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TORONTO--(BUSINESS WIRE)--Feb 21, 2023--
Dream Unlimited Corp. (TSX: DRM) (“Dream”, “the Company” or “we”) today announced its financial results for the three and twelve months ended December 31, 2022 (“fourth quarter”).
“Dream has been making progress growing our asset management business and our income property portfolio together adding to our recurring income,” said Michael Cooper, Chief Responsible Officer. “Our impact initiatives have also contributed to being awarded the Quayside development, which is closing in March. Arapahoe Basin had a very successful year and continued to contribute to our overall profit and value creation. Although there have been many challenges in 2022, Dream is beginning 2023 in very good shape and we are improving the quality of our business and its value.”
A summary of our consolidated results for the three and twelve months ended December 31, 2022 is included in the table below.
| For the three months ended December 31, | For the year ended December 31, | ||||||||||
(in thousands of dollars, except per share and outstanding share amounts) |
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
Revenue |
| $ | 167,692 |
| $ | 150,122 |
| $ | 343,768 |
| $ | 325,922 |
Net margin |
| $ | 43,729 |
| $ | 34,685 |
| $ | 79,135 |
| $ | 60,566 |
Net margin (%) (1) |
|
| 26.1% |
|
| 23.1% |
|
| 23.0% |
|
| 18.6% |
Earnings (loss) before income taxes |
| $ | (57,525) |
| $ | 95,349 |
| $ | 197,291 |
| $ | 125,875 |
Earnings (loss) for the period |
| $ | (51,211) |
| $ | 80,317 |
| $ | 164,445 |
| $ | 110,661 |
Basic earnings (loss) per share |
| $ | (1.20) |
| $ | 1.87 |
| $ | 3.86 |
| $ | 2.52 |
Diluted earnings (loss) per share |
| $ | (1.20) |
| $ | 1.81 |
| $ | 3.74 |
| $ | 2.46 |
|
|
|
|
|
|
|
|
| ||||
| December 31, 2022 | December 31, 2021 | ||||||||||
Total assets |
|
|
| $ | 3,956,494 |
|
|
| $ | 3,488,674 | ||
Total liabilities |
|
|
| $ | 2,402,802 |
|
|
| $ | 2,066,461 | ||
Total equity |
|
|
| $ | 1,553,692 |
|
|
| $ | 1,422,213 | ||
Total issued and outstanding shares |
|
|
|
| 42,587,702 |
|
|
|
| 42,836,031 |
Loss before income taxes for the three months ended December 31, 2022 was $57.5 million, compared to earnings before taxes of $95.3 million in the prior year comparative period. The decrease is primarily due to a fair value loss on Dream Impact Trust's investment in the Virgin Hotels Las Vegas, lower fair value adjustments taken on our investment properties including those held within our equity accounted investments and a $1.9 million loss on Dream Impact Trust units held by other unitholders.
Earnings before income taxes for the year ended December 31, 2022 was $197.3 million, an increase of $71.4 million relative to the prior year, primarily due to a one-time gain on a land settlement, condominium occupancies at Canary Commons in the first half of 2022 and $80.4 million in fair value gains taken on Dream Impact Trust units held by other unitholders. This was partially offset by the aforementioned reasons and higher interest costs.
As of December 31, 2022 the Company has available liquidity (2) of $285.7 million, in line with $275.6 million as of December 31, 2021.
Subsequent to the fourth quarter, the Company’s Board of Directors approved an increase to the annual dividend per Subordinate Voting Share and Class B Share from $0.40 per share to $0.50 per share, effective with the dividend payable to shareholders on March 31, 2023.
