgments and estimates
are required in the determination of the Trust's tax balances. Our income tax expense/recovery and deferred tax liabilities/
assets reflect management's best estimate of current and future taxes to be paid/recovered. The Trust is subject to tax
audits from various government and regulatory agencies on an ongoing basis. As a result, from time to time, taxing
authorities may disagree with the interpretation and application of tax laws taken by the Trust in its tax filings.
TAX ATTRIBUTES
INCOME PROPERTIES
We deduct mortgage interest and available tax depreciation on our buildings from our Canadian income properties that
generate taxable net operating income. These deductions contribute to the overall tax efficiency of our structure and the tax
depreciation helps provide the Trust with tax-sheltered cash flow. Any change in the fair value of income properties is not
recognized in the determination of current taxes until the sale of the asset.
(1)
Represents a non-IFRS measure. For the Trust's definition of the following non-IFRS measure: NAV per unit, please refer to the Non-IFRS Measures and Other
Disclosures section of this MD&A. Non-IFRS measures do not have standardized meanings prescribed by IFRS and may not be comparable with similar measures
presented by other issuers.
2.4 RELATED PARTY TRANSACTIONS
From time to time, the Trust and its subsidiaries enter into transactions with related parties that are contracted under
commercial terms. On January 1, 2018, Dream acquired control of the Trust, 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. DAM, which is a wholly owned subsidiary of Dream Unlimited, is the Trust’s Asset Manager and is a related
party that provides management personnel services to the Trust under the terms of the management agreement.
DREAM ASSET MANAGEMENT
ASSET MANAGEMENT AGREEMENT
On July 8, 2014, the Trust entered into a management agreement (as amended from time to time, the "Management
Agreement") with DAM, pursuant to which DAM provides a broad range of asset management services to the Trust for a
base annual management fee, acquisition/origination fee and disposition fee.
In addition, the Trust will reimburse DAM for reasonable out-of-pocket costs and expenses incurred in connection with the
performance of the management services described in the Management Agreement and the costs and expenses incurred in
providing such other services that the Trust and DAM agree to in writing that are to be provided from time to time by DAM.
Three months ended June 30, Six months ended June 30,
2021 2020 2021 2020
Fees paid/payable by the Trust under the Management Agreement with DAM:
Base annual management fee $ 748 $ 1,047 $ 2,765 $ 2,104
Acquisition/origination fee and disposition fees 273 20 996 36
Expense recoveries relating to financing arrangements and other 289 156 500 329
Total fees under Management Agreement $ 1,310 $ 1,223 $ 4,261 $ 2,469
June 30, 2021 December 31, 2020
Total payable to DAM $ 2,447 $ 1,569
Effective April 1, 2019, the Trust agreed to settle the asset management fees payable pursuant to the Management
Agreement in units of the Trust, until December 31, 2020. The Trust units were valued at $8.74, for purposes of determining
the number of units to be issued and recorded based on the market price on the date of settlement. During the three
months ended June 30, 2021, the Trust renewed the arrangement to satisfy the management fees payable in units converted
at the most recent year-end NAV per unit(1) as determined and reported by the Trust ($8.99 as at December 31, 2020), and
recorded for accounting purposes based on the trading price on the date of settlement. The Trust settled the asset
management fee related to the three months ended March 31, 2021, with the issuance of 344,345 units during the second
quarter of 2021 as the renewed arrangement was effective as at January 1, 2021. Subsequent to June 30, 2021, the Trust
settled its management fee for the second quarter of 2021 with the issuance of 301,477 units of the Trust.
Dream Impact Trust 2021 Second Quarter | 14DEVELOPMENT FEES
The Trust has entered into various project-level development management agreements with DAM, and its third-party co-
developers where applicable, in which the Trust has equity ownership interests. Pursuant to these agreements, DAM
provides development management services to the project. The corresponding development management fees are shared
among the partners within each development.
Under these agreements, during the three and six months ended June 30, 2021, fees of $1.4 million and $3.0 million,
respectively, were incurred by the projects, at the Trust's share (three and six months ended June 30, 2020 – $2.4 million and
$3.2 million, respectively). As at June 30, 2021, at the Trust's share, $5.2 million was owed to DAM from the projects in
respect of these fees (December 31, 2020 – $4.7 million).
Additionally, effective January 1, 2018, the Trust entered into a Framework Agreement with DAM with respect to their
management of development investments. During the three and six months ended June 30, 2021, $0.2 million and $0.2
million in development fees were paid or incurred to DAM in accordance with the Framework Agreement (three and six
months ended June 30, 2020 – $0.1 million and $0.1 million, respectively).
(1)
Represents a non-IFRS measure. For the Trust's definition of the following non-IFRS measure: NAV per unit, please refer to the Non-IFRS Measures and Other
Disclosures section of this MD&A. Non-IFRS measures do not have standardized meanings prescribed by IFRS and may not be comparable with similar measures
presented by other issuers.
DREAM OFFICE REAL ESTATE INVESTMENT TRUST ("DREAM OFFICE REIT")
PROPERTY MANAGEMENT AGREEMENTS
The Trust's co-owned office property is managed by Dream Office Management Corporation ("DOMC"). Effective February 1,
2018, the Trust's wholly owned office properties, previously managed by DAM, were also managed by DOMC. DOMC is
owned by Dream Office REIT.
SERVICE AGREEMENTS
The Trust entered into a services agreement ("Service Agreement") with DOMC on July 8, 2014. Pursuant to the Service
Agreement, DOMC provides administrative and support services including the use of office space, office equipment,
communication services and computer systems, and the provision of personnel in connection with accounts payable, human
resources, taxation and other services. DOMC receives a monthly fee sufficient to reimburse for the expenses incurred in
providing these services.
Three months ended June 30, Six months ended June 30,
2021 2020 2021 2020
Fees incurred pursuant to the property management agreements $ 499 $ 495 $ 1,183 $ 1,038
Fees incurred pursuant to the Service Agreement 143 94 257 178
Total fees incurred to DOMC $ 642 $ 589 $ 1,440 $ 1,216
June 30, 2021 December 31, 2020
Total payable to DOMC for property management agreements $ 106 $ 175
Total payable to DOMC for Service Agreement $ 42 $ 29
3. DISTRIBUTION MEASURES
In any given period, the Trust anticipates that actual distributions paid and payable may differ from cash generated from
(utilized in) operating activities. This difference is driven by a number of factors, including the impact of leasing incentives
and initial direct leasing costs which can fluctuate with lease maturities, renewal terms and the type of asset being leased;
changes in non-cash working capital; cash flow from certain development holdings; and the longer-term nature and
investment return profile of our development and investment holdings, including those held as equity accounted
investments.
Due to the Trust's portfolio composition and the long-term nature of projects in the development segment, the Trust expects
that cash generated from (utilized in) operating activities will fluctuate from period to period and may differ from
distributions paid and payable in a single reporting period. However, these cash flows are relevant in the determination of
distributions, as cash flows relating to a development project will ultimately be fully received at project completion. The
Trust considers these factors among others in evaluating its distribution policy as well as its assessment of cash generated
from (utilized in) operating activities over the longer term. The Trust is expected to meet its ongoing obligations, including
unitholder distributions, over the near term based on our current liquidity position. During and subsequent to the three and
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