Highlights: Recurring Income
Highlights: Development
Highlights: Impact Investing
Share Capital & Return to Shareholders
Select financial operating metrics for Dream’s segments for the three and twelve months ended December 31, 2022 are summarized in the table below.
|
| For the three months ended December 31, 2022 | ||||||
(in thousands of dollars, except outstanding share amounts) | Recurring income | Development | Corporate and other | Total | ||||
Revenue | $ | 42,705 | $ | 124,987 | $ | — | $ | 167,692 |
% of total revenue |
| 25.5% |
| 74.5% |
| —% |
| 100.0% |
Net margin | $ | 11,119 | $ | 32,610 | $ | — | $ | 43,729 |
Net margin (%) (1) |
| 26.0% |
| 26.1% |
| n/a |
| 26.1% |
|
|
|
|
| ||||
|
| For the year ended December 31, 2022 | ||||||
Revenue | $ | 167,985 | $ | 175,783 | $ | — | $ | 343,768 |
% of total revenue |
| 48.9% |
| 51.1% |
| —% |
| 100.0% |
Net margin | $ | 55,116 | $ | 24,019 | $ | — | $ | 79,135 |
Net margin (%) (1) |
| 32.8% |
| 13.7% |
| n/a |
| 23.0% |
|
|
|
|
| ||||
|
|
| As at December 31, 2022 | |||||
Segment assets | $ | 2,258,140 | $ | 1,669,623 | $ | 28,731 | $ | 3,956,494 |
Segment liabilities |
| 980,905 |
| 613,966 |
| 807,931 |
| 2,402,802 |
Segment shareholders' equity |
| 1,277,235 |
| 1,055,657 |
| (779,200) |
| 1,553,692 |
Shareholders' equity per share (4) | $ | 29.99 | $ | 24.79 | $ | (18.30) | $ | 36.48 |
|
| For the three months ended December 31, 2021 | ||||||
(in thousands of dollars, except outstanding share amounts) | Recurring income | Development | Corporate and other | Total | ||||
Revenue | $ | 35,883 | $ | 114,239 | $ | — | $ | 150,122 |
% of total revenue |
| 23.9% |
| 76.1% |
| —% |
| 100.0% |
Net margin | $ | 7,996 | $ | 26,689 | $ | — | $ | 34,685 |
Net margin (%) (1) |
| 22.3% |
| 23.4% |
| n/a |
| 23.1% |
|
|
|
|
| ||||
|
| For year ended December 31, 2021 | ||||||
Revenue | $ | 116,766 | $ | 209,156 | $ | — | $ | 325,922 |
% of total revenue |
| 35.8% |
| 64.2% |
| —% |
| 100.0% |
Net margin | $ | 33,502 | $ | 27,064 | $ | — | $ | 60,566 |
Net margin (%) (1) |
| 28.7% |
| 12.9% |
| n/a |
| 18.6% |
|
|
| As at December 31, 2021 | |||||
Segment assets | $ | 1,885,019 | $ | 1,575,453 | $ | 28,202 | $ | 3,488,674 |
Segment liabilities |
| 739,363 |
| 558,870 |
| 768,228 |
| 2,066,461 |
Segment shareholders' equity |
| 1,145,656 |
| 1,016,583 |
| (740,026) |
| 1,422,213 |
Shareholders' equity per share (4) | $ | 26.75 | $ | 23.73 | $ | (17.28) | $ | 33.20 |
Conference Call
Senior management will host a conference call on February 21, 2023 at 5:00 pm (ET). To access the call, please register for the audio conference using the following link: https://register.vevent.com/register/BIc5adda2edc5b47eaa717e6d719fe9856. Once registered, participants will receive an email with dial-in details, including a unique PIN. A taped replay of the webcast will be archived for 90 days.
Other Information
Information appearing in this press release is a select summary of results. The financial statements and MD&A for the Company are available at www.dream.ca and on www.sedar.com.
About Dream Unlimited Corp.
Dream is a leading developer of exceptional office and residential assets in Toronto, owns stabilized income generating assets in both Canada and the U.S., and has an established and successful asset management business, inclusive of over $23 billion of assets under management (1) across four Toronto Stock Exchange ("TSX") listed trusts, our private asset management business and numerous partnerships as of February 21, 2023. We also develop land and residential assets in Western Canada. Dream expects to generate more recurring income in the future as its urban development properties are completed and held for the long term. Dream has a proven track record for being innovative and for our ability to source, structure and execute on compelling investment opportunities. A comprehensive overview of our holdings is included in the "Summary of Dream's Assets and Holdings" section of our MD&A.
Non-GAAP Measures and Other Disclosures
In addition to using financial measures determined in accordance with IFRS, we believe that important measures of operating performance include certain financial measures that are not defined under IFRS. Throughout this press release, there are references to certain non-GAAP measures and other specified financial measures including earnings before income taxes after adjusting for fair value on Dream Impact Trust units held by other unitholders, net operating income, adjusted EBITDA, Dream Impact Trust and consolidation and fair value adjustments, which management believes are relevant in assessing the economics of the business of Dream. These performance and other measures are not financial measures under IFRS, and may not be comparable to similar measures disclosed by other issuers. However, we believe that they are informative and provide further insight as supplementary measures of financial performance, financial position or cash flow, or our objectives and policies, as applicable. Certain additional disclosures such as the composition, usefulness and changes, as applicable, of the non-GAAP financial measures included in this press release have been incorporated by reference from the management’s discussion and analysis of Dream for the three months and year ended December 31, 2022, dated February 21, 2023 (the “MD&A for the fourth quarter of 2022”) and can be found under the section “Non-GAAP Financial Measures”, subheadings “Earnings before income taxes after adjusting for fair value on Dream Impact Trust units held by other unitholders”, “Net operating income”, "Adjusted EBITDA”, and “Dream Impact Trust & Consolidation and fair value adjustments”. The composition of supplementary financial measures included in this press release has been incorporated by reference from the MD&A for the fourth quarter of 2022 and can be found under the section “Supplementary and Other Financial Measures”. The MD&A for the fourth quarter of 2022 is available on SEDAR at www.sedar.com under Dream’s profile and on Dream’s website at www.dream.ca under the Investors section.
Non-GAAP Financial Measures
“ Adjusted EBITDA ” represents net income for the period adjusted for interest expense on debt; amortization and depreciation; share of earnings from equity accounted investments; and net current and deferred income tax expense (recovery). The most directly comparable financial measure to adjusted EBITDA is net earnings. This non-IFRS measure is an important measure used by the Company in evaluating the performance of divisions within our recurring income segment.
|
|
| For the three months ended December 31, 2022 | |||||||
| Asset management | Stabilized properties | Arapahoe Basin | Dream Impact Trust & consolidation and fair value adjustments (1) | Total recurring income | |||||
Revenue | $ | 11,540 | $ | 18,238 | $ | 8,801 | $ | 7,416 | $ | 45,995 |
Net margin |
| (9,833) |
| 7,789 |
| (1,210) |
| 4,353 |
| 1,099 |
Net earnings (loss) | $ | (26,602) | $ | 5,625 | $ | (1,353) | $ | 13,108 | $ | (9,222) |
Less: Interest expense |
| (276) |
| (6,569) |
| (127) |
| (2,413) |
| (9,385) |
Less: Taxes |
| — |
| — |
| — |
| — |
| — |
Less: Depreciation and amortization |
| — |
| (290) |
| (1,059) |
| — |
| (1,349) |
Less: Share of earnings (losses) from equity accounted investments |
| (28,600) |
| 2,116 |
| 10 |
| 298 |
| (26,176) |
Adjusted EBITDA | $ | 2,274 | $ | 10,368 | $ | (177) | $ | 15,223 | $ | 27,688 |
|
|
| For the three months ended December 31, 2021 | |||||||
| Asset management | Stabilized properties | Arapahoe Basin | Dream Impact Trust & consolidation and fair value adjustments (1) | Total recurring income | |||||
Revenue | $ | 13,944 | $ | 12,620 | $ | 7,434 | $ | 1,885 | $ | 35,883 |
Net margin |
| 4,789 |
| 5,261 |
| (1,392) |
| (662) |
| 7,996 |
Net earnings (loss) | $ | 28,217 | $ | 19,779 | $ | 1,159 | $ | 26,173 | $ | 75,328 |
Less: Interest expense |
| (87) |
| (4,055) |
| (24) |
| (905) |
| (5,071) |
Less: Taxes |
| — |
| — |
| — |
| — |
| — |
Less: Depreciation and amortization |
| — |
| (521) |
| (1,131) |
| — |
| (1,652) |
Less: Share of earnings (losses) from equity accounted investments |
| 23,472 |
| (337) |
| (16) |
| 1,213 |
| 24,332 |
Adjusted EBITDA | $ | 4,832 | $ | 24,692 | $ | 2,330 | $ | 25,865 | $ | 57,719 |
|
|
| For the year ended December 31, 2022 | |||||||
| Asset management | Stabilized properties | Arapahoe Basin | Dream Impact Trust & consolidation and fair value adjustments (1) | Total recurring income | |||||
Revenue | $ | 47,712 | $ | 63,337 | $ | 43,400 | $ | 16,826 | $ | 171,275 |
Net margin |
| 5,894 |
| 26,101 |
| 7,604 |
| 5,497 |
| 45,096 |
Net earnings | $ | 26,497 | $ | 26,678 | $ | 9,428 | $ | 8,647 | $ | 71,250 |
Less: Interest expense |
| (791) |
| (20,622) |
| (255) |
| (6,177) |
| (27,845) |
Less: Taxes |
| — |
| — |
| — |
| — |
| — |
Less: Depreciation and amortization |
| — |
| (949) |
| (4,071) |
| — |
| (5,020) |
Less: Share of earnings from equity accounted investments |
| 9,891 |
| 380 |
| 1,129 |
| 1,288 |
| 12,688 |
Adjusted EBITDA | $ | 17,397 | $ | 47,869 | $ | 12,625 | $ | 13,536 | $ | 91,427 |
|
|
| For the year ended December 31, 2021 | |||||||
| Asset management | Stabilized properties | Arapahoe Basin | Dream Impact Trust & consolidation and fair value adjustments (1) | Total recurring income | |||||
Revenue | $ | 43,121 | $ | 29,481 | $ | 33,380 | $ | 10,784 | $ | 116,766 |
Net margin |
| 17,594 |
| 11,609 |
| 3,640 |
| 659 |
| 33,502 |
Net earnings (loss) | $ | 92,946 | $ | 17,054 | $ | 6,452 | $ | 20,671 | $ | 137,123 |
Less: Interest expense |
| (135) |
| (8,345) |
| (120) |
| (3,514) |
| (12,114) |
Less: Taxes |
| — |
| — |
| — |
| — |
| — |
Less: Depreciation and amortization |
| — |
| (1,068) |
| (4,111) |
| — |
| (5,179) |
Less: Share of earnings (losses) from equity accounted investments |
| 75,791 |
| 5,994 |
| (46) |
| 1,173 |
| 82,912 |
Adjusted EBITDA | $ | 17,290 | $ | 20,473 | $ | 10,729 | $ | 23,012 | $ | 71,504 |
(1) For the Company's definition of the following non-GAAP measures: Dream Impact Trust and consolidation and fair value adjustments, refer to the definition below. |
" Dream Impact Trust & Consolidation and fair value adjustments " are two separate non-GAAP financial measures and represent certain IFRS adjustments required to reconcile Dream standalone and Dream Impact Trust results to the consolidated results as at December 31, 2022 and December 31, 2021 and for the three and twelve months ended December 31, 2022 and 2021. Management believes Dream Impact Trust & Consolidation and fair value adjustments provides investors useful information in order to agree to the Dream Impact Trust financial statements.
Consolidation and fair value adjustments relate to business combination adjustments on acquisition of Dream Impact Trust on January 1, 2018 and related amortization, elimination of intercompany balances including the investment in Dream Impact Trust units, adjustments for co-owned projects, fair value adjustments to the Dream Impact Trust units held by other unitholders, and deferred income taxes.
" Earnings before income taxes after adjusting for fair value on Dream Impact Trust units held by other unitholders " represents the Company's pre-tax earnings excluding the impact from the volatility of Dream Impact Trust's share price. The most directly comparable financial measure to earnings before income taxes after adjusting for fair value of Dream Impact trust units held by other unit holders is earnings before income taxes. Management believes Dream Impact Trust and consolidation and fair value adjustments provides investors useful information in order to review Dream results without the volatility of fair value changes in Dream Impact Trust's trading price.
| For the three months ended December 31, | For the year ended December 31, | ||||||||||
|
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
Earnings (loss) before income taxes |
| $ | (57,525) |
| $ | 95,349 |
| $ | 197,291 |
| $ | 125,875 |
Less: Adjustments related to Dream Impact Trust units |
|
| (1,879) |
|
| (3,782) |
|
| 80,411 |
|
| (25,019) |
Earnings (loss) before income taxes after adjusting for fair value on Dream Impact Trust units held by other unitholders |
| $ | (55,646) |
| $ | 99,131 |
| $ | 116,880 |
| $ | 150,894 |
“ Net operating income " represents revenue less direct operating costs and is equal to gross margin as per Note 26 of the consolidated financial statements. Net operating income excludes general, administrative and overhead expenses, and amortization, which are included in net margin per Note 37 of the consolidated financial statements. The most directly comparable financial measure to net operating revenue is net margin. This non-GAAP measure is an important measure used to assess the profitability of the Company’s recurring income segment. Net operating income for the recurring income segment for the three and twelve months ended December 31, 2022 and 2021 is calculated as follows:
| For the three months ended December 31, | For the year ended December 31, | ||||||||||
|
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
Revenue |
| $ | 42,705 |
| $ | 35,883 |
| $ | 167,985 |
| $ | 116,766 |
Less: Direct operating costs |
|
| (28,362) |
|
| (25,921) |
|
| (104,411) |
|
| (76,351) |
Less: Selling, marketing, depreciation and other indirect costs |
|
| (3,224) |
|
| (1,966) |
|
| (8,458) |
|
| (6,913) |
Net margin |
| $ | 11,119 |
| $ | 7,996 |
| $ | 55,116 |
| $ | 33,502 |
Add: Depreciation |
|
| 1,349 |
|
| 1,026 |
|
| 5,020 |
|
| 3,527 |
Add: General and administrative expenses |
|
| 1,875 |
|
| 940 |
|
| 3,438 |
|
| 3,386 |
Net operating income |
| $ | 14,343 |
| $ | 9,962 |
| $ | 63,574 |
| $ | 40,415 |
Supplementary and Other Financial Measures
" Assets under management (“AUM”) " is the respective carrying value of gross assets managed by the Company on behalf of its clients, investors or partners under asset management agreements, development management agreements and/or management services agreements at 100% of the client's total assets. All other investments are reflected at the Company's proportionate share of the investment's total assets without duplication. Assets under management is a measure of success against the competition and consists of growth or decline due to asset appreciation, changes in fair market value, acquisitions and dispositions, operations gains and losses, and inflows and outflows of capital.
" Available liquidity " represents Dream's standalone corporate cash and revolving debt facilities, including the operating line – Western Canada and margin loan, to cover the Company’s capital requirements including acquisitions. This financial measure is used by the Company to forecast and plan to hold adequate amounts of available liquidity to allow for the Company to settle obligations as they come due.
“ Fee earning assets under management ” represents assets under management that are managed under contractual arrangements that entitle the Company to earn asset management revenue calculated as the total of: (i) 100% of the purchase price of client properties, assets and/or indirect investments subject to asset management agreements; (ii) 100% of the carrying value of gross assets of the underlying development project subject to development management agreements; and (iii) 100% of the carrying value of specific Dream Office REIT redevelopment properties subject to a development management addendum under the shared services agreement with Dream Office REIT, without duplication.
Forward-Looking Information
This press release may contain forward-looking information within the meaning of applicable securities legislation, including, but not limited to, statements regarding our objectives and strategies to achieve those objectives; our beliefs, plans, estimates, projections and intentions, and similar statements concerning anticipated future events, future growth, expected net proceeds from sales or transactions, results of operations, performance, business prospects and opportunities, acquisitions or divestitures, tenant base, future maintenance and development plans and costs, capital investments, financing, the availability of financing sources, income taxes, vacancy and leasing assumptions, litigation and the real estate industry in general; as well as specific statements in respect of expectations regarding closing of our Quayside development; the improvement of the quality of our business and its value; our intention of continuing to employ the majority of Summit employees post-closing of the Summit transaction; our development plans and proposals for current and future projects, including the addition of 3,050 units and 3.0 million square feet of rental, retail and commercial GLA to our recurring income portfolio over the next four years in connection with the West Don Lands, Canary Block 10, Zibi and LeBreton projects, and projected sizes, density, GLA, timelines, units at completion and uses; the commitments for a certain number of lots and acres in Saskatchewan and Alberta and expectation that the latter will contribute to earnings; Dream’s and the Dream group platform’s development pipeline, including square footage of GLA in retail and commercial properties, and number of condominium and purpose-built rental units; expectations, commitments, targets, milestones, and other details regarding the Net Zero by 2035 Action Plan; our $6 billion net zero communities’ development pipeline; our belief that our approach to mitigating climate change will create investment opportunities and shareholder value; expectations regarding our sustainability targets, including in respect of the Dream platform, Dream LeBreton becoming Canada's largest net zero carbon residential community and reaching its affordability targets, our Quayside project becoming Canada’s largest all-electric, zero-carbon master-planned community, and other sustainability characteristics about our projects; the Dream Community Foundation’s commitments and activities; the expectation that recurring income generation will increase as urban development properties are completed and held for the long term; the expected growth of our asset management platform; and our overall financial performance, profitability and liquidity for future periods and years. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond Dream’s control, which could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking information. These assumptions include, but are not limited to: the nature of development lands held and the development potential of such lands, interest rates and inflation remaining in line with management expectations, our ability to bring new developments to market, anticipated positive general economic and business conditions, including low unemployment and interest rates, positive net migration, oil and gas commodity prices, our business strategy, including geographic focus, anticipated sales volumes, performance of our underlying business segments and conditions in the Western Canada land and housing markets. Risks and uncertainties include, but are not limited to, general and local economic and business conditions, the impact of the COVID-19 pandemic on the Company and uncertainties surrounding the COVID-19 pandemic, including government measures to contain the COVID-19 pandemic employment levels, risks associated with unexpected or ongoing geopolitical events, including disputes between nations, terrorism or other acts of violence, international sanctions and the disruption of movement of goods and services across jurisdictions, inflation or stagflation, regulatory risks, mortgage and interest rates and regulations, risks related to a potential economic slowdown in certain of the jurisdictions in which we operate and the effect inflation and any such economic slowdown may have on market conditions and lease rates, environmental risks, consumer confidence, seasonality, adverse weather conditions, reliance on key clients and personnel and competition. All forward-looking information in this press release speaks as of February 21, 2023. Dream does not undertake to update any such forward-looking information whether as a result of new information, future events or otherwise, except as required by law. Additional information about these assumptions and risks and uncertainties is disclosed in filings with securities regulators filed on SEDAR ( www.sedar.com ).
Endnotes:
(1) | For the definition of the following specified financial measures: assets under management, fee earning assets under management, net margin (%), net operating income, earnings before income taxes after adjusting for fair value adjustments taken on Dream Impact Trust units held by other unitholders, adjusted EBITDA, consolidation and fair value adjustments, refer to the “Non-GAAP Measures and Other Disclosures” section of this press release. |
(2) | For the definition of the following capital management measure: available liquidity, refer to the “Non-GAAP Measures and Other Disclosures” section of this press release. |
(3) | Earnings for the three and twelve months ended December 31, 2022 includes a loss of $1.9 million and gain of $80.4 million, respectively, on Dream Impact Trust units held by other unitholders (three and twelve months ended December 31, 2021 – loss of $3.8 million and a loss of $25.0 million, respectively). Refer to the “Additional Information – Consolidated Dream” section of our MD&A for results on a Dream standalone basis. |
(4) | Shareholders’ equity per share represents shareholders’ equity divided by total number of shares outstanding at period end. |
View source version on businesswire.com:https://www.businesswire.com/news/home/20230221005696/en/
CONTACT: Dream Unlimited Corp.Deb Starkman
Chief Financial Officer
(416) 365-4124
dstarkman@dream.caKim Lefever
Director, Investor Relations
(416) 365-6339
klefever@dream.ca
KEYWORD: NORTH AMERICA CANADA
INDUSTRY KEYWORD: PROFESSIONAL SERVICES RESIDENTIAL BUILDING & REAL ESTATE COMMERCIAL BUILDING & REAL ESTATE ASSET MANAGEMENT CONSTRUCTION & PROPERTY
SOURCE: Dream Unlimited Corp.
Copyright Business Wire 2023.
PUB: 02/21/2023 03:01 PM/DISC: 02/21/2023 03:01 PM
